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Microsoft’s Performance Management Powerplay

Software giant announces a new performance management complement to its 2007 Office System that draws on assets it acquired from ProClarity.

• By Stephen Swoyer
• June 7, 2006

Yesterday, Microsoft Corp. dropped a business intelligence (BI) bombshell, announcing a new performance management complement to its 2007 Office System—dubbed Office PerformancePoint Server 2007—that draws on assets it acquired from the former ProClarity Corp.

Microsoft bills Office PerformancePoint Server 2007 as a one-stop shop for performance management (PM), complete with scorecarding, analytics, and planning capabilities. Officials suggest that the combination of Microsoft’s Office productivity tools, ProClarity’s analytic muscle, and Microsoft’s own homegrown planning technology—plus Redmond’s and ProClarity’s expertise in scorecarding (Microsoft markets a scorecarding application of its own, Business Scorecard Manager)—could amount to a hard-to-beat PM value proposition.

“It will be a holistic performance management application, designed to cover the entire performance management cycle, [providing] tracking via scorecards, doing deep analysis through analytics, through planning, budgeting, forecasting, consolidation, setting strategy, and managing operations,” says Chris Caren, general manager of Office business applications with Microsoft’s Information Worker group. “[PerformancePoint Server] was part of the roadmap for … Business Scorecard Manager 2005, [and] the product assets we acquired through ProClarity show up in this server as well, as the analytic engine.”

PerformancePoint’s planning piece, on the other hand, is the fruit of a long-gestating internal project, Caren says. “The planning [functionality] comes from BizSharp, a project we’ve had underway for more than three years. It was an R&D effort around planning, budgeting and scorecarding,” he comments. “Those [BizSharp] capabilities have been used inside Microsoft for the better part of nine months now to run all of our cost and revenue forecasting. It’s far from a [version 1] product, so by the time we hit market it will be in use for a year and a half.”

When it ships, PerformancePoint will be toploaded in favor of financial performance management. But Caren says Microsoft anticipates broad adoption of its first-ever Office PM tool, such that users tap PerformancePoint to augment—or inaugurate—operational, sales, marketing, and other PM practices.

“PerformancePoint is designed to be very strong in the financial domain, but it’s deliberately designed to be holistic, and we anticipate it seeing use in most other areas. “We view [the existing PM market] as ill-served, and what we’re trying to do [with PerformancePoint] is akin to what [we’ve been] trying to do in the more traditional BI tools space: make things a lot easier to use and a lot more widely deployed. We’re trying to enable performance management processes to reach as many employees as possible, and also to have a solution that is a lot better at spanning departments versus having solid apps for supply chain and sales.”

Microsoft’s PerformancePoint announcement also helps resolve questions about the future of ProClarity’s technology assets. Going forward, Caren says, ProClarity Analytics Server will be subsumed as part of PerformancePoint. Microsoft plans to continue to resell ProClarity’s branded products—and will probably continue to resell the legacy ProClarity products for some time after PerformancePoint ships (sometime in Q2 or Q3 of 2007)—but at some point ProClarity’s existing product packaging will go away.

“The roadmap for ProClarity Analytics Server is PerformancePoint. This is where everything shows up, and it’s [a] next-generation [revision] of the existing stuff,” he comments.

Microsoft will also offer its BSM 2005 tool for some time to come, even though BSM is slated become part of PerformancePoint, too.

“We will keep BSM on the market through PerformancePoint’s availability, [while] ProClarity will remain on the market today and will remain likely past PerformancePoint for existing ProClarity customers,” Caren indicates. “We’re trying to be very clear on how [PerformancePoint relates] to customers’ current investments in BSM or ProClarity. So both products [will] stay on the market, but there’s also this happy path, a free path from ProClarity to performance management. So there’s a very clean story for ProClarity users.”

PerformancePoint is tightly yoked to Excel, PowerPoint, SharePoint, and other Office or collaborative technologies. It will also leverage ProClarity’s Analytics Server and data visualization capabilities, along with Microsoft’s own scorecarding and PM expertise. Redmond’s SQL Server also has an important role to play, Caren stresses, and Microsoft’s Information Worker group will almost certainly explore additional areas of interoperability between its Office-based BI front-end tools and its SQL Server-powered back-end BI stack.

“The lead R&D head for PerformancePoint is Bill Baker, and he came over from SQL Server and spent many, many years working on SQL Server BI, so PerformancePoint will bet very heavily on SQL Server as the metrics engine. The products are designed to work very, very well together, much like Excel has been designed to take advantage of the UDM that’s inside of SQL Server 2005.”

In the past, Microsoft has tried to downplay the possibility of conflict with vendors—such as ProClarity, Panorama, Business Objects SA, and others—with which it also partnered. Recently, however, officials have been more upfront about Microsoft’s competitive aspirations. Last month, Alex Payne, a senior product manager in Microsoft’s Office business applications group, said Microsoft planned to compete more aggressively for its own SQL Server BI customers. “[In the past] if there was this hole that people perceived Microsoft [as] having, they'd say to us, 'Yeah, you don’t have this, therefore I need to go look at Business Objects or Cognos.' I don’t want them to have that conversation,” Payne said.

Caren stakes out similar ground. “When we talk to customers, we want them to think more and more about Microsoft BI, … [because] our overall goal in BI is not just to make it more pervasive through easier-to-use capabilities, but [also] to have a complete product, we’re as complete as anyone else in the market.”

Mike Schiff, a principal with data warehousing consultancy MAS Strategies and a member of TDWI’s extended research collaborative, says PerformancePoint product has the potential to be a hugely disruptive release—assuming Microsoft ships it on time and with all of its promised bells and whistles. And while PerformancePoint might be the cause of much fear, loathing, or gnashing of teeth among the BI powers-that-be, it should be eagerly welcomed by users—even by organizations that aren’t consumers of Microsoft’s BI tools.

“It certainly is going to put competitive pressure on the BI specialists. If nothing else, any user who’s negotiating a contract should just drop a hint that they’re considering Microsoft instead. Just the threat of doing so might cause some [BI vendors] to bend over backward to match [Microsoft’s value proposition], maybe in [terms of] both pricing and functionality,” Schiff comments. “Longer term, I suspect this will cause a shake-out of some of the weaker vendors.”

Schiff cites Microsoft’s Office installed base as a potential citadel of strength for the software giant. “Every vendor talks about its ability to integrate with Office, but for Microsoft that’s sort of a given, isn’t it?” he points out. “This helps further entrench Office and will also drive upgrades. A lot of people are still using Office 2000 because basically it does everything they need it to do. There’s this sense in which Microsoft’s Office team is competing against itself, and [PerformancePoint] gives [existing Office] users, and anyone, really, the incentive to upgrade to the new version.”