The StreamBase Event Processing Blog

Why the CEP Tide Has Turned Toward StreamBase

Last week, CMC Markets announced that they switched from Apama to StreamBase as their enterprise-wide event processing platform. As FXWeek reported, CMC “initially spent three months deploying a similar system from Apama, but dropped the deal in favor of StreamBase.” As a firm that trades over $1.4 trillion a year, CMC’s decisions about their infrastructure are not taken lightly. So their decision gives us pause to ask: why the switch? 

Asif Adatia, Chief Information Officer for CMC, described their decision like this: “the ease of development for both financial engineers and technical engineers, the performance, and scalability of the platform were our key criteria.” Let’s examine each part of that statement.

1. Demonstrably better ease of use. You might think that the efficacy of a development environment would be a subjective call. In some ways, it is - when it comes to the visual esthetics of a tool. On the other hand, usability is often the driver for market-altering innovation - profound shifts in the accessibility of a new tool can suddenly unlock barriers to innovation. The change in the last 10 years in finance has been profound. 10 years ago, algorithmic trading wasn't even named, now 70% of the U.S. equities trade execution happens algorithmically. In their report "The World According to Quants: Enter Alpha Generation Platforms", the AITE group reported that certain trading algorithms have a shelf-life of less than 3 months. In the face of all that rapid change and ephemeral opportunity, the ability to quickly build real-time trading infrastructure (algos, execution, risk, compliance, pricing, TCA, surveillance) is a matter of survival.

Firms like CMC, CME Group, and RBC didn't choose StreamBase for its aesthetics, they chose StreamBase because its graphical development environment gives them a fundamental competitive edge. The tools aren't just easy to use, they allow business users and engineers to work together because the language of StreamBase matches the way they think. The StreamBase dataflow language was designed from the beginning to program event-based systems the way you would draw them on a whiteboard, and the proof lies in what customers say, as Adatia told FX week, “Our financial engineers find it really easy to put the models together.” 

And this ease of use delivers another critical innovation: firms get this usability and time to market advantage and the performance benefits of event processing - at the same time. StreamBase isn't like other CEP tools that make the developer resort to low-level programming to make the system perform and scale. Relieving the user from the burden of thinking about plumbing was described by Adatia to A-Team Insight “[CMC] create their models readily, without resorting to code-level programming.” PhaseCapital reported that they built their trading system with StreamBase in 4 months rather than the 4 years it would take to build it with traditional development tools and they change their strategies every day. These are not subjective opinions about aesthetics, they are qualitative and quantitative testimonials to the innovation that StreamBase's interface can provide.

2. Built-in performance you can see. On Wall Street, milliseconds, and microseconds matter. CMC switched to StreamBase because they wanted the fastest engine they could get. 

StreamBase was designed for speed from the very beginning. Release 1.0 in 2005, was designed to take advantage of modern hardware, from the multi-threaded server to the StreamBase language which produces highly performance applications without burdening the developer. The StreamBase language plans performance like a database pre-processor plans query optimization. In 2007, StreamBase engineers broke down another barrier with a straight-through event processing compiler. Recently, in 2008, direct bytecode generation optimization took the StreamBase performance innovation even further ahead of all other CEP platforms.

When performance is something you can see, it's a remarkable result. CMC said it this way: '[we don't talk about our specific latency numbers publically, but the performance is] good though and you can compare us on FX pricing to a bunch of our competitors.  And you will see our performance is noticeably better at times. Absolutely."  The world's largest electronic futures and options exchange in the world, CME Group chose StreamBase after using performance as a critical selection criteria, because they process over 11 million trades a day.

3. Scalability to grow. You might assume better scalability means StreamBase-based applications can be run on multiple CPU cores, and that’s true - better use of hardware means CMC needs less hardware. CMC described that their StreamBase system easily handles "More than twice the real-life peak rate for price ticks encountered so far.”  

But better scalability isn’t only about increasing volumes - it’s about ease of management, ease of customer support, and the ease with which high performance and scalability can be attained by developers.

And scalability is also about expanding usage. Apama established early on algorithmic trading as an important use case for CEP. But now, as CEP's use explodes into new application areas, firms are looking more deeply at how easy it is to build their second, third, and fourth applications. Just last week we had a call with a customer who guessed they had deployed "about 100 StreamBase applications." 

And now we have come full circle back to the StreamBase development environment. Our mantra is to “deliver high performance and scalable applications without having the developer think about performance and scalability.” Streambase makes performance native, which is one more reason it is unique.  

