IBM adds to business analytics move with Netezza buy

IBM's purchase of Netezza is the latest in a long line of moves to bolster Big Blue's analytics offerings.


IBM's $1.7 billion planned acquisition of data warehouse vendor Netezza is more evidence of IBM's relentless intent to define and perhaps even create a new IT market, which its executives call business analytics. In a May investor briefing, IBM Chairman, President and CEO Sam Palmisano emphasised that the field of business analytics would be a growth area for the company in the years to come. The company expects analytics to generate $16 billion of revenue by 2015. The area generated $9.4 billion in 2009 for IBM.

But what is analytics and how is it different from a seemingly similar, though more widely used term, business intelligence, or BI?

At IBM, "the term analytics is used in a very broad sense. BI is just one of the capabilities. Data warehouse, information integration," are all also part of analytics, explained Arvind Krishna, who is an IBM information management general manager, during a conference call Monday about the purchase.

In the same conference call, Jim Baum, President and CEO of Netezza, offered an example of analytics in action. One Netezza customer, trucking firm Conway Freight, uses the Netezza appliances to allocate payloads across their fleet, Baum said. Conway has many deliveries that take up less room than a single truckbed, so the appliances can generate the optimal way of allocating the deliveries across many trucks, weighing such factors as delivery schedules, road conditions and other aspects.

"This is a good example of a company that uses data that they collect to develop an analytical view of the best way to route those trucks," Baum said. "It creates a predictive solution. It's a desired outcome and an optimised path to get there, as opposed to BI, which tends to be focused on reports and dashboards that are often based on views of historical data."

Forrester analyst James Kobielus warned not to place too much significance on the term "business analytics" itself, noting that it is IBM's way of branding a number of products and services having to deal with various aspects of data analysis.

"Don't get too hung up on the term," he advised. He did suggest that the term itself may be a more accurate description than say, BI, insofar as that it describes what the tools and services do, namely help organisation analyse their data. "I like analytics because you can break it into [subcategoires], such as basic analytics, or advanced analytics," he said.

Whatever the merits of the term itself, IBM has spent more than $12 billion over the last four years to acquire 23 analytics-related companies. In 2007, IBM purchased business intelligence software provider Cognos for $5 billion. In 2009, IBM purchased data mining statistical software giant SPSS, for $1.2 billion.

More recently, IBM purchased web analytics software and services provider Coremetrics in June for an undisclosed sum.

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