Sunday, January 04, 2009

CEP 2009 Predictions

David Luckham has asked the CEP crowd to weigh in with their predictions for the CEP marketplace for 2009. While this is an interesting effort in mental masturbation, I think that you can only look foolish if you set yourself up as a prognosticator in an economic environment like the world is experiencing right now.

Instead, I would point you to certain facts that I have observed in 2008, and you can draw your own trendlines from these data points.

1) There has been a massive consolidation in the bulge-bracket financial firms. I know for a fact that most of the CEP companies had spent a lot of time and resources on POCs at some of the now-deceased firms. If a CEP vendor spent most of their time pursuing these IBs, then you can be assured that they lost some amount of money on pursuing these deals. Most of the acquirers of the struggling IBs (Wells Fargo, Bank of America) are not known for their pursuit of advanced technologies.

2) There has been a consolidation in hedge funds. Some are no longer with us. Most of the others have lost money and will have to start consolidating expenses.

3) The bulge-bracket IBs that are still around are consolidating expenses, and taking a very hard look at discretionary technology spending. In other words, it will be very difficult to convince the business to spend $250,000 on CEP technology because it looks "interesting". Technologies that allow machines to do what humans do now will be looked at favorable. Green technologies and data center consolodation (ie: expense reduction) are also looked at favorably.

4) The Gartner CEP conference was poorly attended by customers.

5) Cloud Computing is now the buzzword of the day. People do not go into a cold faint anymore when you mention that you are involved with CEP. Blog traffic is down in the CEP space. The bloom is off the rose.

6) Venture Capitalists are re-examining their investments. There is pressure on the CEP vendors to generate revenue. Several of these vendors had approached me with very interesting and peculiar financing deals in 2008. Some of the CEP vendors have had reorganizations and layoffs.

7) Several of the horizontal CEP vendors are now hotly developing for the financial vertical. Will these new products be used for alpha generation, risk reduction, or cost savings?

8) I get email frequently from people in the financial industry who have heard the term CEP, but have no idea how to apply it to their business. The interest is there. The ready-made solutions are not.

What does all of this mean in 2009? Although these are not predictions, things that I would not be surprised to see in 2009 are:

1) Consolidation of the CEP marketplace. It would be difficult to merge different CEP product lines. However, a larger company would be able to buy a smaller CEP vendor for a cheap price in order to get rid of some competition and to pick up some very good talent. (Hans and Tim predicted this.)

2) A push towards delivering realtime OLAP and integrated analytical tools. The CEP vendors will have to make it more difficult for IT staff to justify the development of their own CEP technologies. Ready-made stacks of CEP processing need to pushed out there. (This is analagous to Hans Gilde's "patterns".)

3) A greater push towards using LINQ as a streaming query tool.

4) The emergence of a new major player in the CEP marketplace, perhaps with CEP technology as a free add-on to their existing technology stack. This would make stream-based processing more mainstream, but would set a new (very low) price point that other CEP vendors would feel compelled to match.

©2009 Marc Adler - All Rights Reserved.
All opinions here are personal, and have no relation to my employer.


Marco Seiriƶ said...

Great to hear some comments on the state of the CEP business from the user's side. Your observations match to a degree to what I see from the vendor side.

Even though I think the times will be hard for many vendors during 2009, I'm still convinced that there's good solutions to many problems in CEP.

But it seems that many vendors think that the interest is growing much faster than it actually is. Thus burning all the good cash too early.

Even if the CEP revolution takes a bit longer I'm pretty sure it will happen and that the players with most endurance will be the winners at the end. But it will be worse before it gets better.

Sadly the VC/startup culture does not support slow steady growth and I'm not sure about the patience of badly selling products at the bigger companies either. So 2009 will certainly give us some interesting changes in the CEP landscape.

Encik Wan said...

Open source CEP, Esper will gain more market share?