CMC is not alone. Organizations that are adopting StreamBase CEP are seeing these same benefits in ease of use and performance. CEP is the disruptive technology that frees their engineers to focus on creating business value instead of plumbing. CEP empowers their business analysts to work with the actual software instead of wishlists and design documents. CEP allows the whole organization to be more agile, to deploy changes to their infrastructure faster, and to take advantage of new opportunities ahead of the competition.

CEP in Brazil, Breaking New Speed Barriers

This week StreamBase cleared another hurdle in the race to take CEP into the mainstream by announcing the first application of its technology to facilitate high-speed trading between assets traded in Brazil and overseas (coverage by Jonathan Wheatley from the Financial Times, São Paulo). Kairos is an excellent case study about three fundamental motivations for CEP technology: speed to get into market, speed to execute event-based systems, and speed of application evolution.

The Brazilian trading market illustrates why time-to-market is so important in the capital markets. As the Financial Times reports, "The BM&FBovesp was formed last year by the merger of the São Paulo futures and stock exchanges - and is currently the fastest-growing exchange in the world according to Mondo Visione, which tracks global exchanges. Its market capitalisation grew by 17.6 per cent in September and by 65.7 per cent over the past year." Kairos believes that algorithmic trading volume on BM&FBovesp will have grown fourfold by the end of the year. That kind of change in market structure presents opportunity to the firms who seize it first.

Kairos' use of event-based technology helped them be the first firm to trade across borders between Brazil and overseas. "With the [event feed] adapters in place, we just connect to the market data and it is easy to implement our strategies in the software - that's one of the main reasons we chose StreamBase." said Gustavo Jacob, CTO at Kairos (from Kairos Bows StreamBase for Algo Data by Max Bowie from Inside Market Data). In an interview I attended Gustavo also spoke of evolving the system every single day as trading opportunities emerged. 

StreamBase was founded on the idea of targeting a 50X improvement in performance over traditional, transactional database technologies. But comparisons between CEP and transactional database technology stopped years ago and now we're more often compared to custom C++ or Java code. Kairos said that their new CEP-based system is 100 milliseconds faster than their previous built-for-purpose application and that it can be changed rapidly—two achievements that are "not possible using standard electronic systems."

Finally, in the A-Team article Kairos Asset Management Taps StreamBase for Algo Trading, Alberto Araújo, the managing director of Kairos, explained their evaluation process and findings:

“Our evaluation process started in mid-2008, when we started looking at the leading CEP companies. Our developers downloaded StreamBase and got to work developing a new algo trading system and were amazed at how easy it was to build applications. After a few months of testing, StreamBase was the clear winner,” says Alberto Araujo, COO at Kairos. As well as evaluating StreamBase, Kairos also considered CEP technology from Progress/Apama and Coral8 (since acquired by Aleri). StreamBase won, says Kairos CIO Gustavo Jacob, because of the ease and speed with which new trading strategies can be created, typically in around two weeks. Specific functionality that gave StreamBase an edge was its visual approach to event workflow and debugging, unit testing and profiling capabilities, and existing connectivity."

We've had an amazing year of competitive public endorsements, including CME Group, PhaseCapital, RBC, ConvergEx, and BlueCrest, and now Kairos. We believe passionately that we have the best CEP product in the industry, and actively encourage anyone to try it to see for themselves.

Performance in three dimensions—speed to get into market, speed to execute event-bases systems, and speed of application evolution—are why CEP entrepreneurs are having fun, growing, and breaking down new business barriers.

CEP: Closing the Loop on Business Intelligence

There has been a lot of talk recently that compares complex event processing (CEP) and business intelligence (BI) technology, and what they compare to each other.  Much of it suggests that CEP is a logical extension of BI into real-time, continuous analysis.  For example, Seth Grimes (@sethgrimes) suggested the distinction here and Paul Vincent from TIBCO responded by quoting Tony Baer from Ovum (@TonyBaer) who twitted the following:

"So, in essence, CEP makes BI literally actionable.  IOW (in other words) BI is embedded in execution."

These posts triggered a Twitter discussion about how true Tony’s statement was and the breadth of functionality available from CEP platforms like StreamBase. It culminated in Neil Raden’s (@NeilRaden) question:

Are you suggesting that CEP, on its own, is an adequate technology for adaptive control & integrating models/rules from BI and BRMS? (tweet)

Neil’s question crystallized the way CEP is misunderstood by those who are more familiar with traditional data management technology. They try to assess a tool that’s new by comparing it to another tool that’s built for an entirely different purpose.

The core technology of CEP is real-time continuous data transformation. These transformations can include event pattern detection, data enrichment, data analysis, and data reduction. They generally also include support for business rules and for executing code written in traditional programming languages like Java or C++. All this is bundled into a high performance engine designed to run scalably and reliably, and supported by powerful development environments and administrative and visualization tools.

