Cisco Takes Stake In Tibco Software

The top management of Reuters-owned Tibco has bolstered its Tibco Software Inc. (TSI) division, as evidenced late last month by the company's executives permitting Cisco Systems to take a minority stake in TSI. In stark contrast, Tibco Finance Technology (TFT), the other half of Tibco, needs an infusion of executive talent.

Vivek Ranadive, the president and chief executive officer (CEO) of TSI and TFT, will not specify Cisco's exact stake. A Reuters spokesperson declines to name the figure, as well, saying it is "far too complicated" to break down the ownership of the Reuters subsidiary. However, the spokesperson confirms that the Cisco stake is "just under 10 per cent." Reuters continues to own a majority of the company, the spokesperson adds.

The move has added significance because TSI has the intellectual property rights to the technologies that got Tibco off the ground in the first place. Also, a source close to Tibco says the employees of TSI own 35 per cent of the company.

These moves and the departure of 12 Tibco senior officials during the last year have many questioning the immediate future of TFT. (D&IS, May 19)

Ranadive says his primary reason for partnering with Cisco is to make Tibco's reliable publish-and-subscribe multicast technology a ubiquitous commodity for "the entire computing value chain."

This would be valuable for TFT customers as well, Ranadive says, because if the Tibco publish-and-subscribe technology were to be embedded in Microsoft software, Informix Software and Oracle databases as well as Cisco routers and networks--"it will allow them to seamlessly create the event-driven enterprise.

"Having the TIB [Tibco's The Information Bus] on the trading floor" along with these other components, Ranadive says, "will allow information to be seamlessly exchanged throughout the enterprise, as well as with their partners."

Ranadive has said he plans to expand Tibco's unique version of publish-and-subscribe technology beyond the capital markets, in order to turn TSI into a software behemoth resembling Microsoft.

"The technology has been proven on Wall Street," Ranadive says. "The three major technology players are: Intel, for chips; Microsoft, for software; and Cisco, for networks. We felt that Cisco was in a special situation because it is the only company whose technology makes up 80 to 90 per cent of the networks which run the Internet."

Apparently to attract other partners to work with TSI, Ranadive has kept the intellectual property rights to TIB and the financial application middleware package Enterprise Transaction Express (ETX) with TSI, not TFI.

Ranadive goes on to say Cisco is the first major, mainstream IT provider to "make a significant commitment to the TIB."

As to why Cisco--which has acquired 15 computer firms and partnered with another 12 in the last four years--is interested in working with TSI, it's because Cisco views Tibco as a leader in the world of publish-and-subscribe technology. "What's interesting about Tibco is that they have a subscriber-sensitive model," says Elizabeth Kaufman, Cisco's manager of business development.

However, she adds, "the challenge to Tibco has been [getting] all of that information to cross the wire. We can put that filtering right into the network, make it very cost-effective and make it a much more efficient mechanism for distributing information."

This effort will entail reworking Cisco routers, switches and Cisco's IOS network operating system. The project is expected to yield results by the end of the year, Kaufman says.

Toward the goal of making TSI a leading-edge firm, Ranadive has given stock options to TSI employees. "That is what allows me to attract people who are highly motivated," the CEO says.

But others close to Tibco say the Cisco partnership and the TSI stock options are simply ploys that Ranadive is using to disassociate himself and his favorite few from TFT, ergo Reuters.

According to one source close to Tibco, Ranadive initially wanted to sell TSI outright to Cisco, but Reuters chairman Peter Job stopped him, and this resulted in a row between the two.

Ranadive denies this, saying that TSI and TFT are run by their own boards of directors separate from Reuters' own.

To compensate for the loss of senior officials, TFT is in the process of looking for 80 sales, support and development people to serve in the US and Europe, says Mark Fahmy, TFT's European sales director, the firm.

"Our business is stunted by the amount of people we can get in through the door," Fahmy says. "We are recruiting full steam to match our business model."

Fahmy's counterpart in the US, Bill Riffert, declined to comment. He would only say, "Tibco Finance is a great place to work."

Others say life at TFT has become somewhat rocky. One executive who recently departed calls it "a gloomy place, indeed."