IBM definitely falls under the category of a traditional vendor adapting to new trends in the IT world. Big data analytics is one of those trends; a rapidly-growing industry where the Big Blue is gradually growing thanks to, among other things, an aggressive M&A strategy.
The company acquired Algorithmics and i2 this year alongside its latest buy – DemandTec. IBM agreed to acquire the firm for $13.20 a share or $440 million in an all cash-deal, according to an announcement that went out on Dec 8. The sum represents a premium of more than 50 percent to the analytics firm’s closing price on Wednesday.
The DemandTec deal stands out because it provides a cloud-based analytics platform, targeting retailers that seek to gain better insight on the direct impact their decisions have on their customers. It’s the latest example of the cloud and big data converging – the theme of this year’s EMC World and a growing movement that will boost big data analytics’ jump to the SMB space. Currently however, big data is standing in the way.
Big data is a cleverly-coined buzzword that in fact centres mostly on Hadoop, the open-source analytics engine that munches on massive amounts of unstructured data such as social media, customer interactions and other data streams. It’s a trend-setting solution that spawned a platoon of innovative startups, but only enterprises willing to invest can make any use of it.
Among the reasons for this is quite obviously the sheer scale of the investment involved and the need for so-called data scientists to manage it all: talented individuals part DBAs, part mathematicians and part many other things that are scarce in the job market. Not every company has the resources to start a massive headhunting campaign that would match Google’s, an active recruiter in this particular segment.
This is why IBM’s customers are interested in a platform that brings together the advantages of the cloud, the economic side included, with the benefits of having insight to market reactions as they happen. Before the acquisition, DemandTec managed to gain about 450 clients including WalMart, Best Buy and other household names.
Hadoop is a powerful solution in the hands of enterprises that ingest massive amounts of unstructured data, and at the same time have all the resources needed available to them. Cloud-based solutions such as DemandTec appeal to customers interested in a more robust solution specific to their goals, and then the SMB market comes into the picture.
Vendors such as SAP have analytics offerings ready for SMB customers interested in analyzing how effective their social media marketing strategy or merchandizing efforts are, but don’t have the budget – or the in-house talent – for Hadoop. This is a big market, and the big data industry is gradually towards it. And this is more than just a forecast.
A startup called Quantivo intends to launch a self-service analytics-as-a-service offering next year that’s designed for the business user and not the data scientist. They plan to operate the way Salesforce does today, and that means a lot of potential.