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.
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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.
