The biggest problem with big data is that there aren’t enough people to make sense of it all.
The amount of information in the world is ‘mushrooming’. And as we know, business or industrial processes generate enormous amounts of data. This information can contain crucial insights, but it takes a lot of time and effort to decipher it all. An expert has to interpret the data and then report on it… and there just aren’t enough experts.
This is where Arria NLG (LSE: NLG) comes in. Arria’s ‘NLG Engine’ (natural language generation engine) is able to absorb and analyse large data sets and produce written reports in plain English. Its reports read like they were written by a person rather than a machine, and they’re tailored to the audience. And because they are authored by a computer, they can be produced much more quickly and in whatever language is needed. Arria says that NLG technology “brings incomprehensible data to life”.
Clearly, Arria builds some interesting technology. So the company has decided to list on the stock market. It listed on AIM this week but unlike most IPOs, it isn’t raising any new money. It already has a wide shareholder base of over 200 investors and has enough money for the time being, so it has listed by way of an ‘introduction’. The opening listed at 105p but by mid-morning the shares were up by 50%, valuing the company at over £150m!
Arria’s first client
Like many exciting tech stocks, Arria started at a university. Aberdeen in this case. Twenty five years research and experience have got the company to where it is today as a leader in NLG. And the £150m company is only just beginning to make commercial sales. With its background in Aberdeen, oil and gas is the first industry to use the product.
The first client is an energy major that has worked with Arria since 2009. Earlier this year it signed a contract to install the NLG Engine on its deepwater platforms in the Gulf of Mexico. The industrial equipment on these rigs generates hundreds of data points every minute. If a machine developed a problem an expert would have to analyse the data to come up with a recommended course of action. Instead, the NLG Engine will produce a report much more quickly and in natural language that can be readily understood and acted upon.
In order to make sense of the data inputs, the engine gets programmed with company-specific information. After that, it’s ready to make reports without human intervention. The process is a lot more efficient than using people for the same work.
Can Arria crack finance?
Arria is aiming to broaden out into other industries. Obviously, it takes time to build an expert knowledge base in new areas. But the technology is already being used by the Met Office. Modern weather forecasting relies on the interpretation of massive amounts of raw data. This is where that ‘scalability’ comes into its own. The NLG Engine can write a detailed three-day weather forecast for 5,000 different locations in just one minute. A single forecaster would take six weeks to create this amount of output. And the forecasts can be instantly re-written as the data inputs change.
As well as oil and gas, Arria is targeting the financial services sector. But it doesn’t yet have an anchor customer. It will be very interesting to see how quickly it can add new clients in energy and make headway in the financial services space. Arria enjoys a decent valuation, so sales and marketing to build new commercial relationships is going to be important. The market is clearly impressed by the technology though. The automation of an expert’s role in this way is hugely impressive – the machines are taking over!
Information in The Penny Sleuth is for general information only and is not intended to be relied upon by individual readers in making (or not making) specific investment decisions. The Penny Sleuth is an unregulated product published by Fleet Street Publications Ltd. Fleet Street Publications Ltd is authorised and regulated by the Financial Conduct Authority. FCA No 115234. http://www.fsa.gov.uk/register/home.do
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