What’s up with Data?

“The Economist” is not “Scientific American”; People don't read Economist to find out what’s happening in web technology. So, when a magazine like “The Economist” publishes a 20-page cover story on data and how data is being used by online businesses and government agencies, you know something big is going on…

And how big is that thing?…well, let me explain.

Let’s start by looking at companies that derive intelligence out of data, that is, the analytics companies. If I just look at the acquisitions of analytics companies in past 4 years, it’s tens of billions of dollars. The important thing to note here is that the analytics companies are not being acquired by bigger analytics companies; rather companies that traditionally bought or outsourced analytics work are now acquiring these companies. Isn't that strange? I mean what about the management principles of outsourcing your non-core work. For instance, when IBM implements ERP or relational database solutions for its clients, it uses SAP and Oracle. Similarly, if IBM wants to provide marketing analytics solution to its clients, it could offer web analytics solutions from CoreMetrics and Unica, it doesn’t have to buy these companies. BUT IBM just did that. Last week IBM shelled out 480 million dollars to buy Digital Marketing Optimization company Unica. In fact, IBM would have spent over 4 billion dollars in last 2 years buying several data analytics companies (Web Analytics giant Coremetrics in June-2010, Preditive Analytics company SPSS for $1.2 billion in July-2009, Datacap, RedPill, Exceros Assets, InfoDyne, Diligent Technologies, Cognos, AptSoft…see complete list here). Why? Is Data Analytics IBM’s core business now? 4 years back when IBM sold its web analytics company SurfAid Analytics to Coremetrics, it declared that Web-Analytics was not its core business. Why this about face now?? I’ll tell you what, it’s not because IBM wants to become an analytics company. It’s because social web was not as big a deal in 2005 as it is now, it’s because behavioural targeting was not $ 4.4 billion 5 years back, it’s because IBM has realized that people on social web are creating unprecedented amount of data and its clients are demanding softwares that can produce deep insights about tetrabytes of data that we so easily create everyday. Make not mistake, data analytics is the latest competitive edge provider. And who would want other players to handle such things on their behalf. Not just that, it’s also a pre-emptive move. Now that these companies are part of IBM, IBM has smartly extended the time that it’d take data analytics to become commodity.

In Sept-2009, Adobe paid $1.8 billion to buy Omniture, a data analytics company specializing in advanced web analytics and search marketing optimization. Why? Adobe’s not an analytics company for godsake. Same reason, Adobe realized that sooner or later its Flash clients would demand the kind of data that Google and Apple have access to. Adobe didn’t have much of a choice. Neither do other big companies that produce stuff for digital media.

Suddenly Analytics companies and specially web analytics companies have become hot cakes. We’ll probably see hundreds of acquisitions in next 3-4 years.

Web analytics guru, Eric T Peterson says future CMOs and Marketing heads will be required to have deep knowledge of web analytics. Isn’t that right? I mean if marketing champions are supposed to be great at knowing what customers want, doesn’t it make sense that their understanding of digital customers will directly depend on their understanding of web analytics, considering that more and more customers are turning digital,.)

The Government 2.0 initiatives going on across the globe is further expediting the pace at which data is becoming important. Tim Berners Lee is leading the Open Linked Data initiative that aims to transform the entire web (of documents) into a linked web of data (semantic web).  He also led the gov2.0 taskforce for the UK govt that has made a significant amount of government data freely available on internet for people to consume. We are a long way from semantic web vision but when that happens, I believe a data analytics company will replace googles and facebooks to become the biggest web-tech company of the world!!

Trivia – Economist also published a cover story on Semantic Web earlier this year, so, maybe that’s another big thing coming our way!!

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