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SQL Server 2005 Offers Risks, Rewards for Business Intelligence Vendors

As Microsoft preps its most ambitious business intelligence offering to date—SQL Server 2005—the good relations it enjoys with some long-time BI partners could be at risk

• By Stephen Swoyer
• January 26, 2005

When Microsoft Corp. enters a market, established players have good reason to be on guard. With very few exceptions, Microsoft has almost invariably settled into a comfortable niche in each of the markets it has penetrated. In some cases—such as the client operating system, office productivity, and Web browser markets—Redmond has achieved undisputed dominance.

The same could be said about Microsoft as a business intelligence competitor. Ever since the software giant first incorporated OLAP and ETL capabilities into its SQL Server 7.0 database, BI vendors have been on their guard. But a funny thing happened on Microsoft’s path to dominance in the business intelligence space: It became what some vendors describe as a model partner and competitor, in spite of the growth of Microsoft’s BI aspirations since the days of SQL Server 7.0.

Last year, for example, Microsoft released its long-awaited SQL Server Reporting Services. OLAP and ETL are important components of BI, of course, but at the end of the day—as TDWI director Wayne Eckerson points out—most BI consumers are still using a reporting tool of some kind. In this regard, SQL Server Reporting Services might be seen as Microsoft’s most serious business intelligence offering to date. Furthermore, Redmond last June announced a new scorecard add-on for SQL Server—its first bona-fide analytics entry. This prompted several industry-watchers to suggest that the company might even hazard a move into the pre-packaged analytics space.

With Microsoft’s appetite for growth, you might expect some vendors to think twice about partnering with the software giant. But in the business intelligence marketplace, at least, Redmond has found no end of willing partners. What’s surprising—at least to anyone familiar with Microsoft’s aggressive practices in other markets—is that Microsoft appears to comport itself as a more-or-less model business intelligence partner. In fact, Microsoft has notched tight—and long-standing—partnerships with an assortment of vendors, including Win32 pure-plays such as ProClarity Corp. and Panorama Software.

“‘What about Microsoft? Are they friend or foe?’ That’s a question we get all the time,” says Lee Ho, vice-president of worldwide marketing with Panorama Software, the one-time OLAP specialist from which Microsoft acquired the OLAP technology that first powered SQL Server 7.0. “The way that we look at it, in fact, is that we’ve been a partner of Microsoft for a while now. When they acquired our server technology back in 1996, a client existed, and they could have taken over that by releasing [a client] of their own. But they didn’t.”

ProClarity CEO Bob Lokken says Microsoft has been an excellent vendor partner. Over the past few years, he indicates, ProClarity has built a thriving business on top of SQL Server—such that the company is now the largest third-party provider of SQL Server-specific BI tools. ProClarity couldn’t have done it without Microsoft’s initiative. “We jumped on the Microsoft bandwagon because as far as we could tell, they were the only vendor who was actually going to get out there and set a standard that a company like ours could develop application logic on top of a standardized query language,” Lokken said in an interview last year, referring to Microsoft’s OLE DB.

In fact, since the debut of SQL Server 7.0, Microsoft’s database has spawned an ecosystem of partner-dependent applications—including offerings from ProClarity and Panorama as well as specialty vendors such as Dundas Software Ltd.—that sit on top of its SQL Server BI stack.

Indeed, when it needed to flesh out its Reporting Services offering with an end-user-oriented report design component, Microsoft acquired another partner, the former ActiveViews Inc. Competitors in other markets don’t necessarily expect to see this kind of behavior from Microsoft. This is, after all, the same company that was sued by the former Stac Electronics for implementing a disk compression technology (called “DoubleSpace”) in its DOS operating system that—a jury found—was remarkably similar to Stac’s own “Stacker” product. Or the Microsoft that once told long-time partner Citrix Inc., which developed the first multi-user extensions to the Windows NT kernel, that it planned to develop its own multi-user solution for Windows 2000—and bundle it for free.

In fact, shortly after Microsoft delivered SQL Server Reporting Services, the company also reaffirmed its commitment to Crystal Reports, an end-user-reporting tool it has embedded with Visual Studio and other versions of its products for more than a decade.

As the software giant preps its most ambitious BI offering to date—the revamped SQL Server 2005 database—the good relationships it enjoys with many long-time business intelligence partners and competitors could be at risk. That’s because SQL Server 2005 ships with substantially revamped analytic, ETL, and reporting functionality.

With Microsoft is pushing much further into several bread-and-butter business intelligence markets, some vendors say they’re excited by SQL Server 2005. Panorama Software’s Ho, for example, says that the revamped database provides a much better foundation for the Panorama 4.0 BI stack, which includes business analytic and operational reporting capabilities. SQL Server 2003 does up the ante for Microsoft, Ho concedes, but it’s also consistent with the software giant’s traditional platform-specific focus. “Where Microsoft has focused its BI attentions is to provide a platform … on which to build business intelligence solutions, and where ISVs like Panorama [can work]. So what you’re getting with Microsoft is great breadth of platform. But in order to make that platform useful for the end user [and] the business user, you have to have applications with depth.”

That’s where Panorama, ProClarity, Dundas, and others come into the mix.

For example, says ProClarity’s Lokken, consider Reporting Services, which—on its own terms—gives IT organizations a base-level means for report lifecycle management (authoring, distribution, etc.). “Yes, you can publish and get [reports] out to people, but we never deliver any content without having the ability to do a rich, root-cause analysis,” Lokken said last year. “We made a seamless off-ramp [from Reporting Services] to an analysis tool, so that a person can push a button and create a report out of it. … Our support for Reporting Services will continue to be strong because Microsoft made it a commodity: they put it in the box for free [with SQL Server].”

Dundas developed a charting technology—aptly titled Dundas Chart—based on Microsoft’s .NET framework. Rather than competing with Dundas or buying it outright, Microsoft licensed Chart for .NET for inclusion with its SQL Server Reporting Services. Other companies have licensed Chart for .NET on an OEM basis, and Dundas almost markets two other BI offerings—Dundas Gauge for .NET (a dashboard control) and Dundas Diagram for .NET—based on Microsoft technologies.

In the final analysis, says Panorama’s Ho, there’s a perception among many Microsoft partners that SQL Server 2005’s risk is worth its rewards. “For example, we really leverage the ETL tools that come with the Microsoft stack, and with the [ETL] changes they’ve made with Yukon, it’s getting even better,” he says. “As Microsoft adds more functionality to their platform, someone could say that they’re competing against you, but you need to remember that the needs of the end user continue to grow. And users will always need application depth to go along with the breadth [of Microsoft’s platform].”