Guest post: Why Ribbit is worth $105m to BT
We've long believed that the real reason you build an open telco platform is to facilitate interactions between merchants and users, not to enable a supply chain of media or entertainment products. The telco industry uniquely has relationships with nearly every economically active person, a means to reach them, and customer data that nobody else has. We've asked Thomas Howe, an authority in the space of communications enabled business processes, to explain the real significance of BT's entry into the telco platform space -- the start of a global telecom platform war.
As I reported a few weeks ago, Ribbit has indeed been sold to BT. The selling price -- $105 million -- has caused some surprise. However, it makes complete sense to me. Here's the math that makes that work:
- BT has relationships with several thousand global companies in Britain and beyond: British Airways, the BBC, HSBC, Barclays, Royal Dutch Shell, BP, RBS... you get the picture. Each of these companies will one day demand (if not already) that their telecom provider offer APIs so that they can integrate their business process with the communications infrastructure. Thus, the BT Web21C APIs are born.
- As a round number, assume that each large company has between twenty and forty large applications that require integration and management. We can count six areas that all have right off the bat : CRM, ERP, HR, logistics, inventory management, IT automation. No stretch to imagine that each area has several applications in it, or different divisions have different needs, etc.
- Again, as a round number, business efficiencies of 20% are commonly seen in CEBP applications, providing ample reason to integrate communications systems with enterprise applications.
- So, from simple multiplication, we have several thousand companies with 20 to 40 applications each, giving us about 30,000 CEBP applications for BT's large customer base alone.
- From a world-wide market perspective, just multiply that number times the number of large carriers.
So, what are the chances that there are 30,000 CEBP engineers in the world? Would you say about... zero? I would. What happens when you have a tool that any web developer can use, like Flex or Flash? You've got a fair sight more than the 100 or so CEBP engineers that exist now. By aquiring Ribbit, BT acknowledges that there's a severe go-to-market issue with CEBP deployments: there aren't enough engineers to do them.
[Ed - You can see Thomas present at our next Telco 2.0 Industry Brainstorm in London on 4-5 November.]