That’s a lot of capabilities that can be brought to bear on many different problems. No wonder some people aren’t entirely sure where to start when attempting to understand what is possible with CEP.

If you know BI, then you try to fit CEP into the BI context. Yet, in fact, StreamBase has never been compared to BI by a prospective customer, despite the fact that “Operational Business Intelligence” has been a buzzword in that area for about four years. If only we could do BI faster, the theory goes, businesses could take advantage of it in the millions of little decisions that impact the business on a day-to-day basis. CEP and BI have similar sounding mantras, yet practically speaking, customers never intermingle the two.

What those immersed in BI don't realize is that the barrier to operational data analysis is not the speed of the data warehouse. As any trader will tell you, the fastest data analysis in the world won’t help you if every trade requires human approval.

In order to take advantage of modern data analysis, you need to stop depending on people to pull the oars, and start making them captains of their own ship. This requires software that can not only analyze a situation, but also take action, and then control that action over time. Workers ("Automation Managers" in the diagram on the left) monitor these systems and cope with exceptions, while the majority of events and decisions are processed automatically, without incident. The role of the user is in guiding real-time activity, not stopping the flow, making a decision, and starting the flow again.

Consider modern trading systems. Years ago, trading floors had hundreds of traders – half of them were making low-level trading decisions based on real-time market data that they watched; orders were placed by typing them into an order management system (OMS); it took 50-100 milliseconds for each trader, once he made a decision, to press the button to buy or sell. Today algorithms designed by quants buy and sell stocks in microseconds, not milliseconds, and one trader, with a real-time application, can guide the behavior that does the work of 1,000 old-school traders, an order of magnitude faster than just five years ago. That’s change in an industry, motivated by a new way of thinking of real-time data processing – complex event processing.

These software applications become the backbone of an automated business. Change is the norm - as the business climate evolves, agility becomes a critical success factor. If the system can be developed and delivered efficiently enough, a wide variety of decisions become suitable for automation. By making millions of small decisions intelligently, massive efficiency gains are possible. Decision support transforms from being a part of the process, to guiding automated processes – a fundamentally new way of thinking that makes old-school BI thinking inapplicable.

But transforming a business to real-time requires not only new technologies, but a new way of thinking as well. It requires a whole set of business practices that only a few companies are now comfortable with. And it requires analysts and software architects who take a wholly different look at how they approach systems. Neil Raden himself talks about this in his book, Smart Enough Systems.

You have to turn operational decision making into a corporate asset you can measure, control, and improve.

Wall Street reached the tipping point about five years ago, and has been creating not only the software systems but also the expertise necessary to run a truly real time business. CEP systems on Wall Street not only monitor markets and customers for opportunities, they also take actions and continuously monitor those actions for successful implementation.

The answer to Neil’s question is that yes, if a business is ready to adaptively control processes with models, rules, and analytics, then CEP is the ideal technology for integrating analysis with action in real time.  

(Richard Tibbetts is the Chief Technology Officer of StreamBase.  Follow him on twitter as @tibbetts) 

Winning Paper Evaluations, Good; Winning Customer Evaluations, Better!

Today, Forrester released their evaluation of CEP vendors, and declared StreamBase a leader in the space. Wonderful news - we're very proud. 

That said, analysts typically perform paper evaluations.  Forrester's paper evaluation is a good tool, and helps prospects create short lists for competitive evaluations.  But as a technologist, I'm thankful for the recent public disclosure of findings from some deep-dive customer evaluations from the last six months.  These evaluations were performed by firms that installed the products and ran, in many cases, stringent benchmarks and scalability tests. They evaluated the debugging tools by using them, and used deployment features like high availability.  They looked at how easily threading or partitioning behavior can be designed and controlled by doing it.  

In some cases, these firms released hard numbers.  In others, we have generic performance characterization information that we provide on an as-needed basis.  And in many cases, they put their money where their mouths are - they made one choice and bought the product. In case you missed them, here's the public take on some of these evaluations:

• CME Group (Press release, CME Group by the Numbers article, follow @CMEGroup on Twitter)
• RBC (Press coverage in Inside Market Data)
• BNY ConvergEx (Press coverage in The Trade)
• PhaseCapital (Blog post: 5 Observations about PhaseCapital's selection of CEP, blog post: 8 Lessons for Entrepreneurs - Based on PhaseCapital)
• BlueCrest (BlueCrest case study, interview with Justo Ruiz-Ferrer from BlueCrest)   

Among the more interesting evaluations was the CME Group's work.  They performed the most exhaustive CEP evaluation I've seen in years - perhaps ever - and their findings reflect what we typically see when you dig in deep and stand StreamBase, Aleri, Coral8, IBM, Oracle, TIBCO, and Progress Apama against each other.

