“In the beginning the huge expectations were sobering. Now the market, mainly thanks to new technologies, is catching up with expectations. "
Adastra Group, the international software and consulting group, saw revenues surpassing two billion last year, where in addition to building traditional data warehouses and business intelligence analysis, they focuse mainly on big data. The Czech market accounted for about one quarter of the total turnover.
“I think that big data won’t replace data warehousing or business intelligence in the future,” said Pavel Kysela, director of Adastra’s office in an interview with Lupa, who joined the company thirteen years ago.
According to Kysela, the market for big data in the Czech Republic has been established and there are still a lot of companies trying to break into it.
“We are at a stage where the ‘buzz’ that existed around large data attracted a lot of companies that feel qualified to move and try to establish themselves in this segment,” said Kysela, adding that the first wave of consolidation was probably on the way.
Adastra operates in business intelligence, but has recently focused on the big data segment. So what is your main business now?
From the beginning, Adastra has focused on integrated business intelligence. Gradually, we’ve been adding other areas which are more or less related to this field. So, from the outset, we’ve focused on data and everything related to it. Traditional areas are gradually widening.
Data integration solutions that utilize specific data for specific business purposes were added. We’re talking about solutions for campaign management, fraud detection in telecommunications, insurance or banking, as well as solutions needed for approval within the banking system, for example.
For example, when applying for a loan, historical data and behaviour patterns are used, helping the bank determine how likely you are to repay the loan.
It is a matter superstructural data warehousing, which initially consolidates data, cleans it and prepares it for further use. Around that we build another “box” that already supports specific business processes.
So you focus on analysing data, not just data warehousing?
This is what I mentioned earlier, we are able to provide it. This means with warehousing we do the analysis, implementation and prepare it for operation. We have prefabricated systems for individual solutions that we can deploy and implement and of course adapt to customer requirements, where appropriate.
Logically, you eventually came to big data. Do you see great potential in it?
In principle, yes. We see big data as a field that overlaps with our focus and expands it to a certain extent. I think that the future will not replace big data warehousing or business intelligence. It’s just another additional part which can extend the use of information systems.
The fact is all big companies have primary systems that cover the basic administrative work of the organization, which you want to process and keep intact. A traditional practice still makes sense in this regard.
However, big data is something entirely new. It’s another area that is connected to and naturally expands our portfolio. But that does not mean it supersedes what we have done so far. This is a new market with great potential.
As we see it, big data essentially has two main directions for further development and utilization. One of them, of course, is that is technologies are increasingly emerging that are able to process unstructured data or data from other sources, which previously went unused. This means that it is possible to enhance management information systems and business intelligence solutions for more resources and give them more intelligence.
The second part is that behind the concept of big data, new technologies are emerging that basically allow commodity hardware to achieve a level of higher performance and greater reliability than is possible today with traditional solutions. In other words, this means that with the same amount of money you are able to process much more data.
This gives companies an advantage.
The first is that some traditional solutions can use new technology to cut the cost of business operations. With reasonable costs, you can do things you previously couldn’t, because it would be economically inefficient and impossible.
Can you give a specific example?
For example, we performed an analysis for a carmaker, which needed to process massive amounts of data from the control units of vehicles that are on the market. As part of the mobility warranty, the statistics showed that 40% of cars that broke down were repaired at the customer site and the rest in services.
A German automaker wanted to reverse this ratio to 60% of cars being repaired on the site of the break down, which on the one hand has a dramatic impact on reducing the company costs themselves, while on the other hand bringing a positive customer experience and satisfaction with the automobile.
How was the analysis conducted?
The model was essentially based on an analysis of data from the control units of vehicles which were directly involved, as well as those that are similar. If a problem occurs, it increases by analyzing data from the vehicle’s control unit the likelihood that engineers will repair the car on the spot, because they know where the problem probably and how to repair the car.
If the described were based on conventional technologies, it would have been economically challenging and probably would never have even been tried.
You’ve talked about banking and now the automotive industry. Which field are most of your customers from?
Historically, we work for companies that have large volumes of data, and don’t say that it is big data. It was the banks, insurance companies, telecommunications operators, large retailers, energy companies and then the state administration to a lesser extent.
I mentioned the carmaker, but we don’t have too many clients in this segment. Overall, these are segments where we have long been established or are trying to penetrate more now. One example is energy.
All these are also companies where big data can have some importance and which are basically involved with it to a greater or lesser extent. It’s true that even when big data has been spoken about for a long time, not too many companies have a clear idea of how they want to use it.
And corporate demand is rising?
