Due Diligence on CEP Vendors – Think Business Not Technology

In another one of his excellent blog posts, Financial Due Diligence, Marc Adler mentions a New York Times article that describes the same effects on software companies I discussed a few weeks ago in The Subprime Crisis and the Impact on the CEP Market.

Marc blogged that some CEP “pure-play” companies have been laying off their employees due to the current crisis in financial services.   He is quite correct that companies should purchase CEP technologies from software vendors who have a strong, sustainable and viable business.    Marc suggests that companies serious about acquiring CEP software should:

  • Insure the source code is written in a “mainstream” language;
  • Keep the vendor’s source code in escrow;
  • Do an analysis on the vendor’s business model and balance sheet; and,
  • Understand the depth and situations of the key technical personnel.

In my roles as lead systems engineer, consultant and trusted advisor on many IT projects over twenty years, I used to follow a standard weighted-matrix developed that factored in the criteria above (and other criteria).  I’ll try to find and post it – but it is pretty standard systems engineering analysis.   

Many of the CEP vendors have been promoting and marketing “low latency.”   As Marc implies, the key criteria when evaluating a product is oriented toward business and sustainability factors.   Most companies have very similar technologies and today’s leader in one small technical detail will be a lagger tomorrow.   Technology changes very fast and having a nose up in the horse race is less important than having strong healthy legs.

So, don’t be fooled by technology babble and buzzwords when you are making investments in event processing.  Do your due diligence on the business, include the financials, as Marc reminds us.


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