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Summary:

With many companies — including those in the rich, technology-savvy financial sector — struggling to store and analyze their mountains of data, it pays to establish a foothold in the analytics market. For vendors utilizing the capabilities of Hadoop, such a promise might be even sweeter.

Last week, I wrote about the firestorm of M&A action in the analytics space, but acquisitions alone don’t tell the whole story of why this space is so hot. The results of two surveys released this week help fill in the details — especially why it pays for vendors to establish a foothold in the analytics market. As I discuss in my weekly column on GigaOM Pro, the promise might be even sweeter for vendors selling Hadoop-based products.

First, there’s demand for analytics, and where better to see this than in the filthy-rich, technology-savvy financial services market? An InformationWeek survey commissioned by SAS and Platform Computing shows that both buy-side and sell-side firms are struggling with too much data, inflexible analytics software and hard-to-understand results. Further, a majority of firms surveyed admitted to performing key analyses either never or only in an ad hoc manner. But the good news is that, in the next year, many plan to increase their focus on risk management across the board.

Enter Hadoop. Cloudera cites financial services as one of two vertical markets adopting Hadoop most aggressively, with primary use cases being fraud detection, complex ETL and risk analysis. At Cloudera’s upcoming Hadoop World event, in fact, one of the first presenters will be Bank of America’s managing director for big data and analytics. On the infrastructure level, storing and processing data with Hadoop is also relatively inexpensive because it’s ideally suited to run on clusters of commodity servers.

But Hadoop isn’t perfect. A recent survey commissioned by Hadoop-centric startup Karmasphere indicates that there are several big obstacles to using it. Products aiming to make Hadoop easier to deploy and use — like those offered by Cloudera, Karmasphere, Datameer and IBM — directly address all three of these concerns.

It doesn’t take a genius to connect the dots. Financial services firms (along with many others) are facing increased pressure to analyze their data, and they’re increasingly turning to Hadoop to help them do it. The number of vendors peddling Hadoop-based solutions is small. If they’re not already, those currently operating should start experiencing significant customer traction.  Given the ripeness of the commercial Hadoop market, something tells me they won’t have the market to themselves for long.

Read the full post here.

Photo courtesy of Flickr user matze_ott.

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