Big Data: Strategic Investment Opportunities for IT Heavyweights & Other Investors

Arjunvasan Ambigapathy

Case Topic Description:With big data being a challenge for CIOs and CEOs in manufacturing, retail, healthcare, energy and finance industries, there is increasing demand for data-driven decision-making technologies that enable companies to deliver value to both their customers and for themselves. This demand creates both opportunities and challenges for big IT vendors such as IBM, Oracle, HP, EMC and Microsoft to create value to their customers and investors. The following presentation are the efforts to explain CIOs, CEOs of Big IT vendors and other strategic investors to leverage opportunity in big data market from an technology investment stand-point. This presentation should support big IT vendors not only to enable their customer transform from traditional business intelligence (BI) platforms to operational business intelligence (BI) platforms, but also help them retain existing market share (BI) and gain competitive advantage in the big data market through strategically investing in pure-play big data vendors with innovative solutions.Target Audience: CIOs and CEOs of Big IT Vendors like Oracle, IBM, HP, EMC etc. Additional audience include VCs and other strategic investors in big data markets

Healthcare

Manufacturing

Retail

Financial Services

Energy

Media & Communication

Clinical datasets

fradulant claims

claims data

retail purchase history

adverse drug reactions

medical records

laboratory reports

labor agencies

extensive electronic imaging

multimedia content

regulatory filings

tax filing activities

identified inconsistencies

product information

sales forecasts

sales channels

online interactions

catalogs, stores

blogs

instrumented production machinery

computer-aided design

R&D and product design databases

demand forecast data

Big Data Explosion

0

Reconcile Disparate Data Sources

Data Quality/Accuracy

Lack of Organizational View of Data

Accessing Right Data

Risk of Data Leaks

Data Security

Timeliness of Data

High Data Management Costs Storage

Capacity

CIO

Cha

lleng

e Th

erm

omet

er

We have too much data, but too few resources

Our organization lack right skills to effectively manage data

There is lack of analytical skills to create value from data

We can’t get data into right people in the organization

Top Challenges for CIO’s

An

Unm

et D

eman

d fo

r CIO

s

Volume

Value

Variety Velocity

Big Data Technology in

Demand

Technology for Big Data?: The Need of the Hour

Demand for technology that can process large volume of data

(Terabytes, Records, Transactions, Tables/files)

Demand for technology that can process various types of

data (batch neartime, realtime, streams)

Demand for technology that can quickly process data

(Structured, unstructured, semistructured, etc)

How Enterprises Create Value from Data through Analytics? The Big Data Era!

2006 2008 2010

CIOs focused Towards Data Storage

CIO Technology Adoption Roadmap

CIO will focus towards Big Data Analytics

SQL-based Business Intelligence OLAP Framework

Map Reduce Text Mining

Data Visualization

Storage Solutions

Cloud Computing

Advanced Analytics

Predictive Analytics

Mobile Business Intelligence

In-memory Analytics

Comprehensive Applications: Analytics across Industry Verticals

• Initial data warehouse model and architecture

• Limited use analytical data due to fewer business analysts

• CIO (Chief Information Officer) level of engagement in data management is limited

• Few KPI (Key Performance Indicators) in Revenue Generation were found

• Standardized data models• Database mining, high

performance computing and analytical appliances

• Tech savvy analytical modelers and statisticians were used

• CIO involves in data management strategies

• Significant impact in revenues were monitored and measured regularly

• Clear data management strategy• Business analytics competency

centers are established with data scientists

• Solve complex problems through competency centers

• CIO plays a transformative role in decision taken by the organization

• Frame new business strategy and competitive differentiation based on analytics

Departmental Analytics Enterprise Analytics Big Data Analytics

CIOs used Traditional Business Intelligence tools

Source: Arjunvasan, Cisco Systems

Global Big Data Investment Scenario (2009-12)

The total investment in Big Data technologies have improved from 6

deals in 2009 to 25 deals in 2011

Total funding in Big Data Analytics have improved

from $76.5 Million in 2009 to $700 Million in

2011

Investors are actively investing in technologies

developed by new market players

Top Investors

Top Beneficiaries

N S

E

W

Investor Inclinations Vs. Top Big Data Technology Segments

Hadoop Applications

Big Data Analytics PlatformsBig Data-as-a-service

Non-Hadoop Platforms

Investment Opportunity Analysis for IT Solution Developers & other Investors

Opportunity Strategy Evaluation (OSE) Grid

Hadoop Distributions

Next Generation Data

Warehousing

Big Data Analytic

Platforms & ApplicationsBig Data-as-a-

Service

Non-Hadoop Big Data Platforms

0

5

10

0 5 10

Probability of Success

Level

of

Att

arc

tivess

Big Data Analytics Platforms and Applications

With increasing demand among organizations to generate value from their existing abundant data, investing in Big Data Analytics Platform Developers is poised for success

Hadoop DistributionsVC funding has increased phenomenally in this market sub-segment with 266% increase in funding from beginning of 2008 to 2011. Cloudera, HortonWorks, MapR, Opera Solutions are few major beneficiaries in VC funding with few portfolios in Series D. Companies focus on certification & training programs in big data

Non-Hadoop Big Data Platforms have long-term (2-3 years) success assured, as far as the penetration of this technology is concerned. Companies in this segment have been attracting VC funding and from other investor sources. The recent IPO of Splunk has created huge waves in this market segment.

