What does Goldman Sachs' $100m investment in APT mean for big data analytics?

The next step for APT could be an IPO, CEO Anthony Bruce tells Computing

Applied Predictive Technologies (APT) has received a $100m minority investment from the merchant banking division of Goldman Sachs in a deal that APT describes as the largest investment in predictive analytics to date.

Corporations including Walmart, Hilton, McDonald's, Kraft Foods and clothes firm Abercrombie & Fitch use APT's causal analytics technology to try to ensure their business decisions deliver the best results possible.

"It is about understanding whether [a strategy] will work, and where will it work, so they can target it to this location, with these people, with these products. And then looking at what elements of the action makes it most successful, so they can modify what it is they're doing to maximise action," APT's CEO, Anthony Bruce, told Computing.

"This process and discipline of test and learn, when supported by an enterprise model can drive tens of billions of dollars of value," he added.

In explaining what predictive analytics actually is, the founder and chairman of APT, Jim Manzi, told Computing that it helped firms to get "about three per cent better at guessing" what a consumer would like to buy.

"It doesn't say: ‘Now I know for a fact that you want this'. What it means is I get about three per cent better at guessing - and this is worth a lot of money," he said.

According to Gartner, advanced analytics remains a relatively immature market. Only 16 per cent of 1,702 respondents to Gartner's Magic Quadrant for Business Intelligence and Analytics Platforms customer survey reported extensive use of predictive analytics in their organisations.

But Bruce believes that the investment from Goldman Sachs is an "exciting confirmation of the [big data analytics] trend from a market perspective".

"It's an endorsement of how we've played the game and what we've accomplished," he said.

Joe DiSabato, managing director at Goldman Sachs, explained that the firm's decision to back APT was based on its software, track record and management team.

"APT is a rare innovator, with multiple patented and commercially proven approaches for truly leveraging big data to generate shareholder value. The collection of talent at APT representing deep data science, advanced math and computer science is delivering that opportunity to customers every day, driving tremendous value," he said.

The journey

Much has changed for the Arlington, Virginia-based firm since it launched in 1999. Then, Bruce said, the concept of software as a service (SaaS) being leveraged for predictive analytics to make a strategic impact within an enterprise was unheard of. But as cloud security concerns ease, APT believes that customers are seeing the benefits of a cloud-based analytic ecosystem that can leverage big data.

What does Goldman Sachs' $100m investment in APT mean for big data analytics?

The next step for APT could be an IPO, CEO Anthony Bruce tells Computing

APT's growing customer base is not restricted to the US, with the firm looking to expand into Europe from its London office, and into Asia from its base in the Taiwanese capital, Taipei.

But not all corporations are ready to embark on a big data analytics strategy just yet. For example, Jaguar Land Rover's CIO, Jeremy Vincent, recently told Computing that while he can see the advantages of such a strategy, he has yet to gain the approval of the firm's board, which remains unconvinced.

APT's Bruce believes that many organisations have still not fully understood the capability of predictive analytics, and that for many of those that already have there is still work to be done to gain the most value from existing data.

"There was a time when only a handful of our customer base was fully leveraging their transactional log - that is now becoming more common. There was a time when only a fraction of our customer base had fully leveraged social media, and its outcomes, and that is a trend that is accelerating; only a fraction of our customer base is leveraging the multitude of indicator data that is available in their business systems - be that customer interaction data or indicator data about their operations - that is a trend that is going to accelerate. The use of data and the expansion of datasets is accelerating very quickly," he explained.

APT's CEO said that the firm usually tells its customers what they should be looking at next, it is also often the case that CTOs and CIOs will come to APT and ask whether new datasets can be analysed or whether there are possibilities to explore a dataset in more detail.

What next for APT?

APT could follow the likes of ServiceNow, Eloqua and Workday to an initial public offering (IPO), Bruce suggested.

"The most important goal is to partner with customers for their success; will we potentially become a public company in support of that? That is a possibility. Right now we see a lot of room ahead of us in that opportunity, so we're focused with our heads down in growing the business," he stated.

While enterprise SaaS providers have a good record on the stock market, APT would be the first predictive analytics firm to go public, and if it fared well, it would confirm - more than the $100m Goldman Sachs investment - that predictive analytics is well on the way to becoming an essential component of any forward-thinking enterprise's IT arsenal.