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As PM Evolves: Attack of the Big Spenders

Microsoft officials say PerformancePoint will help take performance management mainstream. So do many of the company’s competitors.

• By Stephen Swoyer
• April 18, 2007

Later this year, Microsoft Corp. plans to unveil its first-ever branded performance management (PM) offering—PerformancePoint Server 2007. Microsoft officials say PerformancePoint will help do for PM what Redmond’s SQL Server Reporting Services (SSRS) did for enterprise reporting: take it mainstream. So do many of Microsoft’s competitors, for that matter.

Of course, Microsoft isn’t alone. Earlier this year, Oracle Corp. ponied up $3.3 billion for business intelligence (BI) and PM power player Hyperion Solutions Corp. Most industry watchers viewed Oracle’s move as part of a PM power grab; after all, the database giant couldn’t possibly have been interested in Hyperion’s reporting and OLAP assets, which reduplicate (several times over, in the case of OLAP) technologies it already markets.

And just a week before Oracle dropped its Hyperion bombshell, ERP giant SAP AG announced the acquisition of Pilot Software, a respected strategy management specialist. Strategy management, according to SAP, is about closing the loop on the middle management tier; it’s about coordinating the activity—and aligning it with overarching corporate strategy—of the middle management-types charged with effecting top-down business strategies.

Add it all up and it’s starting to look like a PM feeding frenzy. Ironically enough, few BI and PM vendors seem concerned about the incursion of Microsoft, Oracle, SAP, and other software heavyweights (including a suddenly BI- and PM-conscious Hewlett-Packard Co.) into their bread and butter market segments. Many BI competitors are anxious to partner with SAP, for starters, and both vendors and analysts have suggested that Oracle’s Hyperion acquisition might present as many challenges as opportunities.

As for PerformancePoint, many pureplay vendors seem to be reading from the same script. “We think anything that helps attract attention [to PM] is good,” says Delbert Krause, director of performance management product marketing with Cognos Inc. “Yes, we might lose some business, but we believe we’ll gain even more than we lose. [Customers] are going to need to do more [than PerformancePoint allows], so we’ll benefit from that, when they come to us and we show them all the stuff we can do.”

Gaurev Verma, performance management product marketing manager with SAS Institute Inc., makes a similar point.

“[Microsoft has] always been great at building an awareness. There will be people that will be attracted to the price point [of PerformancePoint]. The capabilities will be good enough for many folks, but will leave others hungry for more,” he says. “So [PerformancePoint] will definitely help instigate that line of thinking beyond budgeting concepts. Is it a competitive play as well? Yes, absolutely. But we don’t think there’s going to be that much direct competition. [Microsoft’s] enterprise solutions have gone after a set of the market where the price points are very different, where the capabilities and requirements are perceived to be very different.”

Dismiss such claims as marketing boilerplate, if you will, but bear in mind that both Cognos and SAS made similar statements before Microsoft delivered SSRS. And, while SSRS now amounts to a formidable reporting solution in its own right, no one would call Cognos ReportNet or SAS’ Web Report Studio also-rans.

Microsoft, for its part, says it expects to do just what Cognos, SAS, and other pureplays claim they hope it will do: take PM mainstream.

“We want to mainstream performance management. We’ve had a consistent track record of taking very expensive, very complex products and making them simple and affordable. We believe the performance management category is somewhere we can make that happen again,” says Michael Smith, director of marketing for Microsoft’s Office Business Applications Group. “We want to make [PM] easy to use, easy to buy, easy to deploy, so that customers can get the full benefit without having to spend a lot of money” on software and services.

Microsoft officials, of course, insist that PerformancePoint isn’t a limited or less-than-best-of-breed offering. "The product has been under development for a number of years. Really, it’s an application to help you improve the business process of performance management," Smith said. “Analyzing that performance, that’s where the ProClarity acquisition came in. We’ve been building out the underlying platform that those features sit in or hang off of. So we’ve incorporated the server-side aspects of ProClarity into PerformancePoint."

More to the point, PerformancePoint will leverage Microsoft’s killer one-two-punch: Office and SQL Server. In this respect, the software giant positions Excel and other Office productivity tools as client front-ends for the PerformancePoint offering: "We’re continuing to use Office as a front-end for the application. Most of the visualization you’ll see is using Excel for submitting budgets and plans, or SharePoint for rendering dashboards, or Excel for analytics. Most of the ProClarity stuff is really going to be in the back-end, on the server,” said Smith.