Cyberstrategics

Penny Crossman of Wall Street and Technology wrote “Critics Give Aleri-Coral8 Merger High Marks, but CEP Bloodbath Continues” which included a nice interview with Aleri CEO Don DeLoach and Coral8 vice-president of product marketing John Morrel.

Aleri and Coral8 merged, in my opinion, because both companies are struggling in the current market and combining their respective customer bases gives them an opportunity to cut costs - and hopefully survive.  Aleri gains some very valuable Coral8 customers like Citigroup.  This is a good move on Aleri’s part, and we know they scored some big points with Citigroup, as evident by Marc Adler’s jubilant, orchestrated praise for the merger.   As a side note, I know of one large software company that (a few years ago) purchased a small company at the request of one of their biggest customers, so it is not unheard of for companies to do as Aleri and Coral8 have done.

Unfortunately, experience teaches us that mergers like this tend to fail.   Merging two engineering teams with different software architectures is not a good way to spend time and money in a very challenging market.  In fact, what you want to be doing is focusing on building solutions for your customers, not having internal discussions on how to merge to different platforms with two different proprietary languages.   It is a very rare event to see this type of merger succeed even under the best economic conditions.    Under the current conditions we all call “the global economic crisis” Aleri and Coral8 are hoping that they can survive as an integrated whole.

StreamBase has very quickly come to the same conclusion in What Does the Coral8 / Aleri Merger Mean for the CEP Industry?, hoping to exploit the weakness and uncertainty of a technology merger with a migration program for Aleri-Coral8 customers.   I think this “dog-eat-dog” competition speaks very loudly for the state-of-the-industry when one small private venture-capital funded company announces an “amnesty program” for the customers of two other small privately funded companies.     Don’t you see the red flags waving?

Adding a touch of poetic irony to this merger story is the video interview comments by Don DeLoach who praises the future of “CEP software” because of risk management and regulatory issues in very difficult market conditions.”    As someone who worked as a trusted adviser to government and industry for nearly 20 years, I can state, unequivocally, that the best “risk management strategy” is to buy from a large company with a certain future.   Buying enterprise software from a small company like Coral8 is simply a poor business decision (sorry Marc), from a risk management perspective.  This is why we tend to grin-and-grimance when we read about how “CEP software can solve and mitigate risk management issues” when most of the really important risk-related decisions in business are made at a level where technology and dashboards are irrelevant.

As a sidebar, (my apologies for the shameless self-promotion to follow) when consulting for the DOD a number of years ago, one of my roles at the CIO level was to convince a large software firm to either buy or absorb, via their partner program, a small software vendor selling to the DOD.  The results ended in this recommendation on LinkedIn,

“Top-notch architect, big-picture concept guy that brings to the table a unique combination of vision and insight and has the technical knowledge to back up his evolutionary (and sometimes revolutionary) strategies. … has the ability to develop consensus in situations previously thought impossible. He’s definitely a guy you can count on as a path-finder and trusted technical consultant.”

(LOL) Aleri, Coral8, StreamBase and all the other companies shamelessly self-promote; so I don’t think readers will be too unhappy if I put up a link to nearly 40 professional recommendations and one quote on my blog.

Without a doubt, there is nothing technically earth-shattering in these so called “CEP engines” that is worth the risk of an expensive enterprise buy from any small company in an unproven market.  Downloading software for free and using it in development (Coral8’s model) does not necessarily translate to large purchases.   In fact, it can have the opposite effect.  We evaluated Coral8 for a production web server monitoring application (for example); our team did not find any benefit versus going with free and open source. In fact, the FOSS was easier to configure and more extensible.

As someone who has spent much of his career advising executives on enterprise network-centric IT, I advise as follows:

1. Avoid proprietary platforms and processing languages like the black plague.
2. Avoid technologies that are supported by a small user base like the scarlet plague.
3. If you must purchase proprietary software, focus on vendor stability, not short term feature sets.

If you don’t want to believe me, or you are a member of my emerging “anti-fan club” take the time to read the nearly 40 recommendations on LinkedIn with an open mind.  After all, if Aleri, Coral8, StreamBase and everyone else can self promote without customer recommendations, then, at a bare minimum, I should be able to self-promote with a few customer references, don’t you think?  Then, you can decide if you want to listen to software vendors trying to sell you something, or someone with over two decades of experience advising large companies (some very large) and working with smaller ones.

Aleri did Citigroup a favor absorbing the Coral8 products. However, this short term solution will more than likely be a longer term flop.  These are two very different companies. Coral8 was a developer friendly, laid-back Silicon Valley company.  I did not find their software particularly useful for our project; but I have always liked the company, the people, and their culture.    Aleri folks, on the other hand, are hard hitting, street fighters from Chicago and New Jersey.   The “street fighter” nature of Aleri is certainly useful on Wall Street where street-fighting is the name of the game.  However, integration of these two very different companies, “flip flops” into “army boots” will not be easy.   Enjoy reading the hype, but keep your feet on the ground and realize that these companies are in dog-eat-dog, amnesty program mode.    Invest wisely.

Better not to “commit the crime of a wrong investment decision” that to seek “amnesty” afterwards.

Filed under: CEP News and Events, Complex Event Processing, Coral8, Cyberstrategics