Yes, NW 2004s BI is required to run BIA since the Analytic Engine in NW 2004s BI has the logic to connect to BIA. There are several scenarios supported so you don't necessarily have to upgrade your existing BW box. You could install a separate NW 2004s box connected to BIA, and then use the data mart function to move the infocube data and master data to the NW 2004s box. Several customers are doing this so they don't impact their existing BW environment.
I'd check the BIA page on SDN for more information, since this has the latest and greatest.
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