Category Archives: TIBCO Spotfire

TIBCO Announces New COO and CTO

MattQuinn NelsonPetracek TIBCO Announces New COO and CTO

It’s been a busy month at TIBCO. And now, we’re pleased to announce the promotions of two key employees: Matt Quinn and Nelson Petracek to chief operating officer (COO) and chief technology officer (CTO) respectively.

As we ramp up the TIBCO Connected Intelligence Cloud, Matt’s new role as COO is greatly expanding. He will now head all the operational aspects of running and growing our cloud business.

“Our customer-first mindset is one of the many reasons I’m proud to be part of the TIBCO team,” said Quinn. “When customers choose TIBCO, I want to ensure that they receive a high-performing service that propels the growth of their businesses. I am excited to continue expanding and innovating to meet every customer need.”

Nelson is also taking on a strategically pivotal role as CTO as we continue to see opportunities for our customers in rapid developments around new technology. Able to bridge the gap between business and IT, Nelson works with customers to identify and define the appropriate use of various technologies and architectures.

Nelson has been with TIBCO for 11 years, most recently leading our Strategic Enablement Group focused on various areas of innovation including cloud, blockchain, low-code apps, and natural language processing. He comes to TIBCO from Informatica Corporation’s Emerging Technologies Group, where he was responsible for growing the company’s global tech footprint.

With these two new promotions, the team is poised to help bring TIBCO customers to the next level of digital innovation.

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Data as a Feature: The New Differentiator for Software Builders

iStock 639637200 e1517933445411 Data as a Feature: The New Differentiator for Software Builders

It is a great time to be alive if you are a technology consumer. The era of “there’s an app for that” has quickly evolved into the era of “there are 10 apps for that”, meaning users have more choice than ever over which applications they adopt. Lower barriers to developing and providing an application have lowered the common denominator for software builders.

With an influx of new applications, product managers are having to find creative new ways to differentiate their offerings from the pack. User experience has proven to be one of the new differentiators and, in many in cases, is perceived as more important to users than core features and capabilities. In the new era of software, the best applications—the ones that stick—are those that pair great user experience with the powerful potential that lies within data. The best applications treat data as a feature of their product or service.

What exactly is “data as a feature”? It is the act and process of treating data as a core component of an application in a way that delivers value to the end user. One of the primary drivers for any product manager is to build a product that helps users achieve a goal or set of goals. When designed and packaged in the right way, data is a potent asset that allows users to reach goals and appreciate the full value of an application.

Need proof? Look at consumer applications like and Strava—two of the most successful apps in their respective domains. took the traditionally difficult task of deciphering financial information and made it easy for virtually any user to intelligently manage their finances. Strava accomplished the same feat in the world of personal fitness by allowing users to train smarter and reach cycling and running goals. Both applications provide highly visual interfaces that allow users of any competency to intuitively interact with data. Having these data experiences within the context of the application allows users to not only consume helpful insights, but act on those insights at the point of consumption.

And although data as a feature started in consumer products, business applications are capitalizing on the same practice as well. The HR & Finance application, Workday, uses thoughtfully designed charts and visualizations to give its non-technical, non-analyst users the power to make data-driven decisions around recruiting and workforce management.

Software product managers are a rare breed. Not many people have the creative vision, technical chops, and pragmatic decision-making skills that come with the job of product management. To meet demands of the next generation of application users, product managers must employ all of these weapons and look for new ways to differentiate their products from an increasingly crowded market. With a surplus of data at our disposal, many software builders are unknowingly sitting on gold mines of untapped data that can be unlocked for their users. By treating data as a feature, product managers can make stickier applications by helping users reach goals faster and more confidently with data.

To explore the concept of data as a feature and learn key considerations around embedded analytics, download the complimentary new O’Reilly eBook, Data as a Feature: A Guide for Product Managers.

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Enterprise Blockchain: How is this Different from Bitcoin? Technology & Use Case Comparison

enterprise blockchain Enterprise Blockchain: How is this Different from Bitcoin? Technology & Use Case Comparison

“The distributed-ledger technology that undergirds bitcoin… could change the financial system; think the Internet before browsers.” – THE BROOKINGS INSTITUTE

I think this is an understatement, as blockchain technology will disrupt many industries, not just the financial industry. Before we look at the impact this technology will have, let’s review the basics of blockchain technology. The individual pieces of technology have been around for a long time, but combined they came together under Bitcoin that is today a multi-billion-dollar industry.