Non-Hadoop Big Data Platforms

Next Generation Data WarehousingThe importance of next-generation data warehousing solutions is evident from the recent acquisitions of vendors (Vertica by HP in 2011; Greenplum by EMC in 2010 and AsterData by Teradata in 2011). This segment is more matured, unless new innovations emerge in future

Big Data-as-a-ServiceThis market segment is poised to grow tremendously in future, as its implementation saves cost in the form of recruiting ‘data scientists’ and big data infrastructure costs. R&D investment and solving implementation barriers will increase the probability of success for investors

Opportunistic Big Data Technology Segments

NOTEInvestment opportunity analysis was performed based on analysis of each big data technology segments under the following factors:

• Level of Attractiveness: Sunk Cost, Demand from Industry Verticals, Favorable Government/Regulatory Initiatives and Barriers to Market Entry• Probability of Success: Research Efforts, Challenges to Tackle, Criticality of Challenges, Funding

Analyst Insights

Source: Arjunvasan

Big Data Analytics Platforms vendors are strategic partners within the big data industry. They drive industry growth by partnering with vendors from other big data technology segments

With evaluated high probability of success, Hadoop Distributions vendors (such as Cloudera) can make best strategic investment partners in the near term (1-2 years).

IPO

Strategic Investment Options for IT Heavyweights & Venture CapitalistsSe

ries

ASe

ries

BSe

ries

CSe

ries

D

Hadoop Distributions

Non-Hadoop Big Data Platforms

Big Data Analytic Platforms & Applications

Big Data-as-a-Service

Next Generation Data Warehousing

Big Data Market Segments

Revenue from Big Data as a % of Total Revenue0% 25% 50% 75% 100%

Fund

ing

Serie

s (in

Seg

men

ts)

Each

Seg

men

t sho

ws

Big

Dat

a Re

venu

es o

f pur

e-pl

ay v

endo

rs in

big

da

ta s

egm

ent $

0 - $

50 m

illio

n

Big Data-as-a-Service vendors have potential to make big wave in the Enterprise Software market, but funding is needed to improve few technical barriers

Very few seed investments indicate that it is time to start investing in these technologies

Stra

tegi

c In

vest

men

t Opti

ons

Current Funding Status Vs. Financial Performance of Key PortfoliosTop Strategic Investors

NOTE:• Suggestions for strategic investments quoted in the above chart is based on performance of innovative, pure-play big data solution developers, level of funding and revenues. It is vital to ensure the suggested strategic investment fits well with your business model and customer demands

• Big data innovations have been primarily from pure-play companies, which have lured investment in the form of venture funding and through IPO (Initial Public Offering). In addition to connecting with venture capitalists, it is also important to evaluate IP (Intellectual Portfolio) of each segment to make an informed decision

Source: Arjunvasan, Wikibon

2007

2008

2009

2010

2011

2012

Cranes

Data IntegrationBusiness Intelligence

Data Qualty

Enterprise Resource Planning

Data Mining

Database

Infrastructure

Risk

R&D Data Management

Reporting

Storage

Planning Analysis

Content Management

Text Mining

Predictive Analysis

Charts

Data Analysis

Web Analytics

•Predictive Analysis to help companies differentiate, compete and succeed

•BI solutions that address business specific and industry vertical issues

•Independent performance layer that fits enterprise infrastructure

Demands Transform Technologies!

2017

Traditional Business Intelligence

Operational Business IntelligenceTechnology Transformation

Leveraging the Big Data Opportunity

Mergers & Acquisitions

• There is a greater demand for IT organizations to integrate Hadoop into existing database to gain competitive advantage in the industry.

• With mature sales channels and support services, Cloudera and MapR Technologies could be prospective candidates for strategic investment

• Market consolidation is expected by 2017 and will be worth $50 billion

Technology Transition from Business Intelligence to Big Data IntelligenceM&A Strategy for Big IT Vendors

Top Investors

Top Technologies

Big Data market (shows

consolidation trend similar to

Business Intelligence

market (from 2007 to 2008)

For more details:Arjunvasan Ambigapathya.arjunvasan@gmail.comTel: +91-9962361689