When the 2008 Olympic Games kick off in Beijing next year, organizers will be using a sophisticated computer system to scan video images of city streets looking for everything from troublemakers to terrorists.

The IBM system, called the Smart Surveillance System, or S3, uses analytic tools to index digital video recordings and then issue real-time alerts when certain patterns are detected. It can be used to warn security guards when someone has entered a secure area or keep track of cars coming in and out of a parking lot.

Beijing's S3 network is already being rolled out and is expected to be operational by the time the Games begin in August 2008, said Julie Donahue, vice president of security and privacy services with IBM.

Terrorists have used the Olympic spotlight to grab international attention for their causes, and at next year's event terrorism will be the top security concern, Beijing officials have said.

That means that IBM's S3 system could end up being tested in a very public fashion.

"I was at the Kennedy School (of Government at Harvard University) a couple of weeks ago, and some guy got up and said, "If there's a security incident at the Beijing Olympics, it's going to change the course of capitalism forever," and I'm like, 'Oh man!'" Donahue said.

IBM is also developing a similar surveillance system for lower Manhattan, but has not yet begun deploying that project, she added.

Just one year ago, the S3 system was little more than a research project at IBM's T.J. Watson Research Center, but in the past year the company's service group has been working hard to develop it into a profitable line of business, selling it to retail and banking customers such as Italy's UniCredit bank.

IBM is also integrating the S3 system into the city of Chicago's existing surveillance infrastructure, as part of the city's Operation Virtual Shield emergency response project.

This ability to weave S3 into an existing network and video surveillance infrastructure is an important selling point for the product, Donahue said. "It's expensive to get that video infrastructure in place just for even basic analog cameras," she said. "So what we do is, we can hook in your analog cameras and reuse that infrastructure, put in IP-based cameras and then architect it so that we can do the right level of analytics."

"Physical security and IT security are stating to come together," she said. "A lot of the guys I'm meeting on the IT side are just starting to get involved on the physical side."