Microsoft Makes Sweeping Changes To BI Software Strategy

Microsoft will discontinue PerformancePoint Server as an independent product and is exiting the market for standalone corporate performance management software.
Microsoft will discontinue PerformancePoint Server as an independent product and will fold some of its capabilities into SharePoint Server, signaling a significant change in the company's business intelligence software strategy. Microsoft hasn't announced the move publicly, but it relayed the information in a statement distributed to a limited group of journalists.

As part of the change, Microsoft is easing out of the product area that the BI world refers to as "corporate performance management," the sophisticated financial planning and forecasting tools used by CFOs and financial analysts. While PerformancePoint's dashboard, scorecard, and analytics capabilities will become part of SharePoint, Microsoft said its final work on the planning and forecasting tools in PerformancePoint will be via a service pack it distributes this summer.

The move is surprising in some aspects, but understandable in others. Microsoft has had strong growth in the BI market in the past several years and has reported good sales for PerformancePoint, which it introduced with fanfare in 2007.

The PerformancePoint suite brought together Microsoft's various BI offerings in one package, including Business Scorecard Manager, Excel, newly developed apps for planning and forecasting, and visualization and analysis technologies from its ProClarity acquisition. The strategy change ends the life of a suite that's less than 2 years old.

Microsoft, however, has long touted its philosophy of "BI for the masses," and evidently sees a better opportunity for end-user uptake of BI through its SharePoint collaboration software, one of its most successful new-product introductions in years.

What's more, Microsoft may have had difficulty breaking into CFO offices with PerformancePoint. Oracle's Hyperion, IBM's Cognos, and SAP's OutlookSoft and Cartesis all have a strong foothold in the planning/forecasting area of BI.

Finally, Microsoft is going through a company-wide restructuring that includes 5,000 layoffs. Its BI division surely came under the same scrutiny as other areas when determining where to focus development energies and consolidate products.

In its limited-distribution statement, Microsoft said that the PerformancePoint capabilities will appear in a product called "PerformancePoint Services for SharePoint," and will be available free of charge to licensed SharePoint customers through the upcoming Enterprise CAL version of SharePoint Server.

"Our decision is based on wanting customers to truly experience pervasive BI in their organization at a low cost through the tools they use every day," said Kurt DelBene, senior VP of the Office Business Platform Group, in a statement.

This summer, Microsoft says it will release Service Pack 3 for PerformancePoint Server 2007, but from there on will focus on the BI add-on products to SharePoint and other BI technologies designed for broader audiences. Customer feedback also played a big role in these moves, according to Microsoft.

Yet the move could create some problems for customers that heavily rely on the PerformancePoint engine. In an interview with sister Web site Intelligent Enterprise, Microsoft indicated that customers that want financial planning capabilities will be able to get them in upcoming versions of Excel Services, SQL Server, and its Dynamics ERP suite.

According to IDC, Microsoft's revenue for BI query and analysis tools grew 15.4% to $533 million in 2007. Microsoft ranked fourth in total revenue after SAP Business Objects, IBM Cognos, and Oracle, which averaged annual growth rates of about 10%.

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