Cyberstrategics

In Some Footnotes to Recent Blogs Opher provides a bit of cross-blog-fodder (CBF) for his readers (and apologies to Opher for using his post as a introduction),

…customers started to see Blogs as authority, and this can be of course dangerous since not everybody who Blogs about something is really an authority…

Of course the blog-fodder is that in the same post, Opher posts may have oversimplified the economic fundamentals of the how the software industry generally performs during deep economic hardships, saying,

… everybody is trying to reduce costs these days, and one of the ways to do it , automate processes that are event-driven by nature…

The statement above would be true if the return-on-investment can be realized quickly.   Generally speaking, there is seldom (if ever) a reduction in costs when initiating most software projects.   Sure, tossing out expensive commercial software and replacing with open source might seem like a huge immediate cost savings, but soon the development and O&M costs creep back in. However, companies do often experiment and prototype software platforms that claim to lower development and O&M costs.   This is a more plausible explanation for most increases in CEP/EP platform related sales.

Most major IT projects take considerable resources, especially in the specification, design, development, testing and implementation phase. Generally speaking, the return-on-investment can take many years.   This a well known fact in IT projects.   Organizations generally do not spend very much money on IT projects when there is a serious economic crisis.  They look for ways to cut development and O&M costs.  Well, they do this even during the good times!

My comments are not based on theory.   In my prior consulting practice, I was a very senior advisor to CIOs and CIO-level executives in both government and industry for nearly 15 years.   During budget crunches, IT projects and initiatives, even budgets to automate, tend to get whacked.  However, projects that promise to lower development and O&M costs generally survive.

However, you don’t have to believe me.   It is easier to simply look at the stock market.

If IT-related companies generally reaped benefits from troubled economic times, the stock of IT companies would go up, not down.     Publicly traded companies are held to a much higher legal, regulatory and ethical standards.  So, let’s look to the publicly traded companies for clues.

For example, compare TIBX, PRGS, MSFT, ORCL, IBM and XLF over a one year, 6 months and 3 month period.  You will easily see that all of these stocks closely track the overall financial index, represented by XLF.  Of course, the financial have been hit much harder than the software companies.  Most analysts have also opined that software sales would suffer from the current deep downturn.

Many of the financials have been struggling just to keep from going bankrupt.  Many firms have gone bankrupt!  These firms are not going to be spending very much money on  IT initiatives.  In fact, they will cut back on most IT projects.  To do otherwise would be irresponsible.

Mark Palmer blogs that Steambase is doing very well in these troubled economic times.   We have no reason to doubt Mark’s claims.  It is possible that some companies have the view that event processing engines (like Streambase et al) could actually lower development and O&M costs.  On the other hand, since private companies do not have the same legal and regulatory reporting standards, it is prudent to take Mark’s claims with a grain of salt and look to the public companies; and most public companies are cutting back expenses during troubled economic times (cutbacks in travel, compensation, bonuses, research and development, IT expenditures) and laying off employees.

In closing, we have no reason to doubt Mark and his claim that Streambase had their best Q in Q4 2008. On the other hand, we have yet to see publicly traded companies making public statements that event processing software sales (of any kind) is helping them stay in good financial health during these very difficult times.

Filed under: CEP News and Events, Complex Event Processing, Event Processing, StreamBase, Systems Engineering, TIBCO