Blockchain is used in two major categories of solutions, namely public and private or enterprise blockchains. Let’s review the similarities and differences.

Many similarities exist, but the major ones worth mentioning are:

  • Both aim to be a decentralized peer-to-peer network where each node has replica of shared data that is digitally signed.
  • The replicated ledger is kept in sync through protocol called consensus. Different forms of consensus are used by different blockchain solutions.
  • Both provide certain guarantees on immutability of ledger.

There are also very important differences worth noting:

  • Who is allowed to participate?
  • Who executes consensus protocol, and what protocols are used?
  • Who maintains shared ledger?
  • How much data storage is available?
  • How do we Integrate the blockchain into the existing organization architecture?

Public blockchains

When it comes to public blockchain implementations, Bitcoin was the first and is the largest followed by Ethereum based on market cap. What is Bitcoin you may ask? It is a “digital dollar”. That’s really all it is—minus all the formal regulations that come with a bank (which is what makes it such a disruptive concept). It’s not a technology. It’s not a company. It’s your money, held in a digital form. You can buy Bitcoin through sites like Coinbase to mention just one.

Ethereum’s coin value is called “Ether” and is used by investors to buy into initial coin offerings (ICO) opportunities. The big difference to Bitcoin is that it can be used to build new programs. Enterprise Ethereum is a lot more robust, allowing the building of decentralized apps on top of it.

In public blockchains, storage is limited. For a long time, Bitcoin only had 1mb per block of transactions and it recently changed to 8mb with segwit2. As you can imagine, this is not nearly enough to run any notable transactions that the enterprise requires.

Today, bitcoin only executes about 280K transactions per day and the reason for this is that it takes about 10 minutes to confirm a block of transactions. Again, this is definitely not enough transactions for any enterprise use case. Organizations requires multiple millions of transactions per day throughput before it will consider blockchain and their processing platform.

As you can see, public blockchains are definitely not designed for use in the enterprise. A completely new set of requirements requires a solution that delivers for the enterprise.

Private blockchains

When should we use a blockchain, you may ask, we could apply blockchain to many different scenarios, but every scenario does not require blockchain. There are, however, scenarios where blockchain could add major advantages compared to the traditional system architectures. One of the use cases are when we have shared business processes with organizations in different industries like financial services, manufacturing, and retail.


Where public blockchains provided cryptocurrencies to incentivize miners to do their job and not corrupt the system, private blockchain participants have different reasons for doing their job and not to corrupt the system, and digital tokens are not required. In some cases, however, digital tokens are used by a specific user to represent an asset on a blockchain. Compare this to the old days, you could store physical gold with a goldsmith and he will give you an IOU in return. These IOU’s could be transferred to other users, or you could give the IOU to the goldsmith and get your gold back. A token is a claim to an asset. These tokens that represent value can also be transferred from one user to another. One example of a token that represent value is the Gene-Chain Project that allows researchers to exchange tokens that represents DNA that contains ethnic background for research reasons.

Data storage

Imagine a claim for a medical procedure done by a medical provider. These claims contain huge amounts of data and the 1mb or even the 8mb block size on Bitcoin is not nearly enough to store this data, especially if you think how many claims are processed by healthcare payers and providers. Data Storage is a very important consideration when it comes to blockchain solutions. Companies like Swarm, BigchainDB, and Storj claim to provide scalable blockchain databases with low latency and powerful functionality to automate business processes. From an economic point of view, Swarm allows participants to efficiently pool their storage and bandwidth resources in order to provide the aforementioned services to all participants. These storage solutions act and feels like databases but they provide some blockchain characteristics.


Three distinct aspects of integration exist when it comes to blockchain integration: technical, transactional and organizational. Technical integration is the one aspect where TIBCO can help differentiate. A blockchain solution does not live in isolation. Like a BPM process that requires external data to function effectively, blockchain solutions requires information in the correct format and interaction from other systems to provide a complete solution. This is where TIBCO can play a huge role. TIBCO integration components are uniquely created to allow enterprise blockchain solutions to communicate to the other systems in any enterprise implementation. With the recent launch of  TIBCO Cloud Integration, the TIBCO integration stack has become even more powerful.


