Vivek Ranadive is not only the chief executive officer of TIBCO Software, Inc., he's a New York Times bestselling author (of works like The Power of Now, The Power to Predict and the recently released The Two-Second Advantage: How We Succeed by Anticipating the Future -- Just Enough.) As you'd expect from such a literary type, this proponent of event-driven computing and herald of Enterprise 3.0 is handy with a well-turned phrase. He describes your relational database as a "phone that doesn't ring" and his description of what happens when you open a certain software package from rival IBM is likely to stick in your mind. In this latest installment of the IDG Enterprise CEO Interview Series, Ranadive spoke with IDGE Chief Content Officer John Gallant about why your company needs to move to real-time computing and how TIBCO's 'two-second advantage' can change your business.
Let's start by setting the table. Explain for folks what it is that TIBCO does for enterprise customers and what makes the company unique among enterprise software providers? TIBCO provides the platform that allows companies to tie all their systems together and so that you can take advantage of real-time events. In the 20th century, people would react to things after they happened by looking at information in a database. With the TIBCO platform, not only do you save a lot of money because you're able to connect everything through a software bus so you don't have to have lots of back-and-forth interfaces, but you're then able to find things out before they happen. I call this in my new book the 'two-second advantage.' If you have just a little bit of the right information, just a little bit beforehand, it's more valuable than all the information in the world six months after. What's the point of knowing you've lost a customer after the customer leaves or that you've had fraud committed after the money was lost, or that you have a power outage when it's already dark?
Think of Oracle as the platform for transactions, for static data. In that world, data was static and the Oracle database was the building block, ERP was the killer app and business intelligence was the [tool for] business insight. In the TIBCO world, instead of dealing with static data, it's dynamic or moving data. Instead of a database in the middle, you have a service bus that connects everything. And instead of a database-oriented architecture it's a service-oriented architecture. Instead of having to continue buying siloed ERP apps, you do end-to-end business processes as part of BPM [business process management] capability. Instead of having reporting systems for business intelligence, where you're grinding reports out months after things have happened, you have predictive systems that enable you to predict that, say, you're about to lose a customer.
This is the future. Our business hit the proverbial tipping point in the last year and a half, where there isn't a company, an industry or government that doesn't need to become event driven. When you want to store transactions, put them in a database. But when you want to run your business, you do it in real time, on our bus, with our platform.
You used the phrase "The Power of Now" as a book title and as a marketing positioning statement for TIBCO. What do you mean by that and how will real-time computing change the landscape? What it means to be real-time is that you're able to pick up billions - trillions - of events instantaneously anticipate what might happen next. By doing that, you can prevent the loss of a customer, you can do a customer up-sale, you can prevent fraud from taking place. You can optimize your supply chain so you get much more value from all the assets you have. That's what it means to be real-time. Human beings are real-time. When you're driving, you see a pothole and you avoid it. You look at that as an event: 'I just saw a pothole.' You connect it to a pattern in your brain that says 'avoid potholes' and you drive around it. If you drove using a database, then you would hit the pothole and then six months later try figure out what happened.
That is an example of how it's not just banks or telcos or transportation companies, airlines. Now, it's everyone. Everyone needs to be real-time. If John Gallant's passport gets stolen and two days later somebody shows up at a border crossing with a passport that says John Gallant on it then it's pretty likely that's a bad guy. But, in fact, there's no way to know, because the information is sitting somewhere in a database. With TIBCO, we change all that, we make it real-time. You have a few seconds in which to make that determination. You know, a database is like a phone that doesn't ring. Something happens, there's a weather delay, there's a flight delay. It goes into the database, but if the phone doesn't ring, nobody else knows that something happened, so they have to all keep asking: 'What's the latest status?' In our world, when an event happens, like a delay, it propagates to everywhere it needs to be.
Let me ask you about another concept that you've discussed in relation to TIBCO: Enterprise 3.0. What do you mean by that? Enterprise 1.0 was the mainframe era. The mainframe was the building block; the software was tied to the hardware. A bank, to serve, say, 10 million customers might have a few thousand branches. You go into a branch every couple of weeks with a paycheck, deposit the paycheck, withdraw some cash, and then overnight, in batch, that information would be updated. Enterprise 2.0 began about 20, 25 years ago when you saw client-server computing emerging and the relational database became the building block. The software was tied to the database. Now you had the information accessible everywhere and the information was always available, it was online.
With enterprise 3.0, you have the same 10 million customers, but you're dealing with them 10 times a month. Your service now could be a cell phone, an ATM machine, a branch, a Website, or simply you swiping your credit card at a store somewhere. So you have ten times 10 million -- a hundred million events happening. And sitting at the back of the bank, accumulated over the years, are hundreds of terabytes, maybe petabytes of information. You have to be able to look at each of those events uniquely, discretely, and tie each back to that terabyte of storage to determine what just happened. Was this ATM card used in San Francisco and five minutes later it's being used in L.A.? Maybe that's fraud. Maybe it's an up sale opportunity. Maybe it's loss of a customer.
Alright, now talk about the business process management portion of the business. So now you've got the connections to everything, you've got the nervous system. BPM is kind of like the muscles. It's what makes things happen. Once everything is connected on the bus then you can use the BPM module to create an end-to-end business process. A business process is an end-to-end unit of work. It's auditing cash flow; it's provisioning somebody for a service. Those are business processes. In order to accomplish that, you have to touch seven, eight, 10, 100 different systems. It's about allowing people to come in on a Friday and decide that they want to do a new kind of offer, and have it be looked at, modeled, analyzed and then put into production in days, not years or months. That's what BPM allows you to do.