Steve Goldman, the director of Technology Architecture from CME Group, said it nicely and even put it on video for us, where he cited usability ("The business users and technology users felt the StreamBase technology was heads above everybody else"), horizontal scalability & performance ("This was very, very important"), and sustainability ("The ability to run the platform reliably and with fault tolerance was key.") as the key reasons why the CME Group chose StreamBase as the leader, and the choice for their enterprise CEP deployment.

Here's the clip of Steve from CME Group, in his own words:

  

This endorsement was so strong and decisive that some of our competitors have started making crazy claims, including that StreamBase gave their product to CME Group for the endorsement.  In some cases the claims are so unprofessional that I enjoy nothing more than personally responding to them (with appropriate confidentiality of course).  In fact, I enjoy doing this so much, I decided to put it right out here on the blog and offer my direct contact.  I can be reached at mpalmer@streambase.com, or directly in my office:  +1 781 761-0812.  Naturally, sales solicitations are not welcome and will not be returned. 

Thomson Reuters Acquires Vhayu: What Does it Mean?

The news today in the field of event processing is that Vhayu Technologies was acquired by Thomson Reuters, sparking a flurry of inquiries from press and analysts asking: "How does this change the complex event processing (CEP) landscape?"  The short answer is: it doesn't.  

Event storage is not synonymous with event processing.  Vhayu's tag lne is:"Store and query years of tick data."  The ability to store and query years of tick (event) data is crucial for back-testing real-time systems, for historical analysis, and for research and development of high-frequncy trading strategies.  Event processing is used to help applications monitor, analyze and act on streaming data in real-time. Usually, customers use both at the same time to process historical, and real-time, streams of events. 

Indeed, this is why Vhayu and Thomson Reuters are both strong partners with StreamBase (Vhayu and StreamBase Partner to Provide Real-Time and Historical Market Data Solutions... and StreamBase and Reuters Extend Next-Generation Market Data Development Environment).  These are not "Barney" partnerships ("I love you, you love me:") - the partnerships are driven by customer use.  For example, RBC uses StreamBase and Vhayu together.  And StreamBase and Reuters is one of the most common and critical link our platform supports, and has supported, for years.  

So what does all of this mean?  It means that the event processing market is continuing to grow in importance - both the database side and the event-processing side.  It means the "IBM of Capital Markets," Thomson Reuters, has endorsed event processing, again.  And when viewed in the context of strategic enterprise endorsements of CEP like CME Group, it means event processing is continuing to gain market and strategic momentum in the capital markets.   

StreamBase & Phase Capital on CNBC: Trading on Twitter

Trading on Twitter: Opportunity, Danger, or Folly?

This week my company issued what I thought was an innocuous announcement - our software now allows applications to process Twitter tweets with an application and analyze the contents of the messages in real-time. A firestorm of debate ensued, and the issue gained mainstream media coverage in the Financial Times, the Telegraph, CNBC,and dozens of others. The debate gives us pause to consider the role of the sweeping adoption of Twitter as a real-time, global information source, and how that information might be used beyond the mostly social nature of Twitter today.

One of the examples we cited for this technology is automated trading on Wall Street, where any of the 16 million tweets a day can be analyzed in real time as a means to inform trading decisions.  Wall Street tends to be an innovator with new technologies, so it’s useful to use it as a petri dish to examine some of the opportunities and issues around Twitter in a business context.

Trading on rumor is a time-honored trading technique.   “Buy on rumor; sell on news” is one of the oldest mantras on Wall Street and Main Street alike.  Any tool that improves the speed or quality of transmitting information is of interest to traders.  Twitter does that.   But be careful what you ask for – lots of the tweets on Twitter are garbage – scam artists and manipulators.  On the other hand, there are thousands of credible sources of information, from the SEC (@SEC_Investor_Ed), to the New York Times (@NYTimes), and even exchanges like CMEGroup (@CMEGroup), which has over 500,000 people subscribed to its tweets about the futures and options markets, and more. 

And beyond any individual source, and probably more uniquely, Twitter allows instant access to the sentiment of the masses.

In the Wall Street & Technology article, Todd C. Mirabella, chief investment officer and principal of New York hedge fund QAT, says one of the uses he has found for Twitter is to help look at market volatility and compare it. "So how we get our information, that's the trick. Twitter can give us information on retail " [Tweeters] are the herd," he says.

For example, anything new that Apple does throws Apple’s stock into volatile gyrations.  The recent launch of the iPhone 3GS set off a rash of Twitter tweets about what the herd thinks – taken together, they can reveal sentiment – good and bad. Getting that feedback a few seconds faster, or a little better can make a big difference in trading returns. 

