December 18, 2012

IT Services Firms – The Heavy Lifters of Big Data

As Big Data continues to attract investor attention, technology vendors are reaching for more sophisticated services partners who can help customers achieve the promises of Big Data. IT services vendors focused on high-end data analytics and forensics are being sought after at a precipitous rate. While we at Clearsight are certainly also interested in data analytics businesses that can help clients gain more insight from their data, we understand that you have to get to the data first. Many buyers in the space look past the infrastructure services or “plumbing and pipefitters” to more advanced analytic capabilities, however, we still see a strong demand for businesses that can help implement some of the new Big Data solutions such as Greenplum (EMC), Netezza (IBM) or Teradata to enable data management and data integration. As a recent Harvard Business Review blogsite noted, regarding the notion that Big Data is the “New Oil,” to be of value, oil needs to be transported and refined and distributed to where it is needed. Otherwise, it’s a pool of sludge.

Last year, the market for IT services firms with pure big data-related services was extremely fragmented, with no vendor claiming over $100 M in pure big data services revenue and the majority were under $25M in revenue. The number of firms, and revenues of those firms, will dramatically change this year, but as they do, the need will be even greater for professional services expertise around strategy and architecture before any real work can be done at the analytics layer. Each release of our Big Data Dish is met with a large handful of Private Equity firms looking for data analytics services firms. Deals such as the recent financing of Opera Solutions (at a whopping 5X revenue multiple!), demonstrate the excitement around the analytics layer, however we believe professional services firms focused on the integration and management of data will continue to be in great demand.