GOOG Alphabet Inc

By Angus Loten 

Google's $2.6 billion acquisition of Looker, a business-intelligence and data-analytics software maker, deepens its push into the cloud market, as more companies seek to mine business insights from growing stores of data, industry analysts say.

The move is also aimed squarely at gaining ground on cloud-computing front-runners Amazon.com Inc. and Microsoft Corp.

The acquisition, announced Thursday, is the online search giant's fourth largest, and the first major deal for Thomas Kurian, who in November took over as chief executive of Google Cloud, Alphabet Inc.'s cloud-computing division.

"A fundamental requirement for organizations wanting to transform themselves digitally is the need to store, manage and analyze large quantities of data from a variety of sources," Mr. Kurian said in a statement Thursday. He added the acquisition extends Google's business-analytics capabilities by making it easier for companies to leverage data and make better business decisions.

Business-analytics software enables companies to parse past and current data by applying statistical analysis, data mining and quantitative analysis to spot trends. Business intelligence uses the results to create predictive models, including data visualizations and other capabilities.

Although Google released a business-intelligence tool called Data Studio in 2016, it wasn't explicitly meant for enterprise use, said Boris Evelson, a vice president and principal analyst serving application development and delivery professionals at Forrester Research Inc.

Google's cloud division has yet to build a strong presence among Fortune 500 firms and other large companies by offering enterprise applications such as Google Analytics and Big Query, Mr. Evelson said.

Looker's sweet spot is large enterprises, Mr. Evelson said: "This is a big deal."

The global business intelligence and analytics market last year reached $12.7 billion in revenue, excluding artificial intelligence, machine learning, databases and data warehouses, according to International Data Corp.

Even with Looker, which offers strong growth opportunities, Google is still a "relative newcomer with about 1% share" of the business-intelligence and analytics market, said Dan Vesset, group vice president of analytics and information management in the market research and advisory group at IDC.

"Google is filling a hole in its analytics and business-intelligence portfolio," Mr. Vesset said. "It has data ingestion, data warehousing, data lake technology, but didn't have business analyst or end-user focused products," he said.

Within the enterprise cloud market, Google Cloud will be competing for large business-intelligence and analytics customers with Amazon's cloud business, Amazon Web Services, which offers a tool called QuickSight, and Microsoft Azure, which offers Power BI.

Other large competitors in the analytics space include International Business Machines Corp., Oracle Corp. and SAP SE.

Big tech players are "snapping up data analytics companies with big price tags," said Amir Orad, chief executive of Sisense Inc., which develops technology that speeds and simplifies the analysis of large, complex data sets.

"Looker clearly demonstrates the value these companies have in the larger cloud ecosystem," Mr. Orad said.

Based in Santa Cruz, Calif., Looker was founded in 2012. The company said it now has nearly a dozen locations around the world and several thousand customers. After a funding round in December, the company reported it has raised a total of $280.5 million since 2013.

Rita Sallam, a vice president and distinguished analyst for data and analytics at Gartner Inc., said the analytics and business-intelligence market is intensely competitive, and Google's acquisition of Looker will make it even more so.

She said a big concern for chief information officers is whether Google will continue to operate Looker as a multicloud tool, which is a key draw among most enterprise customers whose workloads are spread across several different cloud providers. That has many CIOs wary about vendor lock-in that ties critical business apps to a single cloud service.

"Data and analytics, including machine learning and AI, are at the heart of most companies' digital transformation," Ms. Sallam said. "With this acquisition, Google is expanding its ability to play a key role here across the data and analytics stack."

The Looker acquisition also underscores the importance of tying metrics to business initiatives such as growth, risk and profit margins, said Chris Pick, founder of the Technology Business Management Council, a nonprofit CIO trade group.

It's becoming more important to CIOs that vendors "tie up to those high-level business goals that any CEO or board of directors would care about," Mr. Pick said.

Last month, Google announced a partnership with Informatica, a data integration provider, bringing data-management tools to Google Cloud services, including storage platforms and market-analytics applications.

--Sara Castellanos contributed to this article.

Write to Angus Loten at angus.loten@wsj.com

(END) Dow Jones Newswires

June 06, 2019 17:22 ET (21:22 GMT)

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