As our lives are getting increasingly mobile and tied to technology, an interesting side effect is occurring. We are creating a ton of data. And it’s not just consumers. Businesses, governments and other organizations are churning out trillions of bytes worth of information daily. Sorting through all of this data and analyzing it in order to make business decisions is becoming a monumental task- one that can reap big benefits for investors.
 
Overall, Big Data could be one of the technology sectors best plays for the next decade.
 
Quintillions of Bytes     
IBM (NYSE:IBM) estimates that every day we create roughly 2.5 quintillion bytes of data. From the 12 terabytes worth of Tweets created each day to the 1 million customer transactions retailer Wal-Mart (NYSE:WMT) handles every hour, the amount of data being created every day is truly staggering. As technology has more and more prevalent, data creation has swept into every industry and business function. In fact, more than 90% of the data in the world today has been created in the last two years alone.
 
However, sifting through those terabytes can substantially improve decision-making, boost performance and ultimately bottom lines. For example, consultants at McKinsey & Company estimate that a retailer using analytics to comb through its data has the potential to increase its operating margin by more than 60%. 
 
SEE: Analyzing Operating Margins

That’s where “Big Data” firms come in and it’s about to be a big business.
 
With all the data being produced it takes some hefty number-crunching to get anything of value from the information generated. After all, cathartic insights don’t spring from raw data. Someone has to know which questions to ask of the data and where to find the answers. The market for those specialists is growing exponentially.
 
According to technology research firm IDC, the market for Big Data technology and services will reach $16.9 billion by 2015. That’s up from just $3.2 billion in 2010 and represents a 40% compound annual growth rate (CAGR). More impressively, that CAGR is about seven times the estimated growth rate for the entire information technology and communications sector. And it’s poised to continue growing as more businesses try to unlock value from all of the information they generate and collect. 
 
Overall, the cycle will continue to feed itself. More data equals more analytics, which equals more profits for the tech firms providing these services. For investors, that’s a huge win in the portfolio department.
 
Betting On Bytes
Given just how important big data and analytics is going to be going forward, investors may want to cash in on the trend. The iShares North American Tech-Software ETF (NYSE:IGV) could be a good place for investors to start. The ETF tracks a variety of firms –like SAP (NYSE:SAP) and Oracle (NASDAQ:ORCL) –that provide analytic services and enterprise software for other firms. Likewise, the SPDR S&P Software & Services ETF (NYSE:XSW) can be used. Yet, neither of these exchange traded funds is a pure-play as both include home entertainment, security and other non-big data software firms. However, there are pure plays as well.
 
One of the best could be Teradata (NYSE:TDC). The company offers a whole suite of database and analytic software that helps businesses improve efficiency, data mine and deliver real-time intelligence solutions. Utilizing strategic partnerships with firms like Accenture (NYSE:ACN) and Wipro (NYSE: WIT), Teradata has managed to grow its revenue pretty handily over the last few quarters. The firm’s latest quarter saw revenue increasing 1% to $670 million with 2013 revenue forecasts coming in at to $2.93 billion. TDC shares can be had for a forward P/E of 19.
 
For those investors looking for a more of momentum play in Big Data, look no further than recently IPO’d Splunk (NASDAQ:SPLK). The firm has more than doubled its initial public offering price based on its growing data analytics business. The young tech firm- which makes software that finds performance bottlenecks in company networks- has seen 50% year-over-year sales growth in each of its past three quarters. Splunk isn’t cheap- with a forward P/E of 424, but could represent a great high growth play in the world of data analytics. 
 
The Bottom Line 
Given just how technology oriented our lives are becoming, the amount of data we are creating is staggering. But in that staggering amount of zeros and ones, there are opportunities for investors. At the end of the day, Big Data is going to be a very Big portfolio play. The previous picks, along with EMC (NYSE: EMC), make ideal selections to play the trend.

Disclosure: At the time of writing, the author did not own shares of any company mentioned in this article.

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