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IBM doubles down on business analytics

IBM is projecting $16B in business analytics and optimization revenue by 2015

By , Network World
January 11, 2011 09:55 AM ET

Network World - Billions of dollars, millions of man-hours, and thousands of projects at IBM are all focused on the same thing: turning scads of enterprise data into useful information.

IBM has been aggressively building an arsenal of technologies for helping companies get more value out of the data they collect. Just how aggressively? Big Blue spent more than $14 billion to acquire 24 analytics companies over the past five years. Internally, 200 IBM mathematicians focus exclusively on analytics (securing nearly 500 analytics patents for IBM in the process). Out in the field, 8,000 business consultants staff IBM's business analytics and optimization services line, helping clients tackle data-related challenges.

BY THE NUMBERS: IBM snares 5,896 patents, Apple debuts among top 50 patent winners

A big payoff is expected from those investments. IBM's business analytics revenue grew 14% year-over-year in the quarter ended Sept. 30, 2010 (compared to 3% companywide revenue growth). Looking ahead, IBM is projecting $16 billion in business analytics and optimization revenue by 2015.

IBM's growth corresponds to increasing enterprise demand for business analytics software and solutions. Research firm IDC predicts the business analytics market will grow at a compound annual growth rate of 7% between 2009 and 2014, with even greater growth expected over the next 10 years.

"After three decades of existence, the business analytics market is finally reaching the mainstream market and gaining status as a formal management discipline," said Dan Vesset, program vice president for IDC's business analytics solutions research, in a statement.

Fueling interest in business analytics is the explosion of digital data, ripe for exploiting. Data is growing in enterprise storage banks at a rate of 50% per year, according to Dell'Oro Group. Further, IBM estimates that 80% of data growth is unstructured -- such as data from blogs, e-mail, podcasts, customer comments and videos -- and will require effort to understand and analyze.

"Not all data is meaningful or important. That's why it's important to be able to access it, mine it, and present it to people in a way that they can actually gain valuable insight from it. Otherwise it's noise," says Mychelle Mollot, IBM's vice president of marketing and strategy for business analytics.

With business analytics, the goal is to sift through diverse, unstructured and disconnected pieces of information and spit out actionable, timely analysis. The emphasis is on real-time information, so consumers of the data analytics can take action based on current business conditions and more accurately forecast future trends.

Nevada's Clark County Family Services Department, for instance, is using IBM analytics software to improve the delivery of social services and help stay compliant with state regulations. Dashboards make it easier to track operational metrics such as whether open investigations are following an appropriate timetable, how many face-to-face contacts have taken place with victims of abuse and neglect, and the average length of stay for children in out-of-home placements.

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