Business leaders, from CEOs to inventors, use Twitter.  For example, Richard Branson (@richardbranson), the CEO of Virgin, tweets regularly.  Now I’m pretty sure the news in the first tweet about Jimmy Fallon isn’t actionable for trading Virgin stock, but the fact that he’s ordering $2.1 billion worth of new planes might be.

Nasir Zubairi, former product manager for algorithmic trading and FX E-commerce, RBS, put it this way in the Wall Street & Technology article:  "[Twitter can be] the fastest source of news, particularly in reference to trading and algorithmic trading," he says. "News feeds are gaining a lot of popularity. Twitter provides the medium in that people, who are there, experiencing things, are able to broadcast their sentiments to their user base via tweets. This provides lots of competitive advantage to firms with trading strategies."

News about world events moves the foreign currency markets as Mr. Mirabella also pointed out.  He’s not yet trading on Twitter but said he sees real use for Twitter in currency trading: "We like to trade in ranges," he explains. "That helps us characterize the extreme edges in any specific currency. We've been trying to follow more individualized Twitter sites to see if we can get extreme views [of Tweeters]. It does give us flavor for what types of ranges we're looking at."

But real use of Twitter has some serious issues.  Technically, it wasn’t built for the kind of quality of service that a robust news source, like Reuters (@Reuters), provides – what happens when Twitter is unavailable?  There are questions about latency of the transmissions – is it fast enough?  Can it be faster?  Authentication and forgery are challenges – there’s a big difference between the real Richard Branson (@richardbranson), and the fake Richard Branson (@sirdickbranson) - who is responsible for the quality and reliability of the information transmitted via Twitter?  Should it be regulated?

And regulatory issues abound, as well.  Trading decisions are moving faster, so regulators have to move more quickly, too.  In December the unfortunate trading run on United Airlines (UAL) (read the story from the Wall Street Journal) stock to drop from $12 to $3 in just 15 minutes only served to remind us how quickly conditions can change in an era of sweeping automation.  The chain reaction was started by an erroneous trading signal from an old story that the Google news crawler picked up from 2002.  How can we guard against these unintended technology-triggered mistakes?

The adoption of Twitter in a social context has been swift, massive, and global.   As technology like event processing makes the content contained in Tweets readily available to business applications, the questions of what to do with this power and responsibility looms large.

Postscript and continued debate (July 1, 2009)

Since this writing, there has been a flurry of response - positive, negative, and vitriolic.  

My favorite coverage was the excellent, balanced story by Melanie Rodier at Wall Street & Technology: Algo Traders Connect to Twitter. She did her homework, including comments by some well-respected people from the trading industry. Read it first.

CNBC's Day-Trading 2.0:  Twitter Takes on Stocks took a day-trader's view on using Twitter to understand market sentiment.  

The Telegraph's coverage, Hedge fund managers betting Twitter will give them an edge in rapid trading also covered the intelligence and military side of the potential use of Twitter.

A spirited message board debate on Server Side was provoked by John Davis (@jtdavis) from OnixS. Like many message board debates, there are rat holes, but there's good stuff there, too.

There was an assertion that StreamBase's announcement of Twitter connectivity is a cheap marketing gimmick. It isn't. This announcement was driven by current and anticipated customer demand, as you can see from our history of connecting to Alpha Trading, Interactive Data, Lime Brokerage, Reuters, other news and data sources of many types, and so on. The article you're reading illustrates the balanced way we're talking about Twitter.  

One blogger, who used to work for one of our competitors, TIBCO, even took the opportunity to predict that StreamBase will be trounced by the "big boys" as they enter our market! To that, I say: "bring it on." Dr. Michael Stonebraker is one of the inventors and thought leaders in event processing, and StreamBase is known as one of the leading businesses in the CEP market, renowned for its performance and ease of use. Are we wary of their deep pockets? Yes. But the big companies have yet to field compelling products - in fact, we rarely compete with them. Furthermore, the "big boys" have not showed signs of innovation and intrapreneurship as I wrote in When Microsoft enters your market:  cause for worry or cause for celebration? And in Innovation: why size doesn't matter, I countered the argument that big companies are the most effective at innovating in a market like CEP. Richard Tibbetts, StreamBase CTO, clarified IBM's recent claims of innovation as misleading in On IBM, unstructured data, and CEP.  Finally, and most importantly, our customer endorsements from CME Group, BNY ConvergEx, BlueCrest, and PhaseCapital and many more say it best - directly from our customer's mouths.

