Monday, July 21, 2008

On Historic Truth, Archeological Truth and hype cycle

In one of the past blogs I have referred to Agnon an Israeli novelist who received Nobel Prize in Literature - today I am using another known essayist, Ahad Ha'am (literally: one of the people), who had an excellent essay in which he makes distinction between two types of truth: archeological truth and historical truth.

The archeologic truth is more objective, and is determined according to the archeological fidings. Historic truth, on the other hand, relates to the perception, the mythos, sometimes the legends around it, but this what is perceived regardless of what happend.

Why am I writing all of a sudden about Ahad Ha'am ? -- the association came while reading the amusing Blog entry by Paul Vincent, entitled: CEP: hype, or the next best thing since sliced bread?

In our context, the archeologic truth looks at the reality of the EP market, while the historic truth looks at the perception. Let's look about the two sides of this equation.

First, as people have realized, it is not very easy to determine the reality of the market. There is a variance between the figures cited by analysts, and each of them probably is looking for a certain segment of the market. Pure CEP players are typically privately held and don't provide public account of their sales figures, while bigger companies who do, do not isolate the sales of their CEP sotfware relative to other software. On the other hand, if the CEP software has been critical to close a larger deal, then the entire larger deal should be attributed to the CEP sotware, since deals have a binary nature... In some cases the application which the CEP software is used for is a marginal application, and in some cases it is critical mission applications, and they also should not have the same weight. Tim Bass has proposed the "reference clients" as a yardstick, by collecting public announcements and press releases, as done last year. I have not been very impressed from the results and their ability to reflect the reality, for example, when IBM acquired Aptsoft, it has been published that Aptsoft at that point had 19 active customers, most of them from 2005-2007, yet in the reference customers table they have 4 - a big difference (I heard from other vendors also that these numbers are far from reflecting their cusotmer base as they see it). It seems that the majority of sales are not reported as public refernce customers -- there are various reasons, and may be I'll return to the issue of reference customers, but the bottom line of archeology truth is not easy to obtain.

Let's talk about historic truth now - perception is easier to measure ? -- we can measure it by the VC investment in a certain area, analysts reports, big vendors attitude and customer's perception. Let's look at all these parameters:

  • VC: As the EPTS gatekeeper, I am still getting membership applications from startups whose name I have never heard before. I estimate that there are 20-30 companies that are financed by VCs, and the fact that new ones are emerging is an indication that the perception of the VC community is that there is a potential in EP software.
  • Analysts: While Gartner has endorsed this area long time ago, other analysts have joined. A recent quote from Forrester says: “Forrester Research has seen an increasing level of interest in and adoption of event technologies in our recent data on software decision makers. Based on this interest we have significantly increased our ongoing research focus in this area". Again - the perception is that this is an area that the analysts should watch.
  • Big Companies: Big software companies, in many areas, tend to wait and let the smaller company play the first generations. In the recent year we have seen two of the big software companies - IBM and Oracle increase their involvement into the EP area both in acquisitions and self-investment. The other big software companies - SAP and Microsoft are showing signs of interest, again - this is an indication of positive perception.

  • Last but not least - the customers -- we can see interest in several indications - some surveys like the ebizQ market pulse which gave insight about the perception, and I have cited it before, there are some other indications -- like the amount of customer participants that the Gartner Event Processing Summit will succeed to attract (the fact that they succeeded to do it second time is an indication); OMG is constnatly doing CEP sessions in its meetings, like the one that Paul Vincent reports about, and general interest among customers. Note, that Gartner in one of its advertisments to their summit stated that "event processing is the future of software technology".

Thus - on the perecption front, it seems that the indications show acceleration and growth.
Alas, one may claim that these are only indications of perception, and not to real substence, and are results of over hype. There is some truth in event processing being a current hype, however, this is a natural phenomenon, as the hype cycle theory indicate - new technologies are moving through hype up and down cycles, and EP seems to be in its way up. Hype is also a good phenomenon, since it act as a catalyst and increase awareness, however, hype cannot replace substence, and my own opinion is that all the perception indications are not a result of hype only. Actually some of them are helping to create the hype.

The interesting question is how the the substence of value to the client and the derived market opportunity is being viewed from the point of view of the people who has to put money on EP software (writing in Blogs is much easier...).

To (try and) get some answers for this question we plan in the EPTS F2F meeting ("the 4th event processing symposium") two panels: the first one will consist of people from the business side of vendors (small and large) to provide their view, the other will be a panel of customers - two populations that spend money on this - and we'll pose them some interesting questions, and summarize it as a service to the entire community. Enough for today...

No comments: