MICROSOFT EXTENDS BI'S REACH
Microsoft, a BI leader. Who knew? Among the four megavendors, it's been the dark horse that may have a shot at winning.

After years as a niche player in the BI market, the company finally started making headway last May when it held its first business intelligence conference, pulling in a respectable 2,600 attendees. It made further progress when it launched PerformancePoint Server 2007 in September, which ended Microsoft's previously scattered approach to BI. It pulled together Microsoft's products, including business Scorecard Manager, Excel, and new apps for planning, budgeting, and forecasting, with advanced visualization and analysis technologies acquired from ProClarity. In February, Gartner identified Microsoft as a leader in the BI platform category, saying it surpassed IBM's Cognos and SAP's Business Objects in its ability to execute in areas such as product investment, pricing, market responsiveness, and customer experience. Microsoft's BI revenue grew 28% to $480 million in 2006, faster than any other BI vendor, following 25% growth in 2005, according to IDC.

Microsoft's goal is to tap into users' familiarity with its Office suite and bring different types of workers to BI. The "everyman's BI" vision is a lofty one and could make it even more difficult for Microsoft to win the respect of power users or gain traction with large businesses.

Microsoft

Strengths

Weaknesses

One place Microsoft is weak is in its offerings of technologies that organize and manage data to provide better analytical capabilities. They don't stack up to the scale and functionality offered by some of its competitors. That could change: Last June, Microsoft acquired Stratature, a small vendor of master data management software, which creates a single place to update, maintain, and analyze hierarchies of data in specific categories, such as on customers and products.

The bedrock of Microsoft's BI platform is the SQL Server database, though Microsoft BI tools can work with IBM's DB2, Oracle, and other databases, says Bill Baker, general manager of BI for the Office platform and a Microsoft distinguished engineer. Baker sees SQL Server 2008, scheduled for broad availability within a few months, as adding to Microsoft's BI momentum, with its improved performance and integration with Office. Microsoft also plans to offer improved capabilities for managing and monitoring large data warehouses, he says.

Yet some BI industry pioneers, including MicroStrategy's CEO Saylor, don't consider Microsoft a serious contender. BI efforts are usually tied to Oracle and DB2, he says, not SQL Server, at least not among large companies.

Microsoft's key BI product, the PerformancePoint suite, includes technology from its 2006 acquisition of ProClarity, which provided a component-based approach to building custom BI apps. Microsoft has tied PerformancePoint to Excel and to its SharePoint collaboration software, creating a platform for delivering BI to the masses.

User-friendly graphics such as scorecards are going to be more appealing and beneficial to more people in a variety of jobs, Baker says, while conventional--and typically lengthy--BI reports are on their way out. "People are overdosed on reports," he says. "If you get a report every day in the mail, the first time you scan it. The next day, you set an automatic delete on it." Meanwhile, Microsoft realizes it must shore up its metadata management capabilities and is investing in that area, he says, without providing specifics.

What's Next

IBM
Tighter links between Cognos and Lotus Notes for more collaborative BI. More capabilities for searching and analyzing unstructured data using IBM Labs' natural language processing technologies.

SAP
A road map of how operational BI will let ERP customers instantly analyze transactional data and change transactions based on that knowledge.

Oracle
BEA Systems' middleware will link BI tools to transactional data. Also, new software capabilities--or maybe another acquisition--in profit management.

Microsoft
Release of SQL Server 2008, with better performance, more integration with Office, and improved ability to manage data warehouses will increase credibility as a BI platform provider.

But is it wise for Microsoft to make Excel such an important part of its BI strategy? While widely used, Excel is often criticized for being kludgy. But in this case, Excel may not be the issue. "Excel has never been the problem. Consolidating data from Excel has been," says Randy Benz, CIO at Energizer, which has standardized on Microsoft's BI platform. Energizer is using a PerformancePoint module that consolidates data from various sources and lets users analyze it using Excel.

Microsoft's strategy makes sense at Energizer, a battery maker that now has 1,300 employees using BI tools and wants to make them available to even more. Employees in sales, logistics, supply chain management, marketing, financial, and other areas use PerformancePoint to analyze retail accounts. Employees work with the scorecards that Energizer's retailers use to assess the company's delivery performance.

You couldn't do that with the BI tools designed for budget analysts and senior managers, Benz says. Other vendors' BI tools are priced to meet the needs of specific users, and that pricing doesn't scale to hundreds of thousands of people, Benz says. "Over time, some of these BI capabilities will become as widespread almost as Excel already is," Benz says, "and we'd like to believe we can take it to anyone in the organization."

Microsoft's approach could be a boon for companies looking to expand their use of BI tools. On the other hand, it could turn out to be a dumbing down of BI. It depends on whether you buy into the company's vision of BI as a collaborative desktop application rather than a specialist's tool, and if you believe SQL Server will eventually match the scale and performance of Oracle and DB2. Another concern is Microsoft's long history of developing primarily for its own platforms. But with the opportunity offered by the fast-growing BI industry, expect Microsoft to stay in for the long term.

This story's headline deck was updated April 14.

Photograph by Erica Berger