Splunk has yet more competition.

A company called Sumo Logic emerged from stealth mode today and unveiled its cloud-based service for managing and analyzing large volumes of machine-generated log data.

The Mountain View, Calif.-based company modeled its approach on that of its giant neighbor Google, said Christian Beedgen, the company’s CTO and one of its Cofounders. Namely, the company uses advanced machine learning algorithms to whittle down mountains of log file data into common groupings, much the way Google News categorizes new stories distributed across the web. This makes it easier for administrators to synthesize the information.

Customers need only install “dumb” data collectors on premise, which gather and compress streaming log data from servers, applications and other IT infrastructure and send it to Sumo Logic’s elastic cloud hosted on Amazon Web Services. There it is analyzed and the results made available to systems administrators and other end-users.

The cloud-based model also means Sumo Logic has access to log data from all of its customers, which can be mined in aggregate to identify security threats and other important behavioral patterns for the benefit of all, Beedgen said.

The company, which was founded in 2010, currently has five paying customers and has raised a total of $20.5 million in venture capital from Greylock Partners, Sutter Hill Ventures and Shlomo Kramer. Cofounders Beedgen and Kumar Saurabh both previously worked in engineering for ArcSight.

Interest in log data management and analytics seems to be ramping up. Splunk is set to go public with a valuation of perhaps more than $1 billion, while Loggly and now Sumo Logic are gaining momentum with their respective SaaS-based log data analytic platforms.