Compared to many other areas, it’s a segment with some awareness about it, so clients are willing to invest in it, but in many cases they don’t know how. Therefore, the market can be seen from several angles.
One of them is that a company buys and implements technology that can handle big data, but only after figuring out how it can actually help them. The second model is that the companies first define how they want to take advantage of big data, and accordingly choose and implement the system. A third possibility is that the enormous popularity of large data recently have given rise to many contractors who want to take advantage of this phenomenon, albeit not offering anything new or revolutionary. The put a big data sticker on traditional products and sell it for more money.
But in this respect, the level of development among companies differs. There are companies that are ahead and are able to extract data large concrete business results. Some companies are able to sell big data. Not just individual solutions, but rather their products that they sell to others. And then there are companies that are bumbling around.
The trend is clear, though.
According to me, which has also been confirmed by some foreign analysts, development in this field will be a dual W profile. At the beginning it was because there were huge expectations that gave way to disillusionment, because companies ultimately did not know exactly how their big data can be helpful.
Now, mainly due to new technology, the market is catching up with expectations. There are specific concepts that work, and now the real phase when companies are starting to use it is starting. So, in the long run, it may meet initial expectations.
It is a domain that can really move the world but it will take some time. Once technology is more advanced, the market realizes what big data can provide and so on.
How do Czech companies approach big data in comparison with foreign companies?
When comparing markets like this we do not find much difference. I wouldn’t say that the US market is a few years ahead of us. But it is true that there are some large and advanced players who are in this respect very far compared to the most progressive here.
They were able to catch everything early, put in the relatively high investment and courage as well. At the same goes for companies that typically, by definition of its business, operate with significantly different amounts of data and other information sources than Czech companies. I’m referring to Amazon, Google and similar companies.
Are small companies interesting for you as well?
They’re not our target group. At the moment, we can’t offer them a suitable solution.
You mentioned that you’re not too active in state administration. Why?
Private business is built on certain principles, which do not work so much in state administration.
Rampant competition has recently appeared in the big data market. What is the potential of the Czech market? In other words, is there still room for more players?
It is very difficult to quantify because the entire market is really growing dynamically. We ourselves are wondering how far it might grow.
Regarding the competition, I could quote my grandmother, who said that “many are called, but few are chosen.” There are plenty of companies that are engaged in this area. But on the other hand, there are a considerably smaller number of companies that have greater practical experience with big data. The market is now establishing itself in this respect.
Has the time come already for some market consolidation, or are there not enough companies yet?
We are at the stage where the “buzz” around large data exists, attracting a lot of companies that feel called to move in this segment and are trying to establish themselves in it. However, I think over time the market will consolidate, clarify and shows who is realistically able to deliver something.
But this is also about who manages to bring something new to the client, something beneficial. At this moment it’s difficult for clients to choose according to previous experience, because almost nobody has it. They choose on the basis of other criteria.
But if we speak again in a year there will already be many companies that will have already done actual projects, so they will obviously have a much better position in other tenders. From my perspective, this market is being shaped and defined.
Will the market also branch out?
Perhaps the market will divide in the sense that some companies begin to specialize in a particular area; maybe just the technology or consultancy or for data analysis and so on.
It’s increasingly said that technology companies have difficulties in finding qualified people. Is that also your case?
Yes, our team is overloaded now. It’s hard to find technically educated people on the Czech market. In addition, in coming years the situation may be worse just from the demographic point of view, as the number of students completing university is decreasing. Between this school year and 2017/2018 there is almost a one-quarter slump. On the one hand, demand increases, while on the other the number of skilled people decreases.
How many people do you have now and how many you need?
We’ve got something like 220 in the Czech Republic. If we got 30 to 50 new employees in the next 12 months, I would consider it a success.
Now a bit of a philosophical question. Isn’t there the danger that we’ll increasingly be dependent on data from information systems when making decisions, which big data is able to be oriented in, but people are not able to deal with it?
I’m not sure right now there is really a fundamental break. In large companies the overwhelming majority of decisions already run on the basis of information that is based on data from information systems.
We now use slightly different technology and adding more data on the very principle of the current operation does not change anything. Since the information systems of large companies are already so complex, to a certain extent they rely on the IT infrastructure. It depends on the quality of systems, processes and people who work with everything. All this affects what the error rate will be there.
It is a further growth of complexity, another reason to look at the quality and use of data. But basically it is just an extension of a system that is already here.
Pavel Kysela – CEO of Adastra, the management software product development company, started at London Logic Prague, where he worked as a developer and analyst, and eventually led part of the time management software development, which has enjoyed worldwide success.