Every day consumers and enterprises create 2.5 quintillion bytes of data. In fact, 90 percent of the data in the world today has been created in the last two years. The sheer volume of the data coupled with the exponential increase in the rate of creation of the data via numerous traditional and non-traditional sources is mind-boggling. In the age of massive uncertainty regarding the economy and the future outcomes of a certain decision (either by corporations or governments), business analytics has provided an avenue to analyze data in order to optimize decision making.
Business and governments make decisions every day that directly impacts their future progress and current standing. The decision making process has one major hurdle: uncertainty. Business analytics not only organizes large data sets (read: big data) but analyzes it in a manner to aid human decision making process, making the process more efficient and less error prone.
International Business Machines' (NYSE:IBM) business analytics service is software based and is one of the most productive and advanced platforms in terms of its breadth and depth. This is possible given IBM's century old industry presence and quality human resource. IBM's strength lies in its powerful business analytics software, which have have become essential for businesses and governments.
End users: Governments and Corporations
IBM's business analytics has five major components: Business Intelligence, Performance management, Predictive analysis, Analytical decision making and Risk management and Analytical Application.
An important realization that has dawned on a number of managers and executives is that one cannot manage what one cannot measure. This has generated demand for software that measure performance objectively. IBM has been the frontrunner providing business analytics which although hasn't boomed as yet but will in the medium-long term. IBM provides Business analytics on cloud making it relatively hassle-free and cost effective for the end user.
IBM's analytics services are being employed by a number of government departments. Driven by greater customer demand for superior services with a limited budget, doing more with less is essential for the government agencies. It assists departments in defining their goals relative to the challenges and use limited resources more effectively to achieve them. Two important areas of business that have employed analytics in recent times are finance and supply chain management.
The big data revolution although has received much hype in the media, the concept has not been fully understood. Big data refers to the 4 V's, Volume, Variety, Velocity and Veracity. The data is primarily massive in volume from a variety of sources. IBM provides big data analytics to tap into internal data for a cohesive information ecosystem. Big data is providing insight into long standing business challenges according to a study revealed by MIT Sloan School of management in collaboration with IBM business value.
The digitization of virtually "everything" now creates new types of large and real-time data across a broad range of industries. Much of this is non-standard data: for example, streaming, geospatial or sensor-generated data that does not fit neatly into traditional, structured, relational warehouses. Today's advanced analytics technologies and techniques enable organizations to extract insights from data with previously unachievable levels of sophistication, speed and accuracy.
The above mentioned development signifies the use of business analytics in order to compete in a fast-technology driven bottom-line oriented environment. IBM provides the perfect mix of products to analyze measure and predict patterns that add real economic value to the business pushing forward the bottom-line.
IBM's Business analytics provides business with a competitive edge that in itself provides IBM a competitive edge. Another study conducted in 2012 in collaboration with Said Business School pointed out that 63 percent - nearly two-thirds - of respondents report that the use of information (including big data) and analytics is creating a competitive advantage for their organizations. This compares to 37 percent of respondents in IBM's 2010 New Intelligent Enterprise Global Executive Study and Research Collaboration - a 70 percent increase in just two years.
The last couple of years have seen a number of disruptive technologies creating markets for themselves and completely destroying the hegemony of the old school business models (Think: Microsoft vs. Apple). It is in such times that analysis and integration of data for the use of the company's internal use provides a sustainable competitive edge. The study also suggested that a number of business analytics are customer oriented enhancing the understanding of customers in an ever changing customer preference environment. An important application of business analytics is in terms of its predictive power analyzing past trends in order to determine patterns that could indicate future correlations.
IBM has been in the computing business for over 100 years. From 2000 onwards it has adopted a strategy of setting 5-year achievable goals in order to measure its performance. Its product mix has significantly shifted from hardware oriented to software and services. Business analytics provided via its cloud computing service will fare well for the company in the next few years as the demand for the service grows.
Big data is the next big avenue for IBM to achieve growth. As a result, I believe the company will continue to grow in the near future and it will be successful in achieving its growth plan until 2015. The stock has followed an upward trend in the past four years, and I believe the trend will continue.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. IAEResearch is not a registered investment advisor or broker/dealer. This article was written by an analyst at IAEResearch and represents his/her personal opinion about the companies mentioned in the article. The article is for informational purposes only and it should not be taken as an investment advice. Investors are encouraged to conduct their own due diligence before making an investment decision. I am not receiving any compensation (other than from Seeking Alpha) for this article, and have no relationship with the companies mentioned in the article.