Every year around this time I review last year’s forecast and publish some thoughts about the coming year.
2015 Assessment
First, a brief review of my predictions for 2015:
(1) Apache Spark usage will explode.
Nailed it.
(2) Analytics in the cloud will take off.
In 2015, all of the leading cloud platforms — AWS, Azure, IBM and Google — released new tools for advanced analytics and machine learning. New cloud-based providers specializing in advanced analytics, such as Qubole and Domino Data, emerged.
Cloud platform providers do not break out revenue by workload, so it’s difficult to measure analytics activity in the cloud; anecdotally, though, there are a growing number of analysts, vendors and service providers whose sole platform is the cloud.
(3) Python will continue to gain on R as the preferred open source analytics platform.
While Python continues to add functionality and gain users, so does R, so it’s hard to say that one is gaining on the other.
(4) H2O will continue to win respect and customers in the Big Analytics market.
In 2015, H2O doubled its user base, expanded its paid subscriber base fourfold and landed a $20 million “B” round. Not bad for a company that operates on a true open source business model.
(5) SAS customers will continue to seek alternatives.
Among analytic service providers (ASPs) the exit from SAS is a stampede.
With a half dozen dot releases, SAS’ distributed in-memory products are stable enough that they are no longer the butt of jokes. Customer adoption remains thin; customers are loyal to SAS’ legacy software, but skeptical about the new stuff.
2016 Themes
Looking ahead, here is what I see:
(1) Spark continues its long march into the enterprise.
With Cloudera 6, Spark will be the default processing option for Cloudera workloads. This does not mean, as some suggest, that MapReduce is dead; it does mean that a larger share of new workloads will run on Spark. Many existing jobs will continue to run in MapReduce, which works reasonably well for embarrassingly parallel workloads.
Hortonworks and MapR haven’t followed Cloudera with similar announcements yet, but will do so in 2016. Hortonworks will continue to fiddle around with Hive on Tez, but will eventually give up and embrace Hive on Spark.
SAS will hold its nose and support Spark in 2016. Spark competes with SAS’ proprietary back end, but it will be forced to support Spark due to its partnerships with the Hadoop distributors. Analytic applications like Datameer and Microsoft/Revolution Analytics ScaleR that integrate with Hadoop through MapReduce will rebuild their software to interface with Spark.
Spark Core and Spark SQL will remain the most widely used Spark components, with general applicability across many use cases. Spark MLLib suffers from comparison with alternatives like H2O and XGBoost; performance and accuracy need to improve. Spark Streaming faces competition from Storm and Flink; while the benefits of “pure” streaming versus micro-batching are largely theoretical, it’s a serious difference that shows up in benchmarks like this.
With no enhancements in 2015, Spark GraphX is effectively dead. The project leadership team must either find someone interested in contributing, fold the library into MLLib, or kill it.
(2) Open source continues to eat the analytics software world.
If all you read is Gartner and Forrester, you may be inclined to think that open source is just a blip in the market. Gartner and Forrester ignore open source analytics for two reasons: (1) they get paid by commercial vendors, and (2) users don’t need “analysts” to tell them how to evaluate open source software. You just download it and check it out.
Surveys of actual users paint a different picture. Among new grads entering the analytics workforce, using open source is as natural as using mobile phones and Yik Yak; big SAS shops have to pay to send the kids to training. The best and brightest analysts use open source tools, as shown by the 2015 O’Reilly Data Science Salary Survey; while SAS users are among the lowest paid analysts, they take consolation from knowing that SPSS users get paid even less.
IBM’s decision in 2015 to get behind Spark exemplifies the movement towards open source. IBM ranks #2 behind SAS in advanced analytics software revenue, but chose to disrupt itself by endorsing Spark and open-sourcing SystemML. IBM figures to gain more in cloud and services revenue than it loses in cannibalized software sales. It remains to be seen how well that will work, but IBM knows how to spot a trend when it sees it.
Microsoft’s acquisition of Revolution Analytics in 2015 gives R the stamp of approval from a company that markets the most widely implemented database (SQL Server) and the most widely used BI tool (Excel). As Microsoft rolls out its R server and SQL-embedded R, look for a big jump in enterprise adoption. It’s no longer possible for folks to dismiss R as some quirky tool used by academics and hobos.
