The Two-Second Advantage: Talking with TIBCO’s Vivek Ranadivé
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a million customers every month. They were using 20th-century technology and looking at the [customer churn] information six months after the fact. They couldn’t solve the problem. We gave them the two-second advantage. Now you are able to see that this guy is a valued customer, and if you drop his calls six times in one 24-hour period, he is probably going to switch to another service. We pick up every single event—so now, after the fifth dropped call, we can offer free SMS messaging, so he doesn’t switch. To do all that, you need access to the data in real time. You need a real-time rules engine, complex event processing, adding context to that data to find patterns, and then you need a business process that you can activate in real time.
X: I’ve covered a company in Massachusetts called Progress Software that also emphasizes complex event processing. How do TIBCO’s offerings compare?
VR: Progress uses a point-to-point architecture. They are not inherently real-time in nature. The analogy is, suppose you want to do a talk show and you want to have 10 listeners. But suppose radio hasn’t been invented yet, and all you have is the telephone. Progress is the telephone. The first guy calls up and says, “Hey, what’s the latest news.” Then the second guy calls up. And so on. When the eleventh person comes along, they have to wait in line. The quantum leap was that was my invention was when something happens, it goes out like a radio signal, and you can tune into subjects the way you would tune into a radio station. When the 101st person comes along it does not degrade performance for the first 100.
X: You’re talking about the bus—the B in TIBCO. So that’s still the idea at the heart of the company’s products?
VR: It all starts with the real-time infrastructure, then builds on top of that. In the human body, the nervous system is the bus. Imagine if your nervous system wasn’t real-time: you’d be getting burned all the time, you’d be getting hurt all the time. Then you have the brain that picks up billions of events every day and makes sense out of them. The brain is what sees that the cell phone company has dropped five calls; it looks at the events and the historical patterns and makes a prediction. The same predictions allow you to know that a customer on a website is playing with a mortgage calculator and you better make him an offer before he leaves the site. They allow you to see that a guy is using an ATM in Boston and five minutes later he’s using an ATM in New York City, so that could be fraud. It says that these transformers on the grid are vulnerable and rather than letting them cause an outage, let’s do something about it. I could go on and on.
The third part of what we do is the business process management capability—the muscles that take action and allow business processes to work. I was talking to an East Coast supermarket chain, and they wanted help with their data warehouse. I said “Aren’t you in the wrong place? Shouldn’t you be at IBM?” And they said, “No sir, we want to operate in real time. When the customer leaves the store, it’s too late—we want to make an offer while they’re there.” We showed, for another retailer, that if a customer is buying seeds for their garden, there is also a very high probability that they will also need some new garden furniture. So you can make an offer on the spot and have an impact on your top line.
X: You started talking about the importance of real-time awareness of business data even before you started TIBCO. At the time it was a novel message, but in many ways it seems like those ideas have sunk in and are completely accepted now. Do you agree?
VR: I think the tipping point in the movement toward real-time awareness and predictive technology has really only been hit in the last 12 months. We have seen a tripling in our offshore service business from a year ago. When we do a beta test, we used to have six or seven customers, but when we announced our last beta we had to shut the door at 500. Now when you talk to business people, they understand that the nature of customer relationship management used to be that people call in when they have problems, but what if you can avoid the problem in the first place.
X: What technological changes have brought businesses to this tipping point?
VR: It’s a combination of things. The cost of solid-state memory has plummeted. An iPhone now has more memory than a big computer did 10 years ago. Also, our type of software has now made it possible to make use of information in real time with a very simple … Next Page »