Innovation by the Numbers at CME Group

(Mark Palmer is the president and CEO of StreamBase Systems.  Follow him at twitter.com/mrkwpalmer)

Recently, I spent a day in Chicago with CME Group, the world’s world’s largest and  most diverse derivatives exchange, to talk about their approach to innovation.  As the CEO of an innovative software company founded by forward-looking MIT techies, I’m lucky enough to work with a lot of innovative people.  But as we talked about the size and scale of CME Group’s business, it struck me that this may be among the most technically challenging environments on planet earth, and the numbers tell a compelling story of challenge and opportunity for a firm that many know of, but few have seen inside. 

CME Group is the modern descendent of the Chicago Mercantile Exchange (CME), the American financial and commodity derivative exchange which was founded in 1898 as the Chicago Butter and Egg Board, and in the past 111 years, grown and transformed into the world’s largest electronic futures and options exchange (Globex).

But I wasn’t visiting CME Group to check out their museum, I was there to dig down on the business and technical motivation behind the news that they have selected a new development paradigm (press release, coverage in Wall Street & Technology), event processing (CEP), on which to build future innovations.  This is a watershed moment for the CEP industry, and an important case study that gives us pause to wonder about the future of automated business, the future of real-time, mission-critical infrastructure, and the role of event processing as the platform for that innovation.

So let’s look at innovation, CEP, and the challenges faced by CME Group: 

...1.2 quadrillion dollars ($1,200,000,000,000,000,000) 

                                           ...The underlying value of the contracts traded by CME Group in 2008

How can a firm stay on the innovation edge while simultaneously supporting the most mission critical operations?

The decision to process 1.2 quadrillion dollars of value was not taken lightly at CME Group. It’s been said that “nobody gets fired for buying IBM” – that is, that big companies are the safe choice when a decision is most critical. 

But when innovation must ride beside reliability, decisions get trickier.  A company like CME Group must balance innovation with mission-critical capability.  And, in the case of CEP, CME Group’s decision illustrates that CEP has come of age.

However, there’s been a rash of recent debate about the entrance of IBM and Microsoft into the CEP market.  Recently, the New York Times published an article, which declared that innovation is moving to big companies from small companies – a conclusion that is not only wrong, it flies in the face of all the most basic tenets of innovation.  So in the innovative, fast paced CEP market, we are wary of, but don’t fear, the entrance of giants like IBM and Microsoft.  Indeed, we welcome it, because it draws more awareness.  The more people look, the more will buy StreamBase.

And from the customer’s point of view   I asked Steve Goldman, CME Group’s Director of Enterprise Architecture, if he had looked at IBM and Microsoft, and his response was casual:  “The decision was very difficult but we felt that based on our environment and needs thatStreamBase was a proven solution.” 

11,000,000...

                   ...The current average daily volume of futures contracts traded every day by CME Group...

“Our data feeds are like fire hoses,” Goldman said.  “Sometimes, we process a few hundred market data changes a second.  But when the markets get volatile, we process tens of thousands of market data changes per second. And, to make it even more challenging, our customers demand the fastest response time – in milliseconds – when volatility is at its peak.” 

Real-time response is becoming more and more important in mainstream business.   Any environment that deals with events (stock market price changes, web site click data, and so on), can benefit from event processing.  And the technological challenge of managing events at high speed, and with low-latency, requires a host of arcane tooling and expertise.  These geeky areas will also repay deeper exploration, including specialized messaging hardware and software, clever use of modern computing models like multi-core CPUs, grids, and clouds, FPGA’s, and efficient management techniques to keep it all running smoothly.

But modern CEP engines are becoming an essential tool for managing enterprise-class streaming IT environments – a better way to manage information that comes through a fire hose.

Hundreds....

                ...The number of products offered by CME Group...

While most businesses might have a few products, or a big business might have a dozen products, CME Group has hundreds of products. But CME Group’s products aren’t made of physical materials; they are built with software development tools.  So the speed and effectiveness of software development at the CME Group dictates the speed and growth of their business.

So the news that CME Group has chosen a new enterprise-wide development paradigm is important news.   CEP, which has been rising to prominence in the past 5 years, flips traditional database-oriented computing on its head.  CEP allows an application developer to design logic that examines what’s happening now instead of what happened in the past.  Options pricing and settlement consumes vast amounts of streaming information, so the CEP model fits perfectly, and allows CME Group to quickly create new products that process those streams.

Any business that has streams of data – from web clickstreams to point-of-sale transactions to financial market data - can apply CEP to more quickly and easily bring new products to market.  When the development methodology matches the form of the data, innovation approaches the speed of human thought.

80...

        ...The number of countries where CME Group's Globex provides regulated exchange access...

Although everyone talks of the inevitability of a global economy,  few firms understand its practical challenges than CME Group. CME Group offers electronic, regulated exchange access in over 80 countries.