One of the biggest barriers for mainstream adoption of blockchain today is scalability. Private blockchains provide much greater scale, but it is not yet enough. Currently, all blockchain protocols like Bitcoin, Ethereum, Ripple etc. have a limitation in that every node in the network needs to process and maintains a copy of every transaction. That means that the processing can never exceed the processing power of one single node. Thus, to increase processing throughput you need to increase the performance of every node in the network and this is impossible in public blockchains. In order to fix this problem, you need to limit the number of nodes in the network without losing the trust of the network. There are multiple possible solutions being worked on to fix this problem namely sharding, off-chain state channels, segwit2 to name just a few.

It is worth mentioning that blockchain technology is in its infancy and there are a lot of work being done to improve all these aspects of blockchain technology.

Public vs. enterprise blockchains

In conclusion, Public blockchains (Bitcoin and Ethereum) is an internet protocol that manages the distribution of unique transactions/data with characteristics like, Anonymous participants, Open data for reading existing transactions and writing new transactions, Consensus algorithm, usually proof of work and Cryptocurrency.

What do we mean by enterprise blockchains? Like we explained earlier, blockchains like Ethereum Enterprise, Hyperledger fabric and R3 Corda is a distributed ledger with the following characteristics:

  • All participants are known, whether from one or more organizations
  • Read and writing of data are role based determined by consensus in the network
  • Multiple consensus algorithms could be used
  • Tokens instead of currency
  • Off-chain data storage
  • Integration to organizational systems

Also, enterprise blockchains can be categorized in two types

  1. Private: This type is managed by a single organization and the participants are normally internal users.
  2. Consortium: This type of blockchain is managed by multiple trusted organizations and to get access, there needs to be consensus by multiple participants in the consortium.

Ultimately, we will benefit if we can have a decentralized system where everybody can have a copy of the data and only append new data validated by the rest of the members of the network. Digital identity in particular, is fundamental for most industry use cases, be it handling supply chain challenges, disrupting the financial industry, or facilitating security-rich patient/provider data exchanges in healthcare. Only the entities participating in a particular transaction will have knowledge and access to it—other entities will have no access to it.

Finally, as stated before, blockchain can only provide a part of the solution, there are still other questions that need to be answered, like:

  • How do I get data in and out of the blockchain?
  • How do I extend smart contract logic to my enterprise?
  • How do I respond to event from my ledger?
  • How do I analyze data within my ledger?

And this is where TIBCO can be leveraged to provide the complete stack.

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Blockchain Technology for Healthcare

To stay competitive, safe, and secure, healthcare organizations have to apply ground-breaking solutions to age old problems. Many industries can use ground-breaking solutions, of course, but healthcare demands ongoing improvements. Blockchain is one such promising technology―for cost reduction, patient empowerment, and cybersecurity.

Here’s a bit of a preview:

Information security

Information security is a hot topic, and not just in healthcare. The world is fraught with criminals in search of information that could be used to scam people out of their hard-earned money. Healthcare information is very valuable on the black market because it contains enough detail to open bank accounts, access health savings accounts, or commit identity theft. The healthcare industry does not have the funds to secure their information like the financial industry does, so finding a more secure and cost-effective way to protect healthcare information would be a very welcome development.


Human DNA contains information on ethnic background, propensity to develop certain medical conditions, and even life expectancy and personal traits. Imagine a world where your DNA could be used for research to help improve the lives of millions around the world. A DNA bank managed by blockchain could first secure information, and then allow contributors and bona fide researchers to exchange DNA. This exchange could be managed under the privacy and consents laws that makes scientific collaboration and ethics procedures easier to maintain.

Claims processing

Medical claims processing is often manual and slow. Many intermediaries are involved in making payments to healthcare providers based on patients’ insurance coverage, which results in lengthy processes and frequent errors. With rules built into blockchain smart contracts and creation of the contract put into business users’ hands, intermediaries could be eliminated and the system could manage itself. Claims would be paid much faster and with fewer errors, and patient claims management would be more secure.

Register for the upcoming Innovation Blockchain for Healthcare live webinar and demo to learn more about these opportunities and concepts.

Screen Shot 2018 01 31 at 11.20.13 AM Blockchain Technology for Healthcare

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How The Cloud Merged Into The Mainstream

mainstreamcloud How The Cloud Merged Into The Mainstream

As first appeared on

While the case for the cloud has always been compelling, perceptions over complexity have remained a persistent deterrent for businesses preferring the security blanket of their on-premise solution. We’re well versed in the dialogue that has long surrounded the subject: how the detractors routine countered the promise of greater efficiencies and cost savings with concerns over privacy and security, fearful of the lack of physical control.

