The importance of artificial intelligence (AI) and big data as key themes driving merger and acquisition (M&A) activity has been highlighted by Salesforce’s purchase of data visualisation specialist Tableau for $15.7 billion. The deal comes after Google bought another data analytics company, Looker, earlier this month for $2.6 billion.

Ed Thomas, principal analyst with GlobalData’s Technology Thematic Research team, said, “The data analytics acquisition trail may now see further activity with companies such as Domo and Alteryx becoming potential M&A targets as those vendors that need to beef up their data analysis capabilities find the pool of available data specialists to acquire dwindling.’’

Big data-led M&A activity

GlobalData’s Thematic Research has highlighted big data as one of more than 50 key themes affecting the technology sector over the next two years.

Amazon and Alphabet have been identified as leaders in the big data theme and they are joined by Chinese firms Alibaba and Baidu, Salesforce and Splunk, IBM in IT services, Qlik Technologies in decision management applications, Software AG in enterprise applications, and Cloudera in cloud management platforms.

The moves by Salesforce and Google highlight the extent to which big data – and also more widely, AI – are now driving a new wave of M&A activity.
For example, AI is increasingly essential to companies, both in terms of efficiency and offering new capabilities. There is also a global talent shortage in AI. So companies will now consider “acqui-hiring” other companies simply to get access to their data scientists and consultants.

A further consideration is that AI tends to be most useful when it is embedded in particular use cases, which means the market is becoming fragmented. Companies are likely to buy others to shore up their functionality in a given area rather than be what might be called ‘AI generalists.’

GlobalData’s Thematic team believes that even where M&A activity does not look like “an AI deal”, it may indeed be one, simply because AI is itself enabling the functionality being bought.

As well as the Salesforce-Tableau and Google-Looker deals, other acquisitions over the last couple of years that have been AI-driven include Cisco’s February 2018 acquisition of Broadsoft Software for $1.9 billion, Broadcom’s November 2017 acquisition of networking equipment provider Brocade for $5.9 billion, and Cisco’s acquisitions of Springpath for its hyper-convergence software in September 2017 and the MindMeld AI conversational platform in May 2017. In Nov 2016, HP Enterprise bought SGI, gaining access to SGI’s high-end servers for big data.

GlobalData’s Thematic Research reveals that both legacy back office and modern cloud-first solutions share one common denominator: big data. The more data, from the most sources in the most timely manner, the better. This is big data.

The term ‘big data’ refers to large, diverse data sets that, when analysed computationally, can reveal patterns, trends and associations, especially relating to human behaviour and interactions. GlobalData’s Thematic team sees seven key segments in the big data value chain: data governance and security, business intelligence, data analysis, data storage, data processing, data aggregation, and data integration. Thomas adds, “Companies who invest in the right themes, such as big data, become success stories while those who miss the big themes end up as failures.

“The challenge for enterprises is not collecting data – data is not scarce, nor is it difficult to extract – but deriving actionable insight from the wealth of information that they accumulate on a daily basis. This is where big data technologies come in, with their ability to handle extremely large, diverse datasets that, when analysed, can reveal patterns, trends and associations, especially relating to human behaviour and interaction.”

GlobalData’s Thematic Research ecosystem is a single integrated global research platform that provides a framework for tracking all themes across all companies in all sectors. At the heart of the ecosystem is a “thematic engine”, which uniquely provides a leading indicator of future performance, ranking companies on the basis of overall leadership in the most important themes impacting their industry.

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The engine tracks 600 technology, media and telecoms companies against more than 50 themes, generating over 30,000 thematic scores. The algorithms in the thematic engine create thematic scorecards for 17 TMT sectors, for example in semiconductors. A company might be a market leader today but, if it is not well positioned in the most important themes driving its industry, it will not be a leader tomorrow.

Want to know more about GlobalData’s thematic research ecosystem, and view the 2018 and 2019 Themes reports? You can visit the Thematic Scorecard landing page where you can buy any of the Sector Scorecards, download a free brochure or buy the 2019 Themes report.

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