FSN: Is Microsoft a threat or enabler in the BI and performance management market?

Is Microsoft a threat or enabler in the BI and performance management market?

19th June 2006
Microsoft's recent launch of new capability around scorecarding, planning and reporting - "Microsoft Office PerformancePoint Server 2007" has rekindled interest in the business intelligence market. Cartesis used the launch of its closer collaboration with Microsoft to highlight what it says is "bad news" for traditional Business Intelligence (BI) vendors such as Business Objects and Cognos. But in a complex world, in which large organisations have multi-vendor platforms, Gary Simon, FSN's managing editor, asks whether Microsoft's latest manoeuvres are a competitive threat or a welcome enabler?

In the last few years, Microsoft has increasingly transitioned from a provider of personal computing and productivity tools into a supplier of enterprise computing. Its SQL database has industrial strength and has successfully added layers of functionality for multidimensional analysis and reporting. In its latest endeavour it is providing even more capability around applications such as scorecarding, business reporting, analytics and planning.

"If you look back six months, then Microsoft had gaps in its capability," says Crispin Read, global marketing director at Cartesis the performance management software house. "But now they tick all of the boxes," he told FSN. It is this broad capability that Read believes is going to trouble the leading business intelligence providers such as Business Objects and Cognos. "If you compare Cognos, Business Objects and Microsoft, then all three have dashboards, scorecards and web based analytics," he says. Commenting further to FSN, Read, a former VP of marketing at Business Objects says, "In the past BI vendors could put forward a strong argument about the completeness of their offerings but this doesn't work as effectively anymore because everyone has got the same capability."

Playing down the significance of the threat, Graham Walter, managing director of Cognos UK , Middle East and Africa , says that Cognos is experiencing very little change in the competitive environment but it would be foolish not to take Microsoft's positioning very seriously. Brian Hartlen, VP global marketing at Extensity (formerly Geac) agrees. "It is hard to ignore Microsoft. Who else can announce something more than a year away, with no pricing information and yet create so much interest," he remarked to FSN.

But according to Walter, this heightened interest isn't being translated into significant impact on the ground, especially in the UK . Commenting to FSN he said, "If you remember, similar things were said about the competitive threat from the launch of OLAP Services but it did not materialise. We integrate and live side by side with that technology and I'm sure that the same will be true with Microsoft PerformancePoint," he said. "I firmly believe that it's not a threat though we may see further consolidation in the market. You have to remember that very few customers have a homogeneous technical environment and will usually have Oracle, and IBM or Microsoft in the mix. They need someone independent," he says.

However, Read believes that the cost effectiveness of the Microsoft solutions combined with their extraordinary business reach could be compelling. "Their solutions are three to four times cheaper and they have very strong distribution channels. Their deployments may start off being small but low pricing could drive implementations across the entire organisation," he added.

Acknowledging that price, availability and completeness of solution are important factors, Walter points out that successful delivery in the business intelligence and corporate performance management is also about skills and business competencies - not just the toolset.

"We've seen the market place for BI evolving into BPM (Business Performance Management) and planning. The services we provide have also changed and our people have to be far more skilled in business and finance. We also work far more closely with partners such as Deloitte, Accenture and Atos to provide the process competencies that the market requires," says Walter.

That is something that Brian Hartlen believes Microsoft may find difficult to match. "You have to remember that at heart, Microsoft is a platform company. That's very different from providing in-depth applications and expertise. They are a long way from building a fully robust BPM application but it's probably good for IT departments that want to build their own solution. As far as we are concerned, we will take advantage of anything that is available in the platform. If it is in the platform that's good for us," he says.

Rather than being a threat to the broader market, Frank Buytendijk, Hyperion's European strategist suggests that, based on history, Microsoft's greater involvement should be welcome news to the BI and BPM industry. "If you look back 10 years, the OLAP market was poorly understood and resisted by the IT community who viewed it as an unwelcome extension of personal and hence uncontrolled computing. However, with the benefit of hindsight we can see that Microsoft helped to educate the market and position OLAP as an important calculation capability behind meaningful business reporting. Microsoft took some market share but grew the size of the overall market at the same time. It is likely that they will do exactly the same again."

Buytendijk sees Hyperion's offerings as completely complementary to the Microsoft platform. "Essentially, we are providing the management layer or data, business rule and process foundation that supports Microsoft's platform. If you distribute BI tools to hundreds of users and to external users outside of the organisation then you need to exercise effective data management to ensure that everybody is working off the same data - 'one version of the truth'," he says.

But he does see Microsoft posing a threat to the wider market. "BI and BPM are becoming the same thing and there is no competitive advantage in selling query and reporting, except in the high end of the market. Differentiation comes from a management layer and solid applications on top - which Microsoft does not have. Any vendor that is purely selling BI, or selling BPM without a BI capability, is going to have a serious problem in the next couple of years."

But Microsoft may not have it all its own way. "From what I see, Microsoft is trying to be all things to all men. They are saying that their solution fits companies of all sizes and in any industry. I've never seen that be successful before in the business applications space," Hartlen told FSN.

So the jury is out. On the one hand, the latest Microsoft announcements are to be welcomed for stimulating interest and creating a bigger market. On the other hand there could be losers in the Business Intelligence space. It is ironic that for a market that prides itself on the quality of it forecasting and planning software there seems to be a high level of uncertainty around the outcome!

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