But perhaps most prevailing of all, was how the technical know-how needed for successful deployment and integration continued to preclude many from reaping the benefits, leaving business process management on premise and the heavy lifting firmly with IT. As a result, this innovative and shapeshifting technology all too often remained divorced and siloed from wider business operations and teams, unable to reach its full transformative potential.

Fortunately, 2017 was a year of more meaningful change in this area, as the hype and predictions finally came to fruition, and the cloud became a more mainstream reality. A number of factors conspired, notably innovation that made its integration and deployment simpler and accessible to more people within an organization. Additionally, the starring role the technology has played in the rising trend for mergers and acquisitions has driven even wider use.

Indeed, the number of these transactions snowballed this year with $ 52.4 billion (£31.60 billion) in deals conducted across the globe between April and June, representing a 57 per cent year-over-year increase, according to professional services firm EY (formerly Ernst and Young). Amid intense competition, businesses have looked to consolidate their core strengths and focus on their most profitable activities, offloading some of the less well-performing facets of the operation onto other businesses through global deals.

Cloud cemented its status as a ‘go to’ platform for underpinning these transactions. It provided the kind of speed, flexibility, and easily scalable infrastructure needed when contending with the challenge of consolidating disparate systems, users and infrastructure, particularly during the post deal transition period. In doing so, the technology helped to shift the perception of IT as a hindrance in the process of mergers and acquisitions, to one that can drive and facilitate the seamless convergence of cultures and operating systems.

Amid soaring application needs, solution developers have responded by offering low-code development platforms, better suited to a business operating environment. An environment that demands pace and agility to solve problems and respond to opportunities with minimum disruption.

Here, the game changer has been the new wave of solutions which harness visual, intuitive instructions for app building, as opposed to pure programming. This empowers a far wider range of business users to get involved, from a click from a mobile or laptop.

The move translates to greater efficiencies and productivity benefits, as applications are built quicker, changes are made more easily for a faster and cheaper operating environment, while organizational culture is improved through better alignment between business and IT.

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Where Will Your Code Live (And Will It Even Matter)?

code Where Will Your Code Live (And Will It Even Matter)?

I’ve been fascinated watching the progress of CRISPR gene editing technology. In short, biologists have uncovered a mechanism that single-cell organisms use to fight against viral attacks by storing a sample of a viruses’ DNA code and then seeking and destroying it wherever it can find it. An additional mechanism can allow these cells to “cut and paste” DNA code, replacing the offending strand with something different, potentially beneficial.

CRISPR promises all kinds of innovations in gene therapy and is currently being studied as a potential cure for diseases like cancer and HIV. A few are even exploring its uses in biohacking to improve their own physiology. But some biologists have also realized that this storage mechanism can have uses beyond biology. Earlier this year, scientists encoded a GIF as DNA within bacterial cells using their CRISPR mechanism. More importantly, they were able to retrieve that data and convert it back into a digital file with no loss of information.

It’s not much of a stretch to suggest that this technology could be expanded to command the cell to somehow act on this code, effectively turning bacteria cells into microscopic biological computers. It all sounds like a far-future Phillip K. Dick story (“Do Bacteria Dream of Electric Sheep?”), but the technology is already at hand.

The ubiquity of code

Truly decentralized apps have been just on the horizon for some time, and with the advent of microservices architecture and—most recently—“serverless” patterns that spin up a piece of code to run it only for as long as needed before putting it back into stasis, we’ve almost reached that golden horizon. The real value in the Ethereum blockchain, with its smart contracts capable of running small chunks of code across dozens of machines, had been almost totally lost amidst the hype over cryptocurrency valuations, bubbles, and instant millionaires. But the recent CryptoKitties boom proved that Ethereum is more than just a currency.

It’s more clear now than ever that the monolithic architectures of the past are rapidly being supplanted by massively distributed computational systems. The applications you write today may very well be served from one of dozens of locations—microservices running in your datacenter, Lambda services running on Amazon, or even, some day, biological computers running in a petri dish. Already, your end users don’t care where the data that drives the applications they use come from. In the near future, neither will you.

When everyone runs your code, who controls access?

The security implications of this should give you pause. When these applications are running on machines beyond your control, how can you be sure the data they’re serving is actually the right data? And how can you ensure that only the right people have access to it?

