By Will Jan, VP & Leas Analyst, Outsell Inc.

Dataminr buys WatchKeeper to offer contextual data, including traffic data, company security data, weather data, and IoT sensor signals. The result is an open data architecture that captures any event contributing to enterprise risk, an approach that could displace traditional GRC solutions (GRC for Governance, Risk and Compliance).

What to Know and Why It Matters

Dataminr, a major supplier of alternative data to financial services and other industries, is acquiring WatchKeeper, a real-time data geovisualization platform for companies. The terms of the deal were not disclosed.

Geovisualization is the ability to collect and navigate through layers of external data impacting a company to evaluate them against internal company data. The acquisition aims to leverage geovisualization to support operational risk management (ORM), a subsegment of Outsell’s Governance, Risk, and Compliance (GRC) Solutions segment.

Through the acquisition, Dataminr will offer real-time alerts on both external and internal events that could disrupt a company’s business. The objective is to allow users to identify the threat of these events in real time so they can expedite corrective measures. Currently, WatchKeeper is offering geovisualization tools for physical security and crisis management.

The combination of Dataminr’s Pulse analytics platform and WatchKeeper’s risk management tool will allow a company to see if there are business threats coming from its supply chain, employees, assets, or facilities, so it can better assess its overall corporate risk profile.

Dataminr-WatchKeeper’s underlying open-data architecture means that data can come from any compliant data source and in any format, including traffic and weather information (which impacts supply chain logistics), employee communication data, security camera feeds, and IoT sensor data. Industry trends fueling the need for realtime ORM include the growth in geopolitical uncertainty, economic and government sanctions, the increasing severity of adverse weather around the globe, and social unrest — all factors that present risks to business continuity.

Analyst Rating: Positive

Outsell rates Dataminr’s decision to buy WatchKeeper positively given that the integration extends Dataminr’s role beyond alternative data provision. The data provider has effectively become a GRC solution provider, enabling crisis and reputation risk management, physical safety and security, cyber-threat detection, and business intelligence (BI), which are all critical components of ORM.

Winners and Losers

Dataminr’s main competitors in the alternative data marketplace include Quandl (a NASDAQ company), Yewno, and S&P Global. These players are all capable of creating their respective GRC solutions through their data strategies. While these firms compete for market share in data provision to financial services, Dataminr’s path of enabling GRC management through real-time sensor data also places it in the same space as Alexa. Amazon’s Alexa also possesses risk identification capabilities through its security feeds and voice data when used in conjunction with third-party weather and traffic information.

Given the momentum that it has already gathered in industries beyond financial services, Dataminr, with its ownership of WatchKeeper, becomes a winner among alternative data suppliers looking to develop functional support of ORM. The runners-up would be Yewno and Alexa, both of which maintain open-data architectures that support real-time data in multiple formats, allowing them to support ORM. Yewno still has a ways to go to obtain scale on its capability, while Alexa already has the capability but needs to pivot from its heavy consumer focus to an enterprise focus.

Quandl’s and S&P Global’s alternative data paths continue to rely heavily on textual content and analytics in support of the financial services vertical, which makes them a laggard in being able to serve a horizontal function outside trading and investing. However, their data partnerships are growing aggressively to include real-time data that serves companies outside financial services, so there remains a tremendous opportunity for them to carve out a role in horizontal support in the corporate market.

What’s Next

The marriage between Dataminr and WatchKeeper will likely evolve beyond the support of ORM to other aspects of GRC management. Moreover, the couple’s real-time BI data could also be a game-changer: the pieces are there for Dataminr-WatchKeeper to support market intelligence (strategy), marketing effectiveness, and customer relationship management (CRM), which are necessary horizontal functions in almost any enterprise.

Quandl and S&P Global will continue to invest in data acquisition in support of horizontal applications outside financial services, as trading and investing remain dedicated functions within financial services. The closest horizontal application for them would be GRC management. Given the type of data they possess on companies, the category of GRC management best served would be supply chain risk (as all B2B companies are effectively suppliers of goods and/or services). What will need sharpening is the real-time aspect of their company data — real-time supplier health assessments require real-time data.

Essential Actions

What Dataminr has demonstrated is its ability to evolve from a vertical-based alternative data provider to a function-based solution provider. Information industry participants looking to do the same need to take the following actions.

Understand the Data Urgency of the Function. To enable effective ORM, most of the data required needs to be real-time. While this may also be the case for data supporting trading and investing, not all of that data needs to be real-time to be effective in financial services or other industries. For example, reference (past) data remains important in understanding a company’s approach to performance, which serves both trading and investing as well as corporate strategizing quite well.

First decide on the target function to serve, then determine whether or not it needs real-time data. Conversely, if unique, real-time data is available, this could be a situation where securing the data is a priority, followed by identifying the ideal function that it can serve — “a hammer in search of a nail” scenario.

Know When to Buy Instead of Rent. There have been numerous M&As between non-financial (alternative) data suppliers and major financial platform providers — NASDAQ’s acquisition of Quandl, FactSet’s acquisition of BTU Analytics, and the IHS-Markit merger, just to name a few. A common thread among these deals is that the companies in them have worked with each other before. This gives the acquirer a front-row seat to see how attractive the data is to its customers. If the demand for the data is strong, the platform provider would simply acquire the data asset to lower the cost of use and mitigate future competition (by making the data asset exclusively its own). A trial period for the data is important to determine whether the data is only in demand in the near term or if it will remain relevant for the foreseeable future. The former would dictate data licensing, while the latter would suggest that an acquisition would be better.

Source: Outsell’s August Contribution

Outsell is a cofounder of BIIA