Among the top-tier software vendors, imitation is less a form of flattery than a necessity to keep up with the competition.
IBM on Wednesday made its first significant foray into the emerging but relatively low-profile complex event processing (CEP) market with its acquisition of privately held AptSoft. CEP applications aggregate information from corporate databases and applications in real time and applies rules to discern patterns and events that otherwise would go unnoticed.
Having this automated “trigger” can give companies the ability to identify and anticipate problems and opportunities culled from seemingly unrelated events before they transpire. To date, CEP applications have mostly been deployed in the financial services industry—particularly at hedge funds and brokerage firms where detecting trading patterns on the fly is critical—but will soon find a home in other verticals such the advertising, transportation and health care industries.
CEP, along with business process management (BPM) and business intelligence (BI) applications, offers more bang for the buck for enterprise customers taking their first baby steps toward a full-scale SOA
Tibco, with its BusinessEvents offering, along with Coral8, Streambase and Aleri are among the most prominent independent CEP vendors developing applications that dig through legacy data to help predict future business events.
One can only wonder if these companies’ executives are already predicting their role in what some analysts see as a consolidation frenzy on the horizon.
“I don’t know who will go next,” Roy Schulte, an analyst at Gartner, told InternetNews.com. “Many of them will be acquired during the next several years so it’s hard to know the exact order. Some big vendors haven’t announced offerings yet, so they might buy a company to catch up fast. An ambitious BI company might buy one of these vendors too, although the BI companies are themselves a target for acquisition.”
When a competitor like IBM makes a move, the competition can’t help but take notice.
But when Societe Generale, France’s second-largest bank, on Thursday confirmed that a rogue trader lost more than $7.1 billion—roughly an entire year’s worth of profits—through what the bank called “a scheme of elaborate fictitious transactions,” it captures everyone’s attention.
“You can bet that we’ll be placing a call to Societe Generale,” said John Morrell, director of product marketing at Coral8, said in an interview with InternetNews.com. “We’re seeing a lot of interest in our product from the investment services area. Our model is let your systems process and analyze the data, like trading patterns, and then tell you when something important happens so you don’t have to keep constantly asking your systems yourself.”
The Societe Generale trader who made the ruinous trades was responsible for basic futures hedging on European equity market indexes, essentially betting billions on how the markets would perform in the future, the company said.
Morrell said one customer is using his company’s Coral8 Engine to identify illegal trading activity and patterns to protect it from exposing how many shares of a particular stock or stocks it’s holding.
“Another great thing about our CEP system is that it’s very modular,” he said. “Customers can start with a base set of analytics for monitoring their Web site and then extend it to customer abandonment. From there, they can expand it to fraud prevention and eventually to real-time adjustment of marketing campaigns.”
Beefing up SOA offerings
On Wednesday, IBM said it was adding AptSoft’s Director application to the existing business process management (BPM) functionality already residing in its flagship WebSphere middleware suite. The aim is to strengthen IBM’s SOA and BPM portfolio and give customers the “most intuitive tools for business-led authoring and event management.”
Adding these complimentary CEP applications to the core middleware suite—just as Oracle and SAP have done with business intelligence through their respective acquisitions of Hyperion Solutions and Business Objects—gives corporate customers added incentive to commit to their SOA-related endeavors. Aite Group, a Boston-based research and consulting firm for the financial services industry, estimates that companies will spend more than $1 billion on CEP-related software and services by 2010.
“CEP is compelling because of BAM, business activity monitoring, as in dashboards and similar tools for near-real-time situational awareness,” Schulte said. “CEP tools cost less than hand coding the equivalent function in an application and enable the solution to get into production in less time. The next few years will see fast growth in this type of application.”
For now, Morrell said Coral8 sees a long and successful run as an independent CEP provider.
“We’re independent and plan to be for as far as I can tell,” he said. “It’s hard to say how much consolidation there will be. There are some new folks that have come in recently. We’ve been looking at this type of architecture for the last six years or so. It’s taken a while for CEP to really start moving. But it’s caught on now and will grow very rapidly.”