These will remain ongoing challenges as these technologies improve and progress. But tools like TIBCO’s Mashling microgateways point the way. These tools provide localized gateway control over the code they govern with the potential to configure and control them from a centralized location. As the number of services and their respective locations grow, these tools can help ensure your data is kept in the right hands and used in the way you’ve seen, no matter whose server or lab hosts it.

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The Telco Cloud: A New Model for a Changed Market—Part 2

telecomcloud The Telco Cloud: A New Model for a Changed Market—Part 2

As first appeared on Vanilla Plus.

In the previous part of this blog we saw how network operators need fresh approaches in order to generate new revenue and hold up their profitability in a challenging and fast-evolving market. In this part, Joerg Koenig, TIBCO’s director of Vertical Solutions, explains two more reasons for changed market.

The issues that lie behind the model

So far, so good. But what are the challenges of this new model? How does it work in practical terms? On the path to digital transformation, where are the stumbling blocks?

To begin with, the telco must realize that this change in business model will lead to billing flexibility, away from minutes, bytes and message volumes and towards value-based pricing. In other words, the telco can base pricing on the value of a transaction or the service being consumed, as opposed to the number of bytes consumed. This does create challenges for the telco around the valuation of a transaction or service, and thus makes it useful for the telco to have the right tools so that they can manage and monitor what is really going on with traffic.

Transforming a telco business to take advantage of this new operating model will be all about integration and automation. The telco operates a broad web of applications from its core to edge and will need to support much higher levels of unpredictable scaling that will be inevitable with an on-demand model. Some of these applications will have to be migrated, replaced by SaaS applications, or deployed into different private or public clouds and platforms.

Some will have to be kept on premise for data legality or latency reasons, or perhaps re-written to support a microservice architecture. Furthermore, the rise of IoT will mean integration of new devices that will require data aggregation and filtering. This wide range of architecture, deployment, scaling, and performance choices will change over time and will require a matching integration capability that will support future innovation.

Essential to the telco cloud model will be the success with which APIs are made available by the telco to third parties. Providing easily consumable, well packaged API products, will attract partners and so drive revenues and business growth. In a platform model, APIs will be the ‘face’ of the telco and the ease with which they can be deployed, tried and consumed will provide crucial differentiation. The speed with which they can be created, tailored, managed and secured to protect backend systems will be critical.

Unpredictability is the new normal. Once APIs are published, the take up from customers and partners should lead both to great success and also to unforeseen levels of usage. There will inevitably be a feeling that the telco is losing control of the API. This is a very different model from the classical subscriber growth approach, and will need a very different mindset.

All of this on-demand network configuration from customers and partners, added to the effect of billions of connected IoT devices, brings the need to monitor and manage decisions in real time in a way that is bigger than any sort of human interaction can cope with. This means that all aspects of OSS/BSS orchestration, configuration and operation will trend towards automation. This necessitates deep and wide advanced analytics and the use of lightweight, real-time algorithms to detect and trigger action, deployed from core systems right out to devices on the edge of the network.

Finally, as the telco network becomes more programmable and network functions become virtualized, the promise of a reduced cost of ownership will be realised. Added to this are the value benefits of the platform approach once an ecosystem of partners can, via a self-service portal and APIs, configure new services on demand. Maximizing the value that the telco can derive from this, requires that the entire OSS/BSS stack be in alignment.

Everything from on-boarding customers and partners, executing on demand order and service orchestration to network configuration, tailored pricing, end to end assurance and all across physical, virtual and third-party networks and services will need to support the telco cloud platform. The wide variety of possible users and services means that such processes must be automatically generated, not simply scripted or coded.

Time to lead, not follow

We have seen that it is no longer sustainable to base a telco business around old ways of delivering and charging for services. The old-school linear pipeline where customers buy the capacity they need from operators via a conventional supply chain is on the way out. It no longer meets requirements. This creates an opportunity for telcos to reinvent the basis on which capacity is supplied. The successful telco will be a leader and innovator in this dynamic ecosystem, not a follower. They will need to show this leadership in numerous ways, for example by embracing a software-driven automated approach to network provisioning and management, and by enabling partners to work with them on taking their business in new directions. There is a need for a bold and decisive approach, and the time for that is now.

Learn more about what TIBCO is doing in the telecom industry.

