Tibco founder and CEO Vivek Ranadive has always kept his unconventional company outside of the enterprise-software mainstream, pursuing instead a range of technologies that help other companies' software work together as well as some complex products designed to turn the concept of real-time business into a reality.
But this year, in what Ranadive described in last week's earnings call as the "tipping point" that has left Tibco's business in the "pole position," the marketplace imperatives are shifting away from the traditional roster of blunt-force, transaction-oriented enterprise software products and toward the more-flexible, more-precise, and more-forward-looking tools that have begun to deliver on the massive promise of real-time business, real-time visibility, and real-time decision-making.
And in so doing, the market has also helped Tibco move from quirky outlier to mainstream innovator as vertical industries from financial services to pharmaceuticals to manufacturing, retail, healthcare and others are aggressively seeking to transform their perspective on the world from that of a backward-oriented historian to that of a forward-looking opportunist.
That shift into the sweet spot for Tibco—and Ranadive's parallel upturn in feistiness—are both substantiated by the company's financial results: for the three months ended Aug. 31, Tibco posted revenue of $184.5 million, up 23% year over year and marking the ninth consecutive quarter the company has beaten its consensus revenue estimates.
In that quarter, Tibco booked 13 deals for more than $1 million, including one for $8 million and another for more than $5 million, and the company is projecting fourth-quarter revenue of between $225 million and $230 million, which would represent a sequential quarter-to-quarter increase of about 23%.
In the transcript of Tibco's earnings call from late last week, Ranadive describes a company showing robust growth across all product segments and from a wide range of geographies, vertical markets, and sizes of companies:
"We booked new quarterly records for a non-Q4 [quarter] in license revenue, total revenue, operating profit, and EPS, while we once again broke new all-time records in services revenue and maintenance and support revenue," Ranadive said.
"We continue to see the mainstream appeal of our software platform with double-digit growth rates across each of our major regions in the Americas, Europe and Asia Pacific, plus seven different verticals contributing 5% or more of our business and a healthy mix of deals this quarter, big and small."
During the call, when an analyst asked about competition, Ranadive offered this confident assessment: "In general when we look at our competitive profile of who we see, I think 80% of the time it's IBM, 15% of the time it's Oracle, and then 5% of the time it's everyone else."
That perspective on competition turned from confident to aggressive in a phone conversation I had with Ranadive Tuesday evening. When I asked why the booming market for Tibco's event-driven software that enables real-time visibility and operations isn't attracting more players, he said, "The traditional companies are trying to come after this market but they simply don't have the goods.
"As you know, SAP has tried for some time but hasn't figured it out, Microsoft tried but has pretty much given up, and even Cisco has been trying to move into the space by using the terms that I've come up with and the ideas that Tibco has pioneered—Cisco tried to go with 'application-oriented networks' and 'real-time' but can't make it work," the soft-spoken but increasingly defiant Ranadive said.
And when I started to mention the efforts by IBM and SAP and Oracle to deliver systems and software that can operate in real time, Ranadive jumped in, claiming that those companies—for all their size and resources and capabilities—can't make the leaps into the future that Tibco has been able to make because they are weighed down by all that mass and all that inertia:
"These are all 20th-century companies grasping at the question of 'How do we become 21st-century companies?' " he said. 'How do we change and enhance our core competencies? How do we marry the three great trends of today: event-driven models, cloud computing, and mobility—how do we marry those without destroying our legacy?' "
On top of that, he said, those big companies with vast rosters of legacy products and entrenched business units find it hard to embrace questions such as "What does the customer of the 21st century look like, or what does the Facebook phenomenon mean to my company, my products, and my customers?"
As a result, he says, "The odds are stacked against them—for example, why couldn't Accenture become the next Infosys? Because they would have had to cannibalize their own existing business—that's a terribly hard thing to do.
"And it's the same in the cases of Oracle and SAP and IBM: to become a 21st-century company, they would have to eat their own children. That is true for all 21st-century players. Oh, they'll still be around and they'll still make some noise, but mostly they'll just live on maintenance."
Inside Tibco, one way in which that 21st-century profile is playing out is in the company's ability to build out an expansive services business at a time when the traditional enterprise software companies are loathe to try to do any such thing because of the limits of scale and expertise.
But Tibco, Ranadive says, has been able to surmount those obstacles at a time when the unique nature of its products and the nascent needs of its customers are requiring the company to staff out aggressively.
"In fact, these 20th-century companies like Oracle and SAP have built up substantial service organizations but they deal with 20th-century problems," Ranadive said.
"On the other hand, we still have all the usual suspects as partners but on top of that our clients are increasingly looking for talent that has an understanding of these advanced technologies. In a typical engagement we might have a customer with a couple of hundred people on a project and Tibco provides 10% of 15% of them.
"But that is changing—rapidly—and as a result our offshore services business has tripled as we have come across massive—truly massive—opportunities," he said.
"On Sunday, I met with one customer who wants an escalation in Tibco people from the 40 now working on the project to more than 200. This is happening because we want to move them from their old 20th-century infrastructure to event-driven platforms and in order to achieve that with such new technology, we have to do everything.
"The tipping point has been reached, and an avalanche of people wanting to do this has started. And here's the proof: we are seeing a 10-fold increase in the number of people our partners are training—but we still have to go it on our own."
This industry needs more of that defiant spirit, and what it really needs as well is more companies growing at the rate Tibco expects to grow: about 23% from the third quarter ended Aug. 31 to the fourth quarter ending Nov. 30.
At the same time, I think Ranadive and Tibco would do very well to grow as rapidly as they can in the next 6 months or so because in spite of his zealot's protestations to the contrary, IBM and Oracle and SAP are going to come after the real-time market like hungry lions on a herd of young antelopes.
As they do, it is certainly reasonable to expect that one of them or an adjacent company will look to acquire to accelerate its play in this strategically essential part of the market. But Tibco's been on the list of "Top 5 Companies That Will Definitely Be Acquired This Quarter" for the past three years—and it's still fiercely independent.
Either way, this is yet one more reason why I believe that the IT world of 2011 will absolutely rock the CIO world with new technologies, capabilities, and business-value potential. And I also believe that Tibco, in one form or another, will be a major catalyst in the wild transformations to come.
Bob Evans is senior VP and director of
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