Splunk Is a Big Winner in Big Data
Big Data may be overhyped as a technology trend, but we believe the large majority of world-wide data is underexploited for generating actionable business insights. Most data management and business intelligence technology today has been developed to optimize structured data generated by transactional systems. IDC estimates the universe of digital data is growing by about 40% per year, and 90% of this data is unstructured, while less than 20% is “touched” by public or private cloud services, including search and social-networking services from Google (ticker: GOOG) and Facebook (FB). As a result, businesses have an opportunity—and a potential competitive challenge—in generating business insights or reducing costs by mining this data.
Our roundtable included a spirited debate about what constituted the most popular use cases for Big Data—those that enabled IT cost reduction, or those that generated new business value (e.g., through competitive advantage). Major “buckets” of use cases are customer experience, customer analytics (including churn prediction), marketing analytics and risk analytics.
We heard a variety of predictions about the evolution of industry structure. Most participants agreed that the adoption of Big Data technology will be more of a vertical affair than the spread of cloud, mobile, and infrastructure technology, which has been largely horizontal. The Big Data vendor landscape will likely have a lot of room for applications, but will probably see more consolidation of enabling technologies as customers get more “scar tissue” from failed experiments.
The event concluded with a discussion of the timing for more wide-scale adoption of Big Data technology, particularly Hadoop. Participants felt that Hadoop was about two to five years away from “crossing the chasm” to mainstream adoption. However, several factors could speed up this adoption: adoption by cloud vendors; the affordability of open source; and the growing importance of mobile computing. Participants generally felt that cloud computing is accelerating Big Data, as the use of Hadoop by major Internet brands helps promote awareness of the technology, and software-as-a-service (SaaS) providers are good thinkers about how to use machine data. However, as bytes move to Amazon’s infrastructure-as-a-service, vendors will need to figure out how to monetize these bytes with Amazon.com (AMZN) in the mix.
We are highlighting Outperform-rated Splunk (SPLK) as a long-term winner in the Big Data space, in our view. We believe Splunk squarely addresses some of the key challenges associated with Big Data projects that were articulated by the roundtable participants: It addresses the high volume and variety of Big Data with innovative technology; it solves well-established business problems in large markets; and it enables rapid time-to-value. Splunk’s target uses include information-technology operations, security, and business analytics (particularly clickstream analysis), collectively worth over $30 billion in annual revenue. Source