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Migrating Integration Apps to the Cloud

cloud Migrating Integration Apps to the Cloud

Cloud initiatives are no longer just a competitive edge for business but instead, a standard expectation. By combining cloud initiatives with existing infrastructure, businesses can modernize their IT systems, improve the pace of innovation and speeding agility, increase developer productivity, and reduce cost. All of these contribute to operational excellence. The combination of cloud initiatives and existing infrastructure creates an environment in which a business can grow and innovate smoothly so that they remain both relevant and competitive in their industry.

An important step in the journey to the cloud is migrating integration apps. In order to do so you must consider and learn what a cloud-native approach entails. This includes understanding options for adoption including re-hosting, re-factoring, or re-architecting on-prem apps as well as, what cloud technologies other organizations are utilizing and where they are on their cloud journey. Once you understand these important parts of a cloud journey, you can begin to evaluate potential challenges and potential approaches to addressing them.

If you’re ready to learn all this, and more, register today for our webinar! We have multiple times available as well as a recording after the live event.

We look forward to seeing you and are ready to help you through your cloud journey!

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The Telco Cloud: A New Model for a Changed Market—Part 1

telecomcloud The Telco Cloud: A New Model for a Changed Market—Part 1

As first appeared on Vanilla Plus.

Network operators need fresh approaches in order to generate new revenue and hold up their profitability in a challenging and fast-evolving market. By basing their business around a cloud-based platform model, they can ensure their survival in a world of unpredictable traffic patterns and massive data growth. Joerg Koenig, director Vertical Solutions, here at TIBCO, examines the dividends, challenges, and practicalities of such a move.

Time to take back control

The historic way in which telco business has been conducted must change. The model of locking the customer into your network and billing them for it in ways that do not necessarily match their consumption is redundant.

Today’s consumers see connectivity as just another commodity, a utility they depend on, but which they largely take for granted. What excites people is not the connection itself, but the data and content that travels over it. This is why telco Over-The-Top (OTT) service providers have been able to achieve so much success—success which has largely come at the expense of the network operator. Not only have OTTs eroded telco revenues, they have damaged the perceived relevance and centrality of the telco by relegating them to a mere pipe for their services, an undistinguished highway between locations.

There are other issues with traditional telco business practices. Network availability has traditionally been dimensioned to support maximum peaks of traffic. This guarantees that a network will be both expensive to build and massively underemployed for most of the time.

The arrival of the software-driven, virtualized network has helped to address the problem of network build costs. Now it’s time for operators to complete the job of grabbing back control by cutting the cost of driving revenue. They can do this by adopting the model of the Telco Cloud—telecoms delivered as a service over a cloud-based platform.

The Telco cloud

The old ‘consumption model’—where telco customers are charged on the basis of a predetermined level of usage—does not fit well with current needs. Consumption patterns, driven by the effect of social media and other forms of rich content, are far less predictable than they were when this model was conceived.

There is an opportunity for bold and far-sighted telcos to reinvent the basis on which capacity is supplied. They must position themselves so that customers see them as suppliers of ‘telco as a service’ instead. This platform-based model is perfectly in tune with what their customers, both on the consumer and enterprise side, really want. A platform-based model enables on-demand scaling and agile, rapid delivery of new services, and is geared to meet the most unpredictable of peaks and troughs.

The model works best when it leaves the creation of these services in the hands of an ecosystem of newly empowered customers and partners, reliant on the telco’s core strength of providing ubiquitous mobile and wireless data connectivity. This has positive implications for revenue, as effectively the telco is providing an army of vertical market specialists with an advanced platform for their products, and letting them do the selling. This means, the old one-size-fits-all linear value chain is broken down into what is effectively a network of smaller value chains. No longer confined to only being able to grow their business by growing the number of subscribers—and without having to resort to price cutting as their best means of competing with rivals—the telco is free to participate in an infinite number of revenue-spinning vertical use cases and new initiatives.

Learn more about what TIBCO is doing in the telecom industry.

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Digital Transformation in Banking—The Elephant vs. The School of Piranha

Piranha Digital Transformation in Banking—The Elephant vs. The School of Piranha

I’ve been working in and around banking for more than two decades. Banking is, of course, not immune from the wrenching changes driven by the relentless advancement of technology. Let’s look at what banks face today through an analogy. An elephant (which represents the bank in this analogy) finds itself crossing a river full of piranhas (which are the FinTech startups). The piranhas start to nibble away at the elephant. The elephant is hefty and even a large school of piranha will take a long time to eat an elephant. But, eventually they will succeed if the elephant does not take any action.

So what are the elephant’s options?

