Saturday, January 26, 2013

Are Big Data Apps the New SaaS?

SaaS and cloud computing have revolutionized the way that businesses operate, and have created a business opportunities for start-ups and established companies like Amazon, Salesforce, and Workday.  Many experts believe that the next wave of innovation will be driven by big data applications; web-based applications that utilize massive amounts of enterprise and web scale data to deliver intelligent results for their subscribers.  These applications are built using cloud-based technologies, and are web-hosted, multi-tenant, and use Hadoop, noSQL, and a variety of machine learning tools.[1]

Much of the recent hype around big data has centered around the tools and platforms needed to manage Big Data and deliver analytic insights. This is just the beginning; the largest wave of value creation is yet to come, and will focus on exploiting this infrastructure to create new applications that analytically optimize business processes. Big data applications have the potential to provide embedded insights for a particular market or business process, delivered at right time to the widest possible audience.



Big data application companies tend to demonstrate three consistent patterns. They focus on the answers that their customers need, and than work backwards to figure out what is required in terms of more data, tools or knowledge to get that answer. The second trait is that rather than delivering insights to a small number of business leaders; they embed insights directly into a business application or workflow. The last trait is that these companies have a strong understanding of information rights, and are methodical in their approach to acquiring, managing and using data.[2]

Sales and marketing has become a key area of focus for big data applications, due to the ability to create value by optimizing how marketers deliver messages and analyze performance across multiple channels.  Many venture capitals are willing to put big money behind this opportunity, including venture capitalist Ajay Agarwal, a director at Bain Capital Ventures who believes this space will yield the next $10 billion dollar company.[3]  Some companies in the space include the following:
  1. Bloomreach- marketing applications that are powered by a web-scale web relevance engine.  This technology complements search marketing efforts by modifing exisiting site content to increase the "crawlability" and quality of every page of a site.  
  2. Good Data- enables companies to measure their marketing by providing metrics that are understandable and actionable.  Provides insight into industry best practices, and key performance measures.  
  3. Lattice- provides the information necessary for sales and marketing organizations to target specific customers with customized product offerings, and to tailor their communication to a style that will be most effective.
  4. Lyris- software solution that integrates behavioral analytics with real-time data processing to optimize the targeting, meassaging, and performance of marketing campaigns.  
Big data applications have many of the benefits of SaaS, such as a delivery model that reduces integration costs, enables pre-purchase trial, and easy scalability.  They also have some significant advantages, such as the network effect associated with collecting data. Big data applications are still in their infancy, but get ready for the next revolution.

Further Reading:
The Future of Big Data is apps, not infrastructure- http://bit.ly/WcWpJk
Finding Big Growth in Big Data- http://bit.ly/JHErtg

References:
[1] http://techcrunch.com/2012/05/04/the-rise-of-big-data-apps-and-the-fall-of-saas/
[2] http://www.georgianpartners.com/uncategorized/big-data-applications-the-next-big-thing/
[3] http://www.inc.com/minda-zetlin/the-$10-billion-idea-this-vc-wants-to-fund.html