o9 Solutions raises $295M to apply analytics to the supply chain and beyond

Investors are throwing capital behind supply chain products as the appetite for ecommerce explodes. Supply chain startups raised $24.3 billion in venture funding during the first three quarters of 2021 alone, according to Pitchbook — 58% more than the full-year total for 2020. Many of the companies drawing big investments focus on managing warehouses, matching freight loads to transportation, and mapping out cost-effective routes  — solutions for which demand is rising due to both the climbing cost of logistics and rise of bottlenecks, the Wall Street Journal notes in a recent piece.

The many beneficiaries of boom include U.K.-based digital supply chain and freight platform maker Beacon and  Altana AI, a startup creating a platform to unify global supply chain data. Other companies including Verusen, Paxafe, and NextBillion, and SourceDay have collectively raised tens of millions of dollars of capital. The investment craze has extended to the public market, where issuers like ProShares and Breakwave now offer exchange-traded funds that track the index of companies involved in goods and raw materials shipping.

One of the more successful players in the market is o9 Solutions, a Dallas, Texas-based company that applies AI to help organizations plan their supply chains and more. o9 today announced that it raised $295 million from General Atlantic’s BeyondNetZero and Generation Investment Management with participation from existing investors including KKR, valuing the company at $2.7 billion post-money.

Supply chain analytics

o9 was founded in 2009 by Sanjiv Sidhu and Chakri Gottemukkala. Sidhu, a former member of the AI technical staff at Texas Instruments, previously founded i2 Technologies, which developed supply chain management software in the early 1990s and 2000s. Gottemukkala served in a range of roles at i2 across product development, sales, and strategy.

After JDA Software acquired i2 in 2008, Sidhu says he saw an opportunity to employ technologies like AI, machine learning, and analytics to build a platform focused on tackling major supply chain and business intelligence problems. He and Gottemukkala formed a team and consulted potential customers to begin developing o9’s platform, which launched in late 2014. Today, o9’s platform supports sales and marketing decision-making in addition to supply chain management and planning.

“The sweeping effects of global supply chain shortages, climate change and a raging pandemic that can be felt at the individual level underscore the fact that we are clearly at an inflection point,” Gottemukkala said in a statement. “Our AI-powered, cloud-native o9 [platform] was born from the need to give organizations the ability to make faster, more integrated business decisions that create customer value and drive better financial results while making efficient use of the planet’s precious resources. Our purpose is to develop the best platform and solutions to help our clients in this critical pursuit.”

Fundamentally, o9 is an analytics platform designed to run on public cloud providers — e.g., Amazon Web Services, Google Cloud Platform, or Microsoft Azure — with prebuilt predictive models tailored for particular scenarios. o9 can draw on data to drive forecasting from both unstructured and structured internal data sources, including customer relationship management software, procurement apps, warehouse and factory machines and internet of things sensors. It can also connect to external sources, tapping into consumer market research, point-of-sales systems, and even smartphone hardware.

Over time, o9 reconciles the data to create a knowledge graph. Like other knowledge graphs, o9’s represents a network of objects, events, situations, or concepts and illustrates the relationship between them — putting data in context and providing a framework for analysis.

“[T]he o9 platform was designed as an open platform, allowing companies to leverage new sources of data … and new algorithms for completely new use cases,” the company explains on its website. Beyond supply chain management and supply chain logistics for retail, o9 offers models for revenue management, integrated business planning, merchandising and assortment management.

Applied analytics

In many ways, o9, whose customers include Anheuser-Busch InBev, Caterpillar, and Walmart, competes not only with supply chain management solutions but with platforms like Fractal Analytics, which ingest data from disparate sources to anticipate trends in various markets and lines of business. Other vendors in the “big data analytics” segment include Noogata, Imply, Unsupervised, Pecan.ai, Tata Consultancy Services, Wipro, Tredence, LatentView, and Mu Sigma.

Big data analytics refers to the use of analytic techniques to make sense of large, diverse datasets that include structured, semi-structured, and unstructured data from different sources and in different sizes, ranging from terabytes to zettabytes.

Despite the potential of — and record investment in — big data analytics, some research paints a mixed picture of its return on investment. A 2021 NewVantage Partners report found that only 24% of executives believe their organizations have realized the goal of becoming data-driven, with cultural barriers including organizational alignment, business processes, change management, communication, people skill sets, and resistance or lack of understanding presenting the biggest hurdles.

As Harvard Business Review explored in a 2013 piece, big data is often hyped so heavily that companies are expecting it to deliver more value than it actually can. Turning insights into competitive advantage requires changes that businesses might be incapable of making. And most companies don’t do a good job with the information they already have — according to Forrester, between 60% and 73%. of all data within an organization goes unused for analytics.

“[W]hile our most recent … survey found that businesses are beginning to reap AI [and analytics] benefits, the reality is they’re not often seeing a financial return — or worse, not even covering their investments,” PricewaterhouseCoopers analysts wrote in a July 2021 report. “Compounding the challenge is the fact that many organizations struggle to define ROI for AI [and analytics] in the first place.”

Still, the global big data and business analytics segment could be worth approximately $684 billion by 2030, according to Valuates Reports — assuming that the current trend holds. o9 claims that “one of the world’s largest beer companies” used its platform to run demand and supply algorithms that reduced supply chain costs and bolstered inventory across more than 32 countries. Another customer — an “American clothing and home decor retailer” — tapped o9 to replace manual and “Excel-driven” processes for inventory planning and management.

“Not only is an agile, intelligent, and resilient supply chain one of the most important growth accelerators, it also inherently leads to a reduced carbon footprint — especially for organizations that operate on a global scale,” Sidhu said in a press release, placing on emphasis on o9’s ostensible potential to improve supply chain efficiency. “A sustainable supply chain requires companies to digitally transform their planning and decision-making capabilities.”

o9 Solutions, which took on its first external financing in April 2020, from KKR (which took a minority stake), has raised $417 million in capital to date.