  • The elephant can freeze, just stand there and wait for the inevitable
  • The elephant can haul himself out of the water to safety
  • The elephant can go on the attack and stamp on some of the piranha
  • The elephant can eat some of the piranha

Now consider the piranha in terms of FinTech. There’s a lot of them but, not enough to eat the elephant all by themselves. But as a group, they can eat enough of the elephant to weaken and kill it. In fact, it has already been happening. Here are some examples of how FinTechs are eating away at and weakening banks:

Funds transfer piranha = Xoom

A funds transfer company that started a few years ago and disrupted the international wire transfer market by offering funds transfers for $ 4.99 compared to the typical $ 35 for a wire transfer initiated through a retail bank.

Personal lending piranha: Lending Club

A personal loan crowdfunding service that allows multiple investors to invest a small piece in funding a personal loan application took a bite out of the bank’s personal loan market.

Mortgage piranha: Rocket Mortgage App

A mobile app that allows mortgage borrowers to apply for and secure a mortgage from Quicken Loans using a smartphone-based application. Quicken has taken big chunks out of the bank’s previous monopoly on mortgage lending.

Commercial lending piranha: Kickstarter

A crowdfunded small business and startup funding service that allows a large variety of startups and business to raise money for most commercial purposes and mostly with electronic loan documentation.

Payment processing piranha: PayPal

Although PayPal is now a behemoth, it did define and disrupt the peer-to-peer payments market that allowed individuals to exchange payments which was a capability that banks couldn’t offer at the time but have since copied (e.g. Chase Quickpay)

Investment advice and management piranha: Mint

FinTech players like Mint have disrupted the investment and money management market where banks and wealth management giants have dominated, making money from commissions and management fees in the process.

Of course, none of these FinTech players on their own can do enough damage to a major bank to bring it down as they only chip away at the portfolio of products and services offered by a full service bank. However, if enough FinTech players chip away at enough of the banks’ services then they can present a structural risk to the bank’s future.

How can banks prevent piranha attacks?

Banks needs to realize they are not without options and can and (in some cases, already do) employ a variety of tactics to preserve their markets. For example:

  • PayPal acquired Xoom and essentially took it off the market as a direct competitor
  • , all introduced no-fee peer-to-peer funds transfer services to compete with Paypal
  • Banks are streamlining and improving their competing services to stay relevant and cost effective to their customers
  • Banks have co-opted major technology players such as Amazon and eBay by operating branded credit card programs for them thus expanding their reach indirectly
  • Banks have assets that startups don’t have such as vast stores of data on their customers, their customers’ financial habits and the products and services they use
  • Banks have vast amounts of capital to employ and can co-opt, fund and in some cases acquire FinTech companies to take them out of contention

It’s not as easy to completely disrupt an industry such as banking like Amazon has done with retail and Spirit and Ryanair have done with airlines. It’s a highly regulated business with deep pockets, strong lobby power and almost as important, vast treasure troves of data on their customers’ financial habits that just isn’t available to independent FinTech upstarts.

However, the elephant standing still in the river while the piranhas slowly render it down isn’t an option. Digital transformation will be an essential part of the bank’s defense mechanism. The only variables are how much is required and how long will it take in order to fend off potentially fatal competition from FinTech?

Alarmist speculation you say? Consider this:

If you had asked the CEO of PanAm in 1990 or TWA in 2000 about threats to their business models they would have said “Don’t tell me how to run an airline, kid!” PanAm went bust in 1991 and TWA in 2001. Meanwhile they have been replaced by more efficient and cheaper upstarts like JetBlue, Spirit, and RyanAir.

If you had asked the Lehman Brothers CEO about risks to his bank on September 14th, 2008 he would have said “There’s nothing you can tell me about running an investment bank.” Lehman went bust almost overnight on September 15th, 2008.

Lotus Software almost single handedly defined the desktop application market with Lotus 1-2-3 but failed to anticipate the growth in MS Windows and their product was overtaken by MS Excel in short order. Lotus sold itself to IBM in 1998 and now their brand is a backwater in IBM’s huge product portfolio.

Oldsmobile and Pontiac made old fashioned and mediocre quality cars for many years before their money losing brands were killed off by their parent company General Motors.

It’s as true for banking as for any other industry, stay relevant, exploit digital transformation, and always keep one eye on your rearview mirror because you never know who is going to sneak up behind you and eat your lunch!

For more information about how TIBCO is helping banks digitally transform, please visit our banking page.

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