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.