Experts from the University of Ontario Institute of Technology will lead the trial of the IBM software, with the goal of helping doctors make better decisions about treatment at a faster pace.
The existing technique requires babies to be connected to monitors that provide a variety of data on paper and onscreen, and the information is only stored for up to 24 hours and then discarded.
The makers of the new software claim that it can handle a constant stream of physiological readings - monitoring heart rate, respiration, blood pressure and oxygen levels in the blood.
They say that the software can process 512 readings per second and screen the results for problems or patterns.
Doctors hope that this software will help reduce sickness in premature babies, and save lives.
"This will elevate neonatal care to a completely new level - which really should be more sophisticated, better care - and would hopefully be associated with better outcomes for the infants," globeandmail.com quoted Andrew James, a staff physician at the hospital, as saying.
He believes that the software may be useful for identifying life-threatening infections, which can be detected up to 24 hours before onset by observing changes in physiological data.
"Premature babies are at very high risk for infection and the signs of infection are really quite subtle until the infection is well established," he said.
"So if we can use this new technology to recognize changes and intervene with antibiotics much earlier than we currently do, we'll prevent these babies from getting as sick as they do," he added.
Carolyn McGregor, who is leading the research project, said that the technology was also being tested for possible use around the world, particularly in places where premature babies have high mortality rates.
"In China, if a child is born in a rural or remote setting, it's nine times more likely that they will not survive if they're born early or born at term with a significant health issue," she said.
Dr. James said that the research was envisioned as a five-year project, and that funding of between three to five million dollars must still be granted before the technology could be fully implemented.