Feb
17
Index to Analytics
Filed Under B2B, Big Data, Blog, Financial services, Industry Analysis, internet, Reed Elsevier, Search, semantic web, STM, Thomson, Uncategorized, Workflow | Leave a Comment
A long time ago the Financial Times formed a joint company with the London Stock exchange to exploit the FTSE share price index. I seem to recall that this was not a success, but a colleague at that time joined the board and I recall asking him what an index was for. He replied that it was a sort of branding statement, and it also said that you had the underlying data from which to create the index, should anyone want to look at it. And was that a good business? Well, not really, since few people were able to make sense of the underlying data. So it was mostly a brand thing, then? Well, yes. And a brand thing where, since most people refer to the “footsie”, the brand reference is lost in speech.
I do not believe that they have the same view at FTSE now, and in a world currently rampant with indices it is interesting to check on the progress of players like Argus Media (www.argusmedia.com) who have used indexation powerfully to elevate a small player in energy and commodity data markets into a very powerful one. I wrote about this in November 2009 (https://www.davidworlock.com/2009/11/battle-of-the-indices/) and envisaged the war between Argus and McGraw Hill’s Platts in oil markets as a classic David-Goliath story – but one which would need to be followed up by the victor to consolidate the gain with a wider service base. To quote: “index publishing is becoming an interesting value phenomenon. It creates lock-in around which workflow activities and value-add analytics can be built. It gives brand focus and recognition. It provides contract opportunities to supply and maintain service points on client intranets. In truth, it is sexier than it sounds.”
In light of this I was delighted to find that Argus Media had made an important purchase in analytics software this month. Fundalytics “compiles, cleans and publishes fundamental data on European natural gas markets” and is a first service acquisition of this type that the company has made. Starting with natural gas, however, it should be possible to create a wider range of analytics activities, across energy markets, which are currently so very active, and other commodity areas like fertilizers where the company is building a stronghold. Competition is obviously fierce, with direct pressure from Platts, about double the size, and RBI’s smaller ICIS. And then there are the market information players who have always used the data and its primary analysis to form notation services for both players and investors – the Wood Mackenzies and IHS operations, and, at a further remove, Michael Liebrich’s New (now Bloomberg) Energy Finance and Thomson Reuters’ Point Carbon. It is understandable that there would be heavy competitive pressure in such an important field, and rewards will align with the industrial, financial and political clout the whole field invokes. But of the companies mentioned here, some are primary data producers, some secondary, and some create market commentary without owning a data farm at all. Can they all survive, and, if not, what sort of equipment do you need to succeed?
This is why the Argus Media purchase is more important than its size or value. If we have learnt anything from the consolidation of service markets in the network in the past decade then it is, surely, that relatively few players are needed to provide the whole range of internet services, and that users do not lust for more – indeed, they seem to want one sure place to go, and an alternative in case their preferred supplier tries to abuse his pricing control. You could point to the history of Lexis and Westlaw in law markets for part of the history of this. Then they want from those two lead suppliers the ability to secure access to all the core data that they need: to both use that data and its analysis on the supplier service, and suck data into their own intranets to use in conjunction with their own content: to access APIs which allow them to create custom service environments and maintain them as fresh value add features are developed by the supplier: to use the supplier as the architect/engineer for workflow service environments, where news and update is cycled to the right place at the right time and where compliance with knowledge requirements can be monitored and audited: and, finally, they want the supplier to run the Big Data coverage for them, using his analytical framework as a way of searching wide tracts of publicly available data on the internet to secure connections and provide analysis which could never have existed before.
This is a formidable agenda, and I am not suggesting that anyone is close to realising it. Those who want to enter the race are probably now securing their content on an XML-based platform and beginning to buy into analytics software systems. And it was the latter point which so interested me in regard to Argus. If the human race descended from a tree shrew, then there is no reason at all why a smart data company close to London’s fashionable Shoreditch tech-zone, should not be a lead player in the future structure of service solutions for the energy and commodities markets!