The host of technologies that enables a 7x24, global operations are many.  But CEP, by making streams of data from all over the globe more intelligent, can make network event processing smarter and faster, and is becoming an important element in enterprise IT infrastructure.

Which leads to a critical innovation issue:  how to strike the right balance between a new technology and a proven technology?  A full answer to that question is outside the scope of this article, but the key elements for enterprise software products include well-designed threading architectures, bullet proof fault tolerance systems, robust management tools, comprehensive testing and debugging tools, and profiling tools. Consider that CME Group traces its origin to 1848, has NEVER had a default or a loss of customer funds resulting from failure, today announced its enterprise deployment of CEP technology.   This is the clearest signal yet that event processing is coming of age as it continues through its rapid growth as a software market.

A few milliseconds....

                                ...the response time necessary at the most heavily loaded times....

To see the manual forms used at exchange over 50 years ago puts the innovation in the capital markets  in perspective.  It took many seconds to fill out the information about trades back then; it takes 400 milliseconds (1/1000 of a second) for the human eye to blink;  today, CME Group’s trading decisions take place much faster than the blink of an eye – in just a few milliseconds.  How can this kind of latency be achieved in the face of massive volumes and massive global distribution?

We discussed the role of CEP in turning the traditional database-oriented model on its head.  Databases, of course, rely on writing data to disk.  The typical seek time for a disk is about 9 milliseconds.  CME Group’s data can change tens of thousands of times per second;  in order to make decisions in a few milliseconds

Exchanges settling contracts, brokers splitting up and routing client trades, electronic liquidity providers making markets, hedge funds finding and executing arbitrage trades, banks delivering currency rates…all in less than one hundredth of a human blink!  Applications are measured in microseconds, and the tools that do the measuring have resolution in nanoseconds, that’s one billionth of a second.  

StreamBase has been emerging as the top CEP company for some time now due to its proven rapid development environment, standards-based approach, high performance, low latency, and mission critical, fault tolerant architecture.   CME Group’s selection of StreamBase is yet another proof point that demonstrates that CEP is ready for the big time, and that StreamBase is leading the way.

That’s why CME Group made this important decision for their real-time, low latency operations – the need for speed, and the need for CEP, is critical at CME Group.

Massive scale.  Instantaneous response.  Constant change.  Nonstop operations. Taken individually, these are big technical challenges; taken simultaneously, they are an extreme business risk.  But risk for one is opportunity for another, and as CME Group shows us, by keeping an eye on the three key “abilities” – usability, reliability, and scalability –firms can keep innovating as business conditions continue to get more complicated.

 

On IBM, Unstructured Data, and CEP

(Richard Tibbetts is Chief Technology Officer at StreamBase Systems. Follow him on Twitter as @tibbetts)

Recently IBM System S (aka Infosphere Streams) has been getting a lot of attention in the press. As is the custom in the news business, writers try to focus on what is new or novel in the technology. Some have talked about the automatic query generation or the massive parallel scalability, which are some of the contributions of the System S research project. Unfortunately others have picked up on the distinction between structured and unstructured data processing and identified that as unique to System S. Philip Howard writing at IT Director is one example, and another comes in the comments on a StreamBase blog post.

The reality is that CEP engines have been processing unstructured data for a long time, and doing it well. For example, unstructured data processing is a major aspect of applications in the defense and intelligence space. As one architect at an intelligence agency put it, you can’t standardize messaging protocols when the other side doesn’t want you to listen.

Unstructured data processing means processing data that won’t fit into a standard relational model. The most unstructured data is media, such as text, audio, or video. Other kinds of unstructured or semi-structured data include XML or packet capture data. These data formats may come as raw streams, or as part of the data payload in events that also contain structured data.

Specialized algorithms and libraries exist to extract meaning from this data, ranging from XPath queries and protocol analyzers to natural language processing (NLP) and machine vision. Different kinds of analysis require different algorithms, but they all share some characteristics. A system for real-time unstructured data processing requires four things:

• Unstructured Data Objects — Data processing begins with data representation. The platform must have an efficient mechanism for representing large data object, integrated with memory management, persistence, and messaging systems.
• Extensible Language — Most unstructured data processing involves specialized algorithms. The language must be extensible so that these domain-specific algorithms can coexist with built-in functionality. Since the algorithms are often already available as libraries, it is important that these APIs support mainstream languages.
• Unstructured-Data Aware Authoring Tools — Authoring tools are a critical part of any modern platform, and it is important that the tools be designed for both real-time processing and for both structured and unstructured data processing.
• Clustering Capabilities — Unstructured data processing applications are often resource intensive. Spreading the load across large numbers of compute servers is a critical scaling technique. Being able to scale via multi-threading across a single large server is also required.