The open source business model is also attracting capital. Two analytics vendors with open source models (H2O and RapidMiner) recently landed funding rounds, while commercial vendors Skytree and Alpine languish in the funding doldrums and cut headcount. Palantir and Opera, the biggest dogs in the analytics startup world, also leverage open source.
Increasingly, the scale-out distributed back end for Big Analytics is an open source platform, where proprietary architecture sticks out like a pimple. Commercial software vendors can and will thrive when they focus on the end user. This approach works well for AtScale, Alteryx, RapidMiner and ZoomData, among others.
(3) Cloud emerges as the primary platform for advanced analytics.
By “cloud” I mean all types of cloud: public, private, virtual private and hybrid, as well as data center virtualization tools, such as Apache Mesos. In other words, self-service elastic provisioning.
High-value advanced analytics is inherently project-oriented and ad-hoc; the most important questions are answered only once. This makes workloads for advanced analytics inherently volatile. They are also time-sensitive and may require massive computing resources.
This combination — immediate need for large-scale computing resources for a finite period — is inherently best served by some form of cloud. The form of cloud an organization chooses will depend on a number of factors, such as where the source data resides, security concerns and the organization’s skills in virtualization and data center management. But make no mistake: organizations that do not leverage cloud computing for advanced analytics will fall behind.
Concerns about cloud security for advanced analytics are largely bogus: rent-seeking apologetics from IT personnel who (rightly) view the cloud as a threat to their fiefdom. Sorry guys — the biggest data breaches in the past two years were from on-premises systems. Arguably, data is more secure in one of the leading clouds than it is in on premises.
For more on this, read my book later this year. 🙂
(4) Automated machine learning tools become mainstream.
As I’ve written elsewhere, automated machine learning is not a new thing. Commercial and open source tools that automate modeling in various ways have been available since the 1980s. Most, however, automated machine learning by simplifying the problem in ways that adversely impact model quality. In 2016, software will be available to enterprises that delivers expert-level predictive models that win Kaggle competitions.
Since analysts spend 80% of their time data wrangling, automated machine learning tools will not eliminate the hiring crunch in advanced analytics; one should be skeptical of vendor claims that “it’s so easy that even a caveman can do it.” The primary benefit of automation will be better predictive models built consistently to best practices. Automation will also expand the potential pool of users from hardcore data scientists to “near-experts”, people with business experience or statistical training who are not skilled in programming languages.
(5) Teradata continues to struggle.
Listening to Teradata’s Q3 earnings call back in November, I thought of this:
CEO Mike Koehler, wiping pie from his face after another quarterly earnings fail, struggled to explain a coherent growth strategy. It included (a) consulting services; (b) Teradata software on AWS; (c) Aster on commodity hardware.
Well, that dog won’t hunt.
— Teradata’s product sales drive its consulting revenue. No product sales, no consulting revenue. Nobody will ever hire Teradata for platform-neutral enterprise Big Data consulting projects, so without a strategy to build product sales, consulting revenue won’t grow either.
— Teradata’s principal value added is its ability to converge software and hardware into an integrated appliance. By itself, Teradata software itself is nothing special; there are plenty of open source alternatives, like Apache Greenplum. Customers who choose to build a data warehouse on AWS have many options, and Teradata won’t be the first choice. Meanwhile, IBM, Microsoft and Oracle are light years ahead of Teradata delivering true hybrid cloud databases.
— Aster on commodity hardware is a SQL engine with some prebuilt apps. It runs through MapReduce, which was kind of cool in 2012 but DOA in today’s market: customers who want a SQL engine that runs on commodity hardware have multiple open source options, including Presto, which Teradata also embraces.
Meanwhile, Teradata’s leadership team actually spent time with analysts talking about the R&D tax credit, which seemed like shuffling deck chairs. The stock is worth about a third of its value in 2012 because the company has repeatedly missed earnings forecasts, and investors have no confidence in current leadership.
At current market value, Teradata is acquisition bait, but it’s not clear who would buy it. My money’s on private equity, who will cut headcount by half and milk the existing customer base. There are good people at Teradata; I would advise them all to polish their resumes.
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