Doug Safford from AllState Insurance gave a fascinating overview of a large Insurance IT department’s migration from a high-overhead ($1B pa budget!) mainframe shop to an architecture-driven organisation. This primarily revolved around the introduction of a standard ESB - a business event bus in this case, with a standard middleware solution (TIBCO EMS) with a standard framework (to handle the governance needs of tracking, logging, etc). It also involved much simplification of the IT processes: going from 10 to 2 data centers, for example, and from 15,000 (!!) to just 4 (!!!) AS400-class servers.

Doug mentioned that the enablers for their Business Process Management were frameworks, services, events and rules. Of these:

• Services are carefully managed: they have deployed 4,000+ TIBCO BusinessWorks engines in the service and framework areas!
• Moving to an Event Driven Architecture allowed much more business control of their business events, such as standardised routing and de-duping. The events feed their CEP engines as well as their Data Warehouses for analytics.
• Separation of the business logic / rules was seen as critical in such a regulated industry; they could not afford to have volatile rules replicated in software code around their systems. AllState have standardised on TIBCO BusinessEvents as their rules engine (with 800+ engines today, and the fastest growing tool deployment for them).

In terms of the ROI for their investment, Doug mentioned:

• Marketing campaigns can now be deployed from new in weeks rather than 6-12 months, or from existing campaign templates in days rather than months.
• Rule changes, such as for routing leads to agents, can be done overnight, usually from the BAM reports. In one example they monitored the success rates for agents in closing business, re-routed more leads to them, to gain a 15% increase in closing rates…

I would not be at all surprised to see this AllState IT transformation to be covered in business management books and MBA programs in future!

An interesting use case from the travel industry came up in conversation recently: an airline decided to upgrade its fraud detection efforts to be real-time and event-driven. This exploited their existing analytical applications for fraud detection in areas like ticketing, but made sure the events fed to them and the responses from them could be correlated and actioned at the time of the fraud (rather than in a report after the event). Result: something like $12M savings in the first year.

Not bad. Perhaps TIBCO should change the “2 second advantage” catchphrase to something like the “$12M advantage”!

Hopefully this customer will publicly present this application (along with some of their other CEP applications) at TUCON this year…

Note Joe doesn’t ask if it is required, necessary, or useful - just affordable.

It’s an interesting question. Here are some additional thoughts:

1. EDA and CEP does not replace BPM, SOA or databases.

Events still drive processes (human) and services (IT) - and indeed CEP can be thought of as an event driven process or service. And events end up being needed to be stored for historical analysis / analytics - so a database is still necessary somewhere in the architecture…

2. Are EDA and CEP less affordable than SOA and databases?

Not really. The technology is getting pretty mature now - consider the ubiquity of messaging middleware - and CEP incorporates the “best practices” of IT from SOA and database worlds - e.g. declarative rules, model-driven, object-oriented, distibuted storage, event streams and patterns … but this is still a “value” metric, not an “affordability” one. The affordability comes down to development and deployment costs versus ROI: development can be quicker, and deployment can often avoid a boatload of application server nonsense (i.e. administrative stuff that is not business logic). And the ROI of the ensuing “operational intelligence” can of course be immense.

3. Is “open source” the saviour of affordability?

I saw this was one (and a typical) response to Joe. Again, not really - open source tooling has its place, especially for educating ourselves. But affordability is a lifecycle issue not a development tool cost - and I am reminded by the customer who spend a few months trying to build something with an open source tool that was solved in a few weeks with TIBCO BusinessEvents. And most CEP vendors provide evaluation copies that mitigate up-front costs. Remember “open source” is just one more business model option for “vendors” (where the “vending” is of support, maintenance, services etc).

4. Is there any proof of affordability vs value etc?

I can’t say I’ve come across many folk who have said “nice but we can’t afford it” - from a cost perspective anyway. Often IT budgets are consumed in getting existing IT systems functioning - the affordability is affected by the non-affordability of existing IT infrastructure. Most EDA and CEP systems of course integrate rather than replace conventional IT, and there is an additional emphasis - not burden - on IT architects in organisations to understand what fits where. But architects I have met like EDA and CEP (albeit I am unlikely to meet uninterested architects!). Some use cases show pretty powerful ROIs.

5. If EDA and CEP is affordable, what is the problem?

Entrenched views. CIOs bought up on data-first mentalities. Not enough “thinking outside the box”. Anything that resists paradigm shifts. Which is fully understandable, and why there will be steady, not revolutionary, growth in CEP and EDA markets. Although the published growth data looks pretty impressive!

The full discussion is on ebizQ here.

The end-of-year analyst report (aka “earnings call”) is where financial analysts listen to and question the corporate officers of a company like TIBCO on their end-of-year report card. TIBCO’s 2009 report (recorded Dec 22 2009) delivered by the CEO, COO and CFO had some comments relevant to the CEP business:

• TIBCO innovation in event store-and-forward approaches: the release of TIBCO ActiveSpaces
• “[I]t is actually substantially more valuable to have just a little bit of the right information, at the right place, at the right time and in the right context than having all the information in the world six months after the fact.” This followed 3 customer examples doing TIBCO-based CEP (a “Western states utility”, a “major Asian bank”, and a “major Indian mobile company” -  covering energy, finance and telco industries).
• On EDA: “[T]here’s going to be a systematic shift from transactional to event driven architectures … transactions don’t pickup threats and opportunities … there is a systematic shift, it’s like a change that’s taking place …”
• On BPM: “We’ve seen a number of situations where a customer actually went away from say an ERP CRM type implementation as in the case of the Asian bank and went through an event driven inbound marketing approach.”
• On BI: “The traditional BI players are largely reporting systems … they allow you to analyze and mine data after the fact and what we do is we look at streaming events before and allow you to anticipate what’s going to happen as it is about to happen. Then, we also with our Spotfire product have taken the visualization of it through a whole different level. I think those are the two elements, the predictive real time nature versus the reporting after the fact nature and the visual technology that goes with it.”

Computing (a UK IT weekly) has an article called Tools of the Architect’s Trade. In it, Gregor Baus from Air France describes some aspects of their EDA system for “smart boarding” - utilizing TIBCO CEP technology, as it happens. Note that “smart boarding” is about intelligent passenger operations, and is nothing to do with CIA interrogation techniques…