Many commercial CEP systems already have some or all of these capabilities; StreamBase, for example, has all of them. Unstructured data objects can be ingested over the network at very high speed. Advanced text processing plugins can be developed in Java or C++ - and can be developed and debugged in the CEP development, debugging, and testing tools (i.e., StreamBase Studio.) And event processing applications that analyze structured data can be deployed and scaled across large clusters.

One reasonably infers that System S has these capabilities, though for the moment it is difficult to find information on authoring tools.

Now Philip Howard suggests that System S is more capable in unstructured data processing because it does not use SQL. This is a non sequitur. The additional power afforded StreamBase by using SQL does not harm developers of unstructured data processing applications. Instead, it increases the flexibility of their systems, and the speed with which they can learn the system. One system, developed using StreamBase, first extracts meaning from unstructured text, and then uses that meaning data to identify which analysts need to be alerted to this data. The conditional alerting is expressed best in SQL, while the text processing uses unstructured facilities. Developers can build alerting logic using StreamSQL EventFlow and integrate the text processing algorithms without learning an entirely new language.

The IBM SPADE language is not based on SQL or any other language familiar to developers. This may have given IBM researchers a lot of freedom to experiment when designing the system, but it won’t help enterprise programmers learn the language quickly, and it certainly is not a silver bullet for unstructured data processing.

When Microsoft Enters Your Market (CEP): Cause for Worry or Celebration?

(Mark Palmer is president and CEO of StreamBase Systems)

This week, Microsoft announced they will enter the technology space inhabited by my company, StreamBase.  Naturally, I got a flurry of questions, ranging from: "Is Microsoft's entrance going to crush your business?" to "Could Microsoft entering your market be validating?"

The question behind these questions is:  "How can a company with less than 100 people compete with Microsoft?"

First let's start with some background:  what is complex event processing, or CEP?  CEP is an enterprise software technology - big companies buy it to do big things.  CEP is kind of like a database, but turned on its head for real-time decision-making.  For example, Orbitz uses CEP to monitor their business in real time - when there's a problem, Orbitz knows about it in milliseconds, which means they can do something about it before its too late.  And they can change the logic for detecting and responding to problems on the fly. Databases, in contrast to CEP, are designed to help a company look at what already happened, not what's happening now.  Clearly the database is an essential tool that can inform future decisions.  But knowing what's happening now helps identify and therefore seize business opportunities that exist for just a short time, like fixing your problem on Orbitz before you leave and go to Travelocity.  CEP is increasingly becoming a critical tool for the enterprise.

The most extreme, and common, use of CEP is in the capital markets - firms like Deutsche Bank, JP Morgan, and RBC use CEP to automate their trading decisions.  The financial markets produce millions of events every second, and opportunities to make money last, in some cases, for minutes, or, in some cases, for milliseconds. The systems that identify and exploit those opportunities are under constant development. In trading, rapid development and instant action aren't luxuries;  they directly impact revenue and competitive differentiation.

So, can Microsoft dominate CEP?  In his groundbreaking book Intrapreneuring, Gifford Pinchot researched the success and failures of innovative efforts in large U.S. corporations.  At a macro level, he found that big companies, statistically, are terrible at innovation: 

You might think that larger organizations would be stodgy in thinking up new ideas, but, because of a wealth of management talent, would be very good at executing them.  It turns out, however, that just the reverse is true:  our large organizations are producing large numbers of good ideas but generally are unable to implement them." 

This, of course, is why the venture capital industry is alive and well - innovation naturally comes from small firms.  However, Pinchot went on to describe that when big companies act like little companies, they can innovate.  But they must create small groups, accept and expect failure, let these groups be autonomous, hire different kinds of people, compensate them differently, manage them differently, and get close to customers.  All these attributes fly in the face of traditional big company culture.  

But Microsoft has pulled off innovation before - are they doing it here according to Pinchot's findings? It's a CEOs job to watch for competitive threats, and I see no evidence to suggest Microsoft is approaching CEP in a way that portends success.  Nimble moves by Microsoft could include:  recruit top visionary CEP engineers (they haven't); create a small, independent group (they didn't - the product is coming from the SQL server group, which has hundreds of engineers); get out and talk to customers directly and co-develop with visionary partners (we see no evidence of this); recruit and empower entrepreneurs and empower them to break down corporate structures (Microsoft didn't do this either).

So the physics that would make an entrepreneur worry just aren't there at Microsoft's CEP effort.

Which leads me to my current answer: the fact that Microsoft is trying to get into CEP is a big, important endorsement for CEP.  And since we think we have the best CEP product available (as many others who have evaluated us have found), we invite the competition.  If Microsoft's endorsement makes corporations more aware of CEP, it's better for StreamBase.  

Welcome, Microsoft!