In IBM's biggest foray in business consulting since it acquired PricewaterhouseCoopers Consulting in 2002, the company announced on Apr. 14 that it is setting up a 4,000-person organization focused on helping corporations analyze data better and make smarter decisions. The consultants will mine IBM's research and software divisions for innovations. They'll also incorporate products from other companies.

The new business unit, IBM Business Analytics & Optimization Services, is the brainchild of Frank Kern, who ran IBM's sales force until January, when he was shifted to lead the $19.6 billion Global Business Services division. "We're at the beginning of a new wave," Kern says. "We're beginning to instrument the world, but we have to take the data and analyze it to make a better bank, a better electric utility, a better planet."

Business consulting has become a mainstay at IBM since the PricewaterhouseCoopers deal. In 2003, GBS delivered $184 million in profit. Its contribution swelled to $2.3 billion by last year.

Picking the Data Apart Faster

Analytics is a potentially lucrative target since it's emerging as one of the most strategically important fields in corporate computing. Executives analyze their sales patterns so they can do a better job of targeting customers with product offers and advertising. They pick apart and modify operations to make them ever more efficient. And, increasingly, they want to slice and dice data as quickly as it comes into their computing systems, and to make more accurate forecasts of future sales and shifting market conditions.

Business analytics is a bright spot in an otherwise subdued technology market. While overall demand for corporate technology is expected to shrink this year, market researcher IDC forecasts a relatively healthy 3.45 percent growth for the $23 billion market for business analytics software in 2008. It forecasts 2 percent growth in the $45 billion analytics consulting business...