Where should the two-second advantage take Tibco next?

OVUM VIEW

Impact

While 2011 has been a better year than 2010 for most enterprise software vendors, it has been very good for Tibco. Not only are revenues up over the year before; new license sales are running 32% higher year-on-year. Much of the growth has occurred with Tibco’s newer generation products, and it has now diversified its base so that three quarters of its business is outside its traditional home in the financial services industry. It has achieved this through a combination of execution, a new discipline on message, and filling out and unifying the stack for core products. Its message “The two-second advantage” has served it well. With emergent use cases around Big Data and Fast Data, Tibco has the opportunity to stake ownership of one aspect of the Big and Fast Data challenge that is often overlooked: the case for managing Big Data in motion.

A rising tide is part of the story

For well-managed enterprise vendors, a rising tide will lift all boats. Tibco has had a good second quarter. Year-on-year, Tibco’s revenues were up 25%, but a more important yardstick – new software licenses – showed 32% growth. Admittedly, for the more successful enterprise software vendors, 2011 is a better year than 2010. For instance, during the same period, Oracle’s results were 13% growth for revenues and 19% for new software licenses.

However, the rising tide doesn’t tell the full story for Tibco.

Tibco is becoming a broader-based company

Tibco has significantly diversified since its days as a provider of messaging for financial services and trading firms. By the last quarter, more than 75% of its business came from outside the financial industry. That has come through a combination of broadening the appeal of core products and making targeted acquisitions to extend its business beyond Wall Street. For instance, Spotfire, a business intelligence visualization tool, had its core base in life sciences, while a recent acquisition, Loyalty Labs, is a niche add-on to Tibco’s portfolio that is focused on targeting promotions for consumer product brands.

Nonetheless, much of the credit comes from broadening its middleware stack and making it more coherent. Tibco’s BPM product, which has been re-architected to become native to its Active Matrix SOA framework, has delivered sales that increased 33% year-on-year. To a lesser extent, accelerating adoption of BPM has had a spillover effect on the SOA business, which grew 21%. These enhancements have helped Tibco extend its market footprint.

Honing its message

Tibco’s original claim to fame was “The Power of Now.” Although Tibco has had no shortage of compelling messages, in the past it has stepped on those messages with needless diversions such as “Enterprise 3.0.” But over the past year the company has shown discipline in emphasizing a new take on “The Power of Now” with “The two-second advantage.” The message works for Tibco because it provides a compelling business case for a company that has otherwise been known for brute force technology. Tibco’s two-second advantage poses an implicit question that few businesses can fail to relate to: “What would you do if you had just enough information two seconds before your rivals?” Tibco’s message, not only appeals to fast technologies, such as the ultra low-latency message product for high frequency traders where it competes with another new offering from Informatica; it also applies to longer-running processes such as complex events processing and BPM, where enterprises can benefit by being the first to get and act on actionable information.

Big Data and Fast Data are Tibco’s next challenges

Each day, new business use cases are emerging for the processing of Big Data. But here’s the catch: until now, Big Data has mostly been associated with Hadoop, NoSQL, or Advanced SQL, which are utilized for processing sets of data that would otherwise overwhelm traditional SQL database technologies. Fast Data has been associated with in-memory databases. These are the cases for data at rest.

However, as Ovum defines Big Data as data sets that are so large and diverse as to be beyond the capabilities of traditional SQL, that opens up a use case for data in motion. We define Fast Data as low-latency data computational problems that demand new approaches to data persistence.

To its credit, IBM is one of the few players so far that is claiming a stake in data in motion. This is an area that should also have Tibco’s name on it, as Tibco has built its business on integrating data in motion, and using it to trigger analytics (via Spotfire) or business process management (via Active Matrix BPM).

Tibco already has some of the technology pieces in place, such as its FTL ultra-fast messaging bus, which is aimed at capital and derivatives markets, and its recent acquisition of Data Synapse, which provides a distributed data grid for processing events, either coming down the wire or in other scenarios such as smart grid management or realtime optimized logistics. The missing piece is events processing, as its Business Events CEP product has a heavier-weight architecture utilized more for long-running, not high-volume, short-term events. But Tibco could slim down the agents for its CEP product for grid deployment to intercept large, fast distributed streams. Looking over the horizon, there are many emerging NoSQL technologies such as CouchDB that can, in effect, function as temporary caches for Internet data. This is an area that would provide a logical extension for Tibco’s business.

Either way, to keep its “two-second advantage” relevant and current, Tibco must form and articulate a formal product and go-to-market strategy for how it will help its clients gain that advantage from Big – and Fast – Data.

APPENDIX

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