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Microsoft Targets the Analytic Applications Market

A rising tide may lift all boats, but what happens when the tide recedes? This article examines the effect of Microsoft targeting the analytic applications market.

• By Mike Schiff
• June 21, 2006

In early June Microsoft announced that it was augmenting its business intelligence product portfolio with Microsoft Office PerformancePoint Server 2007, an enterprise performance management analytic application with scorecarding, planning, budgeting, forecasting, consolidation and financial reporting functionality. Although general availability isn’t scheduled until mid 2007, ramifications are already being felt throughout the industry. Of course, Microsoft tends to miss initial delivery date estimates rather than meet them early, but the impact of this development is still reverberating.

This is because Microsoft’s entry into a market typically has several effects, not the least of which are bringing attention to the technology and increasing the overall level of competition. This is not a new phenomenon, as evidenced by previous Microsoft pre-release announcements; such as the bundling of OLAP and ETL technology with SQL Server 7, and enterprise reporting technology with SQL Server 2005. These pre-announcements served as a catalyst for many BI tools vendors to further differentiate themselves by offering analytic application solutions. In the case of SQL Server Reporting Services, the result was that many BI vendors began developing or acquiring their own enterprise reporting capabilities.

Popularizing a technology benefits all of the vendors in a market insofar as it results in overall market expansion. As the press and analyst community comment on Microsoft’s market moves, a better understanding of analytic applications and their benefits will be included in the discussion. Analytic application vendors will publish case studies and new white papers showing the advantages of their products. Businesses that focused their software purchasing efforts on operations much more than analysis (in many cases small-to-medium sized organizations) will no doubt learn more about how analytic applications can help them optimize their processes. Ultimately, these prospects will likely be more receptive to taking a sales call from BI vendors.

While many have seen Microsoft’s move as a new initiative, the company’s foray into the analytic applications market dates back to at least June 2004 when it announced the availability of the Microsoft Office Business Scorecards Accelerator. Unlike its other BI offerings such as SQL Server Analysis Services, SQL Server Reporting Services, and even Excel, the Business Scorecards Accelerator was an analytic application—a BI solution, not just a BI tool. Many of Microsoft’s BI partners may not have recognized all of the ramifications, but Microsoft had telegraphed its intention to target the BI solutions market and eventually place itself in competition with its analytic application partners.

Analytic application vendors will likely claim to “welcome” Microsoft to the analytic applications market, at least until Microsoft Office PerformancePoint Server 2007 is commercially available. Many of them will point to their own integration with current versions of Microsoft Office. But because Microsoft products are perceived by many as low-cost, easy-to-implement offerings, analytic application vendors will need to compete aggressively in terms of cost and implementation assistance. As they attempt to position any Microsoft analytic application as an entry-level solution, many prospects will also be thinking of how Microsoft has historically improved its offerings over time, in some cases dramatically, with each successive release.

Companies looking to purchase such software can benefit from Microsoft’s market entry by hinting—or outright stating—that they are considering Microsoft’s offerings. By doing so they may gain price or support concessions that might not otherwise have been offered. From a vendor perspective, it is somewhat ironic that many BI tools vendors, who moved to offer analytic applications in order to strengthen their overall appeal and differentiate themselves from “commodity” BI tools vendors, now find Microsoft setting its sights on the analytic applications market as well. Like Oracle and SAP, Microsoft is seeking to broaden its analytic portfolio rather than leave money on the table. Isn’t this what competition is all about?