IBM and Netezza, turning business intelligence into business analytics

Netezza purchase signals IBM's interest in developing BI applications that analyze data instantly and on the fly

Is business intelligence just a commodity? Don't tell that to doctors at Toronto's Hospital for Sick Children, where physicians are using a new breed of BI software to monitor the condition of critically ill premature infants.

The software, which IBM prefers to call business analytics, differs from the classic BI applications, which analyze stored data to aid in decision making. Instead, the new breed of analytics applications analyzes data as it enters the network, allowing physicians to make critical care decisions and predictions about an infant's condition on the fly.

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IBM, Oracle, SAP, and Microsoft have all made massive investments in BI in the last few years, largely through a series of billion-dollar-plus acquisitions: Oracle bought Hyperion for $3.3 billion; SAP acquired Business Objects for $6.8 billion; IBM bought Cognos for $4.9 billion in 2007 and paid $1.2 billion for SPSS in 2009.

The acquisition spree continued this week as IBM announced the $1.7 billion takeover of Netezza, a Massachusetts company that makes BI appliances combining software and hardware optimized for analytics. Netezza's appliance is actually an IBM System X tricked out with a series of field-programmable gate arrays, tuned to run the company's analytics software.

IBM, which doesn't always break out revenue by segments, had no such compunction this week, saying it is projecting $16 billion in business analytics and optimization revenue by 2015.

A windshield, not a rearview mirror

Even if the term "analytics" is more of a branding effort by IBM than a truly new class of software, it's clear that BI is morphing into something more interesting.

One way to understand IBM's take on analytics is to talk with Jeff Jonas, chief scientist of the company's Entity Analytic Solutions group. Much of his thinking can be summed up in a phrase he likes to sprinkle into conversations: "The data is the question." (I wrote about Jonas and his work in some detail in February.)

In essence, Jonas and his fellow researchers are developing analytics software that is smart enough to look at an incoming data stream, see patterns of interest, and alert the right people -- all without being queried.

Consider a potential customer surfing an e-commerce site. A classic BI or data mining application would know what the customer has purchased in the past and make recommendations for future purchases based on that stored data. If you're an Amazon customer, you've seen that in action many times.

But suppose that software could see what products or information a customer is looking at right now, analyze it, compare it to his or her past buys, and then show the customer relevant content based on that instant analysis. "We need to know what we know when we know it," says Bernie Spang, director of strategy for IBM's information management software.

BI, you might say, is like a rearview mirror: important, but not forward looking. Analytics lets you look at the road ahead.

This article, "IBM: Turning business intelligence into business analytics," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog.