Splunk IPO explained and why it matters

Splunk filed for an IPO on Friday to raise up to $125 million in the first public offering launched by a big data player.
The company’s search, analysis and visualization technology is used by big companies including Bank of America(s bac), Comcast(s cmcsa), Salesforce.com (s crm) and Zynga (s znga) to make sense of the mountains of data they create in their daily operations: data that’s produced both internally and that comes in over the transom via Twitter feeds, and other sources. With Splunk, they can parse and visualize this data to spot trends and act accordingly.
Splunk is important because its search, analytics and visualization technologies address the sweet spot of demand between the reams of big data generated by the second and the ability to parse and display that data in a meaningful way. But that’ s just the first part of the story. After downloading the tool and connecting it to the relevant feeds, a mere mortal — not a data scientist — can work with Splunk to put that data into an easily understood visual format.
Splunk, for example, isn’t stopping with making machine data more understandable to any employee that might need it, it has also signed a deal to integrate its flagship product with Apache Hadoop so users could apply Splunk’s real-time search, analysis and visualization to Hadoop-resident data. Signed in November, that deal gave Splunk another product to charge its existing customers for, and it also helped render the highly complicated Hadoop framework into something more people could use.
Splunk Co-Founder and CTO Erik Swan told GigaOM’s Derrick Harris in Dec. 2010 that Splunk can replace or complement the popular Hadoop big data framework.  Harris wrote:

Where Hadoop might be great for churning through social-networking data and creating a social graph, for example, Splunk is ideal for time-related tasks like monitoring profile changes. In fact, [Swan] says, even web sites such as Facebook, Myspace and Zynga (s znga) use Splunk to analyze operational data where Hadoop isn’t appropriate. Sometimes, he says, users try using Hadoop for certain tasks, realize it will require an incredible amount of work to make that happen, and then turn to Splunk.

San Francisco-based Splunk started out building technology used by sysadmins to search computer log files for security issues, server-level bugs or other problems, expanded far beyond that into what Haas has called a Google (s goog) for the world of machine language. Instead of searching web pages, Splunk consumes, searches and parses machine outputs: security logs, Twitter feeds, you name it. They can be in-house or in the cloud.
Those talents put Splunk in a pretty enviable position and may have drawn the attention of potential buyers — Oracle (s ORCL) and Dell (s Dell) were both reportedly interested in Splunk, which apparently had other ideas.
This IPO, which has been in the works for more than a year, will be one to watch. Splunk, which will trade under the SPLK ticker, has taken in $40 million from investors, including August Capital, Ignition Partners, JK&B Capital and Sevin Rosen Funds.
Feature photo courtesy of  Flickr user *n3wjack’s world in pixels