Analytics: Sweetspot for Tech M&A

If I were to invest in a tech company today, it would definitely have to have an advanced-analytics story. ... Why? ... Well, firstly, with the recent announcement of IBM to invest both money and resources in research for analytics & big data projects; secondly, with research indicating that location analytics is going to be a $9 billion market within a few years; and thirdly, with a number of small and big companies (including IBM, EMC, Microsoft and others) focusing on either developing or supporting Hadoop-based or similar analytics products and solutions, I feel that there is a lot of attention on advanced analytics and data management space by investors, small, and big companies, and, therefore, it clearly lies in the sweetspot of technology M&A activities in the coming few years.

Now what is 'advanced analytics' ? Well, for the past decade we have, among various other things, generated and collected astronomical amounts of data -- end-user behavior data, business data, demographic data, social interaction data and so on -- using different Internet tools, social-media websites and other means. Now this astronomical amount of data, most of which is unstructured, needs to be turned into something meaningful and actionable. That is essentially, what our focus has currently turned to -- i.e. being able to make some sense out of all that data by analyzing them and more importantly generating some actionable insights out of them. One important distinction that I would like to draw here is that 'analytics' is very different from 'reporting', although a lot of companies like to use the term analytics to refer to a reporting tool that they might offer. Reporting only presents data in a meaningful form, something which traditional Business Intelligence (BI) companies used to do. 'Analytics', on the other hand, analyzes data and makes it actionable for its users. In other words, if you are reading this blog, I can tell from the statistics that I collect (not that I collect any readership statistics), how many readers have read this blog before you -- that is reporting. What I cannot tell, however, from that data is how can I increase the readership of my blog -- that is what analytics should give me. Clearly, whether you talk to consumer Internet sites, media companies, businesses or social-media companies like Facebook, Twitter or Linkedin, one of the big things in their minds, today, is how to take some meaningful actions based on their user data, including of course, how to do very targeted advertising.

Several recent relevant acquisitions highlight the importance of advanced analytics and data management:

-- HP's Acquisition of Vertica, a real-time analytics platform company.
-- Teradata's acquisition of Aster Data, again a real-time analytics technology provider.
-- Google's acquisition of PostRank, aiming to make sense of social engagement data.
-- IBM's $1.7 billion acquisition of Netezza, although more in the data warehousing and business intelligence space, clearly shows the amount of $ being spent in analytics related acquisitions. Other IBM's acquisitions of Coremetrics, Unica, and other analytics companies. In fact, over the past few years IBM has invested $12 billion in 23 or so analytics-related acquisitions.

-- Same is the case with EMC's acquisition of Greenplum, which is more of a data warehousing, BI play. However, using the acquisition, EMC recently announced a Hadoop-based appliance meant for data co-processing. Interesting..Huh!

Other smaller M&A activities include ePrize, a marketing campaign company, acquiring CRM division of Apollo Data Management, which although seemingly unrelated is actually a predictive analytics play, Adenyo acquisition of Arizona-based KinectX, again a small acquisition in the predictive analytics space, and Twitter recent announcement of its plans of acquiring Tweetdeck, in an attempt to make sense of their user data.

Several other companies, like Datameer, Xobni, Zettaset, Datastax and others have raised or are raising millions of venture dollars and are coming up with innovative analytics products and solutions.

So it looks like there is significant money & resources flowing into the analytics space by investors and deep-pocketed companies alike. At the same time, there is market demand for advanced analytics products from all corners of the Internet, by companies clamoring to make advertising dollars from their user data. Therefore, there is focus and attention on the analytics space and, as a result, a spate of analytics acquisitions is clearly on the cards.