Follow the Search Engines

Earlier this week, I had my first encounter with Apache Hadoop, the open-source parallel file framework for unstructured data. The system is currently being used by Yahoo to store much of the search engine's data, and the technology was built from similar technology developed and used by Google.

An industry contact of mine estimates that Yahoo has about 14 TB worth of data stored on its various servers.

The beauty of Hadoop is that it is, theoretically at least, infinitely scalable—it's just a matter of adding more servers to hold the additional data. The only catch is that it's for unstructured data, such as HTML text, which shouldn't come as surprise considering who contributed to the design of it.

There are a number of startups like Hadapt looking for ways to take Hadoop's scalability and mix it with various relational databases. Then there are some new firms, such as Mapr, creating a proprietary version of Hadoop, according to industry gossip.

Although much of the data in the financial services industry is structured data, the rising importance of unstructured data when it comes to trading cannot be underestimated.

We've seen the rise of commercially available machine-readable news over the past five years, where the news providers tag their stories to make it easier for automated analytics to consume them.

Now traders are looking to add data from unstructured content, such as government reports, court decisions and other content, to their automated decision-making.

The one spot that I'm not hearing about, though, is search engine results. I can't envision anything that would be higher up in the decision-making process than sitting down to Google, Yahoo or Bing, and literally seeing what the world is thinking about in real time. I'm sure that Google has perfected this to a science and will continue to manage its own treasury head and shoulders above the competition. The question is whether or not the search giant will commercialize that offering or keep it to itself.

I'm not sure whether financial firms would go as far as to create their own mini-Googles internally to analyze what is happening on the web, but I have a feeling that there are at least five firms going down this road, if not more, at the moment.

To handle this amount of unstructured data, Hadoop would seem to be the proper technology to adopt.