The next area is business optimization. I think of business optimization as the brain. You connect everything through the nervous system and you're picking up events, and then you put those events into the brain and you start finding patterns. You can find those patterns in a visual fashion, using, say, Spotfire, or you can find them using rules. For example, you know that if a guy buys garden seed then there's a 90% chance he's going to buy fertilizer and there's a 40% chance that he's going to buy garden furniture. There's no point in making him an offer on the fertilizer because he'll probably buy it anyway, but let's make him an offer on the furniture before he leaves the store, because maybe he'll buy it. That's business optimization. It's finding patterns, looking at rules; so you've got the nervous system, you've got the muscles that move things, and then you've got the brain that does the analysis.
Would you equate business optimization with BI? Are they similar? It's 21st century BI. BI is looking at things after the fact, six months after something happens. We're creating predictive capabilities. For example, we were working with a retail store in the U.K. and we found that if somebody buys champagne and razors and diapers, then there's a high likelihood that the person has a stolen credit card. So, you do something about it before they use the credit card. That's twenty first century BI.
Let's talk about that, the social or collaboration angle. Explain Tibbr. It seems like a very cool social tool. What does it help companies do and how do you differentiate it from things like Yammer or Chatter or all the other strangely named social products. Tibbr is something I was personally involved in conceiving. It takes the best elements of social networking -- the ease of use, the virality, the user-generated content -- and combines that with what TIBCO is all about, which is enterprise class capability, reliability, security, real-time [functionality]. It ends up being the universal inbox, or the universal outbox, but really the universal desktop. With Tibbr you can follow people just like you can with the social tools like Twitter, but you can also follow subjects. What makes that unique is that we already have the backbone and the adaptors into every platform in the world. We already have an adaptor factory with hundreds of adaptors into SAP, Oracle, salesforce.com, databases; every known system. With Tibbr on your mobile device or your desktop device, your iPad, you can decide which subjects to follow and the information comes to you on that. With Chatter, you only get salesforce.com data. With Tibbr, you can get every kind of data. The second thing is this whole concept of subjects. You can have a very fine level of granularity on what you want to follow. You might want to follow a person, but only what [they do] that pertains to a specific topic. The third difference is that we offer it either in the cloud or on premise. That's a huge factor, because a lot of industries are regulated and they don't want to put their customer data in the cloud. The fourth thing is we are thing kings of real-time, so we can relay the information more easily in real-time than anyone else can. Tibbr's taken off like a rocket. We launched it a few months ago and we have close to a million users on it. It's like catching fish in a barrel right now.
I wanted to get in a couple of company- and market-specific questions. In 2010 you acquired six companies. Why the acceleration on the M&A front? What's the strategy there? Our strategy is that we like to acquire technology, we don't like to buy revenue. A lot of companies, like Oracle, buy a lot of revenue. Those, in my mind, are mature companies. You know, they're buying maintenance, basically, they're buying revenue. We like to buy technology. For example, we paid $11 million for a company called Netrics and I got $50 million or $60 million of R&D for that $11 million. They fit into my eventing platform and my master data management platform and allow you to look at data just like a human being, using what we call a bipartite algorithm. When the Detroit Christmas Eve bomber struck a year ago, two years ago; his name was on the terror watch list, everyone knew he was a bad guy, and his data said he was a bad guy. But the reason that he wasn't stopped was because one letter in his name was misspelled. This Netrics technology, which augments our master data and BPM capabilities, thinks like the human brain and it cross references, whether your name is spelled with two 'l's' or one 'l', it knows you're the same guy. Those are the kind of deals that we like, when we see great technology that fits into our stack we like to buy it.
Looking back at 2010 and this year, you've had terrific financial growth. What's driving that growth, and what's the catalyst that makes somebody it's time to make the move to TIBCO? We've actually had outstanding growth and, as I've said, we believe we hit that proverbial tipping point. Becoming event driven or real-time, has now become not a nice-to-have but a must have -- being able to do customer upsell, cross sell, being able to do fraud detection, improve cybersecurity. The old model was try to build a better and bigger lock, but no matter how good the lock, there's a guy who picks the lock. So we make it event driven. We basically look at events and we do like a neighborhood watch. We look for suspicious activity and we see patterns and then cut off all access when it happens.
The catalysts are the explosion in mobility, the explosion in social networking, the cloud, as well as global competition where companies are being forced to do more with their existing assets, where companies need to get a bigger wallet share from their existing customers.
Who within the IT organization is the person who typically makes the buying decisions involving TIBCO? Historically it has been something that the CIO gets involved with. But increasingly we're seeing that the business side of the equation, the head of sales, the head of marketing, head of customer service, those kinds of people are now driving the process as well. When we were selling just the SOA part of it, it was more of a technology, infrastructure decision, but now, we're creating these event-driven applications like customer upsell, cross sell, fraud detection, it's increasingly becoming a sales, marketing, customer service, even CFO buy in.
Which companies do you directly compete with? It's simple; it's IBM, in one word. Take IBM's whole Smarter Planet campaign. I joke that I did an 'Inception' on IBM and had them spend their ad budget to describe what TIBCO does. There are other companies, like Oracle and SAP, now that try to do some of this, but the big gorilla for us is IBM.