Why IT giants are so hot for analytics: The never-ending upgrade cycle

Listening to Fred Balboni, global business lead for IBM's business analytics and optimization unit, talk about analytics it becomes clear why IT giants ranging from Hewlett-Packard, Oracle and others are so damn hot for the space. You don't have the infrastructure to do real predictive modeling---yet.

IBM's Balboni chatted with about a dozen bloggers or so and laid out Big Blue's analytics progress. The company launched its analytics services practice more than a year ago with 4,000 people. Balboni said IBM will be up to 7,000 shortly. Analytics is a huge effort that flows through IBM's multiple business units.

For those following IBM closely, the analytics push isn't new. But what hits you about the business strategy behind IBM's analytics and smarter planet pitch is the virtuous cycle.

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When asked whether customers had the infrastructure to make real predictive analytics happen, Balboni said "all and few" do. Sure, enterprises have building blocks---business intelligence, data warehousing etc.---but analytics typically is at the bottom of the application stack. "All companies are doing some level of analytics, but most are based on applications for analytics," said Balboni. Balboni said there's a whole layer for analytics that will combine data and find correlations necessary to make gobs of money or avoid disaster.

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Then the appeal of analytics becomes clear. Balboni noted one bank started with IBM to improve analytics. After the business got the first taste---analysis that could predict defaults based on bank balances---every division wanted similar capability. Naturally that demand warrants more processing cores and servers. Overwhelmed with the data? IBM has services to help you. Need a presentation layer? Check out Cognos. Need some newfangled approach---check out research.

Pick your vendor---SAP, HP, Oracle, whoever---and there's a similar stack of stuff that all ties into analytics somehow.

The analytics push---some vendors will be more talk than reality---creates a virtuous cycle for IT giants. It's no wonder that analytics, data centers, software implementations and servers all go hand in hand. If you're a systems provider---IBM, HP and Oracle---the appeal of analytics is never-ending. Why? The IT department has to provide the infrastructure to support analytics.

"Analytics is adding to the total load IT has to deliver," he said.

I have to wonder whether the need for analytics infrastructure will drive cloud computing adoption and outsourcing. At some point, you're going to get tired of buying 24 core systems to support your CEO's penchant for analytics.

Balboni said that IBM isn't seeing analytics push enterprises to outsourcing---he acknowledged that Big Blue would be happy if that was the case. "The outsourcing decision is separate from the analytics decision," he said.

But as analytics becomes more important it's easy to imagine enterprises handing infrastructure off either through cloud computing or outsourcing/hosting arrangements. Analytics has the potential to create a never-ending upgrade cycle and at some point you're going to get tired of building infrastructure.