The largest big data company in Malaysia, Fusionex, is set to be liquidated by its new buyer Hitachi through a court order. Financial data analysis from a YouTuber, Learnabee video reveals that despite “steady growth” in performance and profits, Fusionex is experiencing a precipitous decline in cash flow. Additionally, since Fusionex’s revenue is primarily driven by projects, resorting to the strategy of capitalizing expenses to artificially enhance the financial outlook is not advisable. Instead of reporting profits, it would be more realistic to acknowledge losses in each of the three years following the acquisition by Hitachi.
Nevertheless, why did Fusionex collapse? Is the big data industry failing? Wasn’t it said that AI is built on the foundation of big data? How did big data companies decline just as Large Language Model (LLM) gained popularity? Where does this logic fit?
Based on my personal understanding and observations of the industry, I’ll outline the reasons behind Fusionex’s closure.
The popularity of big data arises from the increasing volume of data produced by individuals and businesses every day. Previously, data generation was inconvenient and costly. For instance, writing a diary used to be a rare habit, and it was done manually in a book with limited circulation. Now, diary writing is a common practice, especially on social media platforms. Previously, people used cash, making it difficult to track transactions. Now, with the rise of ewallets, every transaction leaves a trace. Similarly, businesses produce more data due to digitalization, and those who understand how to convert it into valuable insights and actions can add significant value to their operations. Companies lacking in-house data talent seek external assistance, giving rise to big data firms like Fusionex.
If big data is so crucial, why did Fusionex’s prospects deteriorate to the point of the owner selling it off? While selling a company may be due to a favorable offer rather than concerns about its future, incidents that exposed three years later for Fusionex suggest otherwise. While this might be seen as a case of poor management, my view is different; I see it as an inherent flaw in the industry.
Firstly, internet giants, the pioneers where the concept of big data originated, are the best equipped to engage in discussions about big data, treating data as their most valuable asset. They establish internal data teams ranging from dozens to thousands of professionals who continuously analyze, utilize, and cultivate data. Occasional consultations with external experts are the exception, as these companies rarely seek outsourcing for big data services. Can you imagine Google, Facebook, Alibaba, or JD outsourcing their big data analytics to external firms?
Secondly, even if traditional large enterprises lack the expertise in big data and initially rely on services from companies like Fusionex, this is usually temporary. Data is a trade secret, and once these enterprises establish their own data teams after gaining experience, they tend to recruit the talent responsible for their projects from the outsourcing company. I believe Fusionex’s primary clients were these traditional enterprises or government departments, and they are prone to being phased out, especially after a change in government.
Thirdly, to achieve data-driven decision-making, digitization must precede datafication, and this relies on application systems. More and more system providers are contemplating integrating data analysis modules into their systems as part of their products, assisting clients in transitioning seamlessly from digitization to datafication. System providers with data analytics capability have an extra advantage of industry know-how over big data companies. This advantage reduces costs and time for enterprises, sidelining specialized big data companies. TimeTec, which launched the data analytics modules for all its solutions last year after two years of development, was one of the moves to prove such a trend.
In essence, what was once exclusive to a few has now become commonplace. While big data’s importance continues to grow, the significance of big data companies appears to be diminishing.
Teh Hon Seng is the Founder and Group CEO of TimeTec Group of Companies. Prior to founding TimeTec, Teh led his former company to be listed on the MESDAQ (ACE) market of Bursa Malaysia in 2002. In 2000, Teh initiated research and development in fingerprint technology, which later evolved into a renowned global brand for commercial fingerprint products known as FingerTec. In 2008, he foresaw the trends of cloud computing and mobile technology. Over the years, he strategically diversified and transformed his biometric-focused products into a suite of cloud solutions aimed at workforce management and security industries, including smart communities and digital building systems centered around the cloud ecosystem. Teh holds more than 20 patents, and he has also been a columnist in a local newspaper and the author of several books.