IBS Journal - News

Sybase has purchased Aleri, a vendor that specialises in complex event processing (CEP) engines and liquidity management systems. It now owns all of Aleri's products, which include two CEP engines – Aleri's own development and an engine from a fellow CEP vendor, Coral8, which Aleri purchased last year (IBS, March 2009, Aleri acquires Coral8). The project to integrate these two engines, called Ohio, has also been transferred to Sybase. Jeff Wootton, senior director of product management at Sybase, emphasises that the investment made in this project will not go to waste and the work will continue. 'The product plan has not changed, but now we have the support of a large company that has millions in the bank,' he says.

Sybase also owns Aleri's application templates and adapters, which are of particular interest, according to Neil McGovern, director of product strategy at Sybase. 'Aleri's adapter set is much bigger than Sybase's. Also, its GUI and developer network are very strong,' he explains.

The details around the acquisition are somewhat muddied by Sybase's announcement of the agreement 'to buy the assets of Aleri', which raises the question of Aleri's financial situation. However, neither side has been willing to shed any light on the situation, with McGovern declining to comment on why the Sybase acquisition team decided to structure it as an asset acquisition purchase. Wootton, who until recently was VP of product strategy at Aleri, also declines to comment, on the grounds of being an employee of Sybase and therefore not being at liberty to discuss another company's situation.

However, McGovern points out the advantages of an asset purchase approach. 'It is a much faster way to gain control of the assets and have the rights to offer Aleri employees positions at Sybase'. It was done 'in a matter of weeks'. He denies rumours that a large number of Aleri staff left, saying that the majority of the engineering, sales, marketing and customer support personnel joined Sybase. This excludes Aleri's CEO, Don DeLoach, who has left the company.

The product set and the customer base were the main drivers for this acquisition, says McGovern. Together, the Sybase and Aleri client list exceeds 100 real-time analytics software users in the capital markets space. Sybase will strengthen its presence in Europe thanks to Aleri, while Aleri's products will make an entry into the Asia Pacific region, where Sybase has an established presence. McGovern indicates that the vendor is to embark on a marketing campaign there in April.

At present, Sybase's own CEP engine, RAP, as well as the Coral8 and Aleri offerings, are available and will continue to be supported. In the short-term, the first two will be merged, as they both use the same codes (Sybase bought the codes from Coral8 for its own CEP development last year). This will be straightforward, says McGovern. Sybase will then market two offerings – Sybase/Coral8 and Aleri. The latter uses a different set of codes. There will be some minor changes in pricing, as 'Sybase has a different pricing policy to other companies'.

In the long-term, a unified CEP product will be offered. It will be known as Sybase Streaming Platform. This is when the Ohio development will come in handy. Eventually, all CEP customers of Sybase will be migrated to this new platform. However, there is no indication of when it is likely to happen, or when the support for the previous products will be dropped. McGovern says that Sybase's policy is 'to support previous releases for a certain amount of time', but he stresses that 'no customers will be left behind' and he is confident that the CEP client base will be retained.

On the liquidity management side, Aleri's dedicated software – Liquidity Management Systems (LMS), Liquidity Risk Management (LRM) and Market Liquidity Analysis (MLA) – will also continue to be 'supported, enhanced and actively marketed', says Wootton. However, no detailed roadmap is publicly available yet. As with the CEP offerings, the liquidity management solutions will be rolled out globally. At present, the takers are mainly based in Europe. These include Barclays, Dexia and Swedbank. The latter was the first taker of Aleri's LRM system, which is a new module within the liquidity management suite (IBS, November 2009, Swedbank updates technology in wake of new regulations).

Meanwhile, Aleri's rival in the CEP space, Streambase, is keen to lure the former's clients onto its CEP offering, StreamSQL. Almost immediately after the acquisition announcement, it issued a press release offering Sybase, Aleri and Coral8 customers to trade-in their products and to migrate to Streambase for 'a one-time credit'. The previous investment in CEP will be credited to the adoption of Streambase.

'We expect a lot of interest with our announcement,' says Justin Fry, SVP, marketing at Streambase. 'Sybase, Aleri and Coral8 clients face unavoidable changes within timelines they might not be comfortable with.' He also questions whether Aleri and Coral8 will continue to be innovative once they are incorporated into a large company like Sybase.

Although there were talks about Aleri being up for sale, Streambase did not consider acquiring it, says Richard Tibbetts, CTO at Streambase. He feels that there is as a lack of synergy between the products and customer bases of the two entities. The latter factor, however, hasn't prevented Streambase from inviting this customer base to adopt StreamSQL.

At present, Streambase is one of very few independent CEP vendors and it intends to remain so, states Fry. He believes that being a relatively small company (under 100 staff) does not hinder the business in any way. While some vendors might complain that they are not able to sell to big entities due to their small size (such as Aleri, Fry says), it has not stopped Streambase from signing such heavyweights as CMC Markets in the UK and Chicago Mercantile Exchange (CME) in the US (IBS, July 2009, CEP goes mainstream with CME). 'We have backing from some of the largest and oldest venture capital firms in the US and the UK, so we offer financial stability, which appeals to the customers,' he says.

Streambase had issued a similar call to Coral8's customers when it was acquired by Aleri. How many customers moved was disputed. Streambase initially claimed a lot of interest and several 'defectors' (no details were disclosed) but Aleri insisted it had not lost a single customer. Eventually, the argument came down to just one client: Fry says that customer's switch has been confirmed by an external analyst, not connected with the company, but Aleri's Wootton denies all knowledge. However, Wootton adds that 'possibly there is one marginal customer that became a Streambase customer that I am not aware of. Some of our clients are large organisations, using different products in different departments – so there might be an overlap between our customer bases. It is very possible that some Aleri clients have also become Streambase clients in the past year, but I know that we have not lost any users.'

However, overall, Streambase is pleased that large international players such as Sybase take an interest in CEP. Fry believes that this acquisition will raise awareness of CEP across the board. To show its commitment to innovation in this field, Streambase has recently announced the launch of the CEP developer community, Streambase Component Exchange (SBX). The vendor describes it as the 'industry's first'. It will allow participants to download, extend, test and share reusable components within a global community.

For a breakdown and analysis of the M&A activity in the past month go to the Mergers & Acquisitions section of our website.