The great software robbery

Vivek Ranadivé knows the value of a sound bite. The CEO of business integration and process management software company, Tibco, has spent much of his time recently touring the globe with a deliberately contentious accusation: for the past 20 to 30 years, SAP, Oracle and IBM have, he says, been extorting money from their users.

His argument runs that the database-centric model of the infrastructure inherently locks customers into relationships with their suppliers. Once data is stored in a particular kind of database, they become so dependent on the supplier of that database that it can name its price.

“The database is the ultimate tool of extortion,” Ranadivé told a recent European press conference. “It is centralised, it is rigid, it is hardwired and impossible to change.”

Similarly, customers become so reliant on their ERP platform that they have no power when negotiating for support or development.

And business intelligence (BI) tools that analyse the past are not worth the high prices they command either, says Ranadivé. “Who cares what happened a week ago? In the modern era, that’s too late.”

These controversial remarks are followed with the assertion that a service-oriented architecture will liberate user organisations from extortion and retrospective BI, and that Tibco’s enterprise service bus will be the tool to bring about that liberation.

Bernard Bourigeaud, CEO of Atos Origin and Tibco board member, says that Ranadivé knows the transition to the service-oriented architecture is not going to be quite so revolutionary, but thinks marketing messages must be bold to penetrate all the noise to which customers are exposed.

“He is not thinking of a big bang. He is saying is that we are moving away from database-based IT towards a process organisation. But he’s taking an extreme position.”

But does that position hold a grain of truth nonetheless? According to research by McKinsey & Company and the Sand Hill Group, the cost of software licences and maintenance is consuming an ever increasing amount of the IT budget: 30% in 2006 will rise to 35% in the next two years.

Of course, all businesses would like to pay less for what they buy. The question is whether the expanding cost of the database-centric software stack is enough to push user organisations to adopt a whole new model.

The experts' response…

David Keene, director of Oracle’s Fusion middleware, believes Ranadivé is underestimating the importance of the database.

“Data has to live somewhere. Applications and data integration platforms don’t mean anything without data flowing through them. I don’t understand what Tibco are proposing in terms of storing data. It has to be stored, whether in a message queue, in a database or in a file.

Ranadivé’s assertion about ERP seems to be that people should go out and build all their own applications, which is clearly madness. Customers want packaged, customisable applications which they can build business solutions around, not to have to hand crank their own processes.”


David Roberts, CEO of blue-chip user group the Corporate IT Forum, says that buyers need more bargaining power when it comes to software pricing.

“Licensing is a challenge. We do believe it’s true that user organisations think that the price they are paying for software licenses is higher than it needs to be.

When software is sold in one piece, or as modules that have built in interdependencies, it limits the amount of choice that users have. That in turn reduces the opportunity to negotiate with suppliers over price. Anything that improves the amount of choice that user organisations have, therefore, should improve their ability to negotiate pricing costs.”

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

Related Topics