HAWTHORNE, New York -- IBM's massive consulting arm, IBM Global Services, has announced a new business line, Business Analytics and Optimization services (BAO), supported by 4,000 consultants. This will be the first new service line for IBM Global Services since it was formed in 2002 after the acquisition of PricewaterhouseCoopers Consulting.

The new service addresses a key need, according to IBM (NYSE: IBM) executives. "Businesses' use of data will separate the winners and losers going forward," said Frank Kern, senior vice president of IBM Global Services, speaking at a presentation at IBM Research in Hawthorne, N.Y. Tuesday.

Too many managers cannot trust the data on which they base their decisions, said IBM's Frank Balboni, the Global BAO leader heading the initiative.

Although managers have access to more data than ever before, and more of it is delivered in real time, they lack the tools to use it, especially in real time.

That's a challenge and an opportunity. To address it, said Kern, IBM Global Services is working with the company's software business and its research arm.

"IBM is attacking and solving business problems with math," said John Kelly, senior vice president and director of IBM Research, speaking by pre-recorded video from Tokyo, Japan. "It is detecting fraud in insurance claims, improving supply chains and monitoring traffic systems in Singapore and the health of the Hudson River."

IBM is taking global leadership of a new business, he added. "We now have a capability that nobody else can buy, build, or even imitate," he said.

The new initiative, said Balboni, is as significant as IBM's embrace of open source. "In my twenty-five years in the business," he said, "this is the first time I've had a chance to participate in the creation of a new business." He added that the last new consulting business was CRM.

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The new line of business addresses the fastest growing area in enterprise software, said Ambuj Goyal, general manager for information management software at IBM's software group. He noted a report from IBM Market Intelligence saying that demand for business optimization will grow at a 7.8 percent compound growth rate between 2009 and 2012, compared to a 3.3 percent compound growth rate for the much larger business automation market.

"That's why IBM is investing so much skills and cash in it," he said.

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