Snowflake Inc., whose software helps enterprises rapidly analyze business information, saw its shares more than double in value on its first day of trading last week. What is behind the startup’s roaring IPO? It all comes down to the company’s ability to unify business data—a critical pre-requisite to enable the build-out of Intelligent Software applications.
While data warehouses are nothing new, Snowflake’s innovation started by allowing customers the ability to separate storage from computing power, which was something that couldn’t be easily done before Snowflake introduced its offering. At its core, Snowflake unifies data from across enterprise silos and from disparate systems. Having all the data in one place is absolutely key to successfully building Intelligent Software applications which are built on data and powered by Artificial Intelligence.
Simply put, data fuels Intelligent Software applications, which in turn allow businesses to garner actionable insights and tangible value. Businesses ultimately really only care about the economic value that Intelligent Software applications provide. But, without the right data to feed into these applications they risk a garbage-in, garbage-out problem. Data is growing so quickly and is so fragmented in the modern business enterprise that it is a big job in and of itself to make sure data is available in the right Volume, Variety, Velocity, and Validity.
“The value ascribed to Snowflake by investors is the canary in the coal mine, signaling the massive value that stands to be derived from the Intelligent Software applications that can be built on top of the enterprise data layer. ” — OMEGA VENTURE PARTNERS
Fundamentally, Snowflake’s valuation comes down to the powerful value it provides enterprises in unifying and analyzing their data in real-time across multiple data sources. According to IDC, 143 million petabytes of data will be created, captured, and consumed in 2024 up from 45 million petabytes in 2019. (One petabyte = 1,000 terabytes).
The pandemic has also played a role in Snowflake’s successful debut. As enterprises are emerging from survival mode, they are demonstrating a renewed zeal to overhaul their operations with digital tools. In short, even as businesses scrambled to facilitate remote work amidst Covid-19 lockdowns, they are now doubling and tripling down on efforts that expand the use of cloud computing, data analytics, and Intelligent Software.
With our robust enterprise network and robust iterative dialogue with key enterprise decision makers, OMEGA is in a unique position to gauge the pace of this shift firsthand. The OMEGA Fortune 500 Network gives us a differential advantage in reading the shifting tides of the enterprise. Since March, we have conducted dozens of conversations with Fortune 500 executives, both advising on what we are seeing from the frontlines of Silicon Valley while keenly listening to the priorities, challenges, and opportunities that these executives share with us.
We are seeing digital transformation accelerate across the board, including the ability of digitally advanced companies to rapidly churn out business-continuity tools during the crisis. Nearly 70% of corporate boards cite the impact of Covid for a ramp up in spending on IT and digital capabilities, according to Gartner. And McKinsey & Co. reports that the pandemic has prompted at least 50% of enterprises with more than $1 Billion in revenue to accelerate the implementation of e-commerce tools, mobile apps, chatbots and automation.
With this backdrop it comes as no surprise that these moves are compelling businesses to manage a rising tidal wave of data. Snowflake Inc. rode that wave to its very successful IPO.