Is There Much More (Pro)Clarity In Microsoft’s BI Strategy Now? - Part 2

Part 1 of this blog series presented Microsoft’s official position on its recent notable change in business intelligence (BI) product strategy, whereby the company is breaking apart the business performance management (BPM) family of products. To that end, Microsoft will include the monitoring and analytic functionality within Microsoft Office SharePoint Server (MOSS) 2007, while seriously backpedaling on (if not completely unplugging) the development of its nascent financial planning & consolidation application.

I certainly concur with the views about the event that have already been expressed in respective alerts and reports from Gartner, Aberdeen, and Forrester. With this move, Microsoft tacitly admits that it feels more comfortable and adept in selling technology platform solutions than it does in developing high value-adding and more involved BPM applications. Thus, even the largest software provider has to pick its battles in this economic climate.

The No-spin Zone

In layman's terms of home building and home improvements: Microsoft prefers to do plumbing and wiring rather than interior design, roofing, or painting. Microsoft has hereby given up on its forays into providing stand-alone BPM solutions, where it had been late to market compared to its competitors, who had a controlling market share in this arena.

The BPM space has indeed been ruled by the renowned solutions such as Oracle Hyperion, SAP OutlookSoft, Business Objects Cartesis, IBM Cognos 8, SAS InstituteIBM Cognos TM1 (formerly Applix), Infor PM (a combination of former Comshare and other acquired products), CorVu, and SAP Business Objects. Most of these products can be evaluated in depth in TEC’s Business Performance Management Evaluation Center.

Some observers might have seen the writing on the wall at the Microsoft BI Conference in the fall of 2008, where the showcased deployments of Microsoft Office PerformancePoint Server (MOPPS) were often limited to analytics, dashboards, and monitoring gadgets. But planning, budgeting, and forecasting (PBF) and financial consolidation and reporting applications are less pervasive while being much more domain-specific, and they tend to be divisional (i.e., within financial or human resource departments) rather than enterprise-wide deployments. Accurate and timely PBF and financial consolidation & reporting are critical processes in the performance management cycle, and require lots of customer hand-holding by the vendor and/or the vendor's partner.

Somewhat ironically and unfortunately, Microsoft had started to get some traction with MOPPS, but I suspect the investment payback was too far out and the company pulled the plug because of the recent overall cutbacks. Also, given that BPM entails both the expertise of finance management as well as that of BI, the company didn't want to invest in the finance part any longer.

The decision came after the giant likely realizing that it is too hard to catch up with the above-mentioned competition. Microsoft will thus rather focus its efforts to make BI more pervasive by bundling analytics (from former ProClarity) and scorecards (from the former internally developed Microsoft Office Business Scorecard Manager product) into MOSS.

Instead of competing head-on, Microsoft will attempt to outwit the other vendors' BI/BPM platform offerings from the adjacent search and collaboration solutions. Ultimately, this strategy change might make sense for customers, partners, and for Microsoft.

Microsoft excels at delivering platforms that partners can extend functionality- and industry-wise, both at the application layer and specifically to meet the exacting needs of customers. The change from delivering a full-fledged domain expert application (such as financial planning) to refocusing efforts on how to build out a completely interoperable and extendible platform, is likely the right way to go.

There might be short-term pain in making the change in the direction around MOPPS. Namely, the customers that have implemented the platform for PBF or financial consolidation will be using a legacy product that will reportedly be supported for 10 years, but will no longer be enhanced or developed past Service Pack 3. There is also a challenge for independent software vendors (ISVs) and value-added resellers (VARs) who will have either embedded MOPPS in their products or geared up to sell and implement it.

But I believe that the partners will pick up the slack in evangelizing the BPM vision and delivering focused BPM solutions, while Microsoft can focus on delivering a solid BI platform. As for the ISV community that was looking to embed MOPPS, they can still offer PerformancePoint Services (the dashboards, scorecards, and analytic capabilities) through MOSS. It also appears that Microsoft will be making White Papers, "how to" instructions, and making sample code available that will allow ISVs and customers to extend the planning component of PerformancePoint Server.

A New Lease on Life for Microsoft FRx?

I believe that this change is also good for Microsoft FRx and Microsoft Dynamics. It will allow the Dynamics group to take applications that are incredibly important to its customers and extend their functionality. As I think about it, this was the only move for the FRx product suite that made sense. The product line was to have been superseded by MOPPS, but now remains in play after Microsoft reversing its decision from 2006.

More than 130,000 businesses use the Microsoft FRx product as a widespread cult-like mid-market solution for generating financial statements (income statement or profit & loss [P&L] statement and balance sheet reports). As a matter of interest, the product is embedded in products and resold by numerous application software partners, many of which compete fiercely with Microsoft Dynamics (e.g., Epicor Software, Infor, IQMS, Flexi International, Consona Corporation, and The Sage Group, to mention only some).

A newer related product within the FRx family is Microsoft Forecaster (formerly called FRx Forecaster). Forecaster is a purpose-built PBF solution principally for the mid-market, which is curiously often an upgrade for Microsoft Office Excel as a rudimentary PBF tool. But ironically, unlike so many planning products in the market, Forecaster does not natively leverage Excel as a familiar user interface (UI) metaphor, using its own proprietary web-enabled UI instead.

It’s the Economy, Stupid!

MOPPS was a small but growing revenue stream compared to Microsoft's SQL Server and SharePoint revenue. In light of the current economic climate and Microsoft's recent earnings report, this change in product strategy represents a pragmatic, BI-centric road map. Focusing its efforts on the large revenue producing products (e.g., Microsoft Office, SQL Server, and SharePoint) versus making upfront investments in products with less certain returns and much longer paybacks (e.g., PerformancePoint), is a prudent (ahem, performance management-based) strategy that seems to be in tune with the current dire economic realities.

Only time will tell whether this decision is in tune with the reported changing habits of BI buyers. Dear readers, what are your views and comments in this regard? If you are existing users of SharePoint, PerofrmancePoint, or FRx, what have been your experiences with these products and what is your take on their future?
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