July 18, 2008
The New Face of Business Intelligence

Business Intelligence (BI) has existed in some form (i.e. Decision Support Systems and Data Warehouses) since the early 80’s. You have likely noticed that after this relatively long incubation period, BI has only recently moved to the top of priority lists for executives from all types of organizations. So what has changed in the marketplace to cause a sudden shift from BI being perceived as multi-million dollar initiatives for Fortune 500 companies, to something many small and mid-size organizations are considering? And more specifically, what has Microsoft done over the past 10 years to evolve into one of a handful of market leaders?

The biggest hurdle for most organizations implementing BI has always been cost. The high cost of software and services previously put BI out of reach for all but the most technologically aggressive organizations. But we are in the midst of significant change. First, let’s focus on the software. Until recently, BI software occupied a relatively small niche, with relatively shallow market penetration and high licensing costs. Over time, three large BI mega-vendors emerged: Hyperion, Business Objects, and Cognos. As the enterprise market became saturated, these and other vendors began working to drive their products down to the mid-market. Over time, BI began to become more commonplace, drawing the attention of major software companies looking to get into the BI space. This resulted in a round of market consolidation including the acquisition of Hyperion, Business Objects and Cognos by Oracle, SAP, and IBM respectively. The result of this has led to a shift away from the previous best-of-breed approach when selecting BI tools, to a platform based approach, where organizations select a single integrated platform to meet their BI needs.

So what has Microsoft been doing during this time? While other vendors were working to make sense of a variety of acquisitions, Microsoft was quietly piecing together a highly competitive suite of back-end tools for developing BI solutions, integrated with SQL Server. The heart of this new platform is Analysis Services, which now has over twice the market share of the nearest OLAP competitor. While this approach of back-end was pragmatic at first, it left a significant gap in Microsoft’s BI platform for front-end user tools. This led to an opportunity for independent vendors to develop visualization tools utilizing Microsoft’s back-end platform with somewhat inconsistent functionality and quality. With the release of SQL Server 2005, Microsoft began switching its focus towards filling this gap. This became evident with the acquisition of ProClarity in 2006 which when integrated with two other internally developed technologies makes up Office PerformancePoint Server 2007 - released in November 2007. Despite being a version 1 product, PerformancePoint has helped push Microsoft into the "leaders" quadrant in Gartner’s BI Magic Quadrant for 2008, with the highest ranking on ability to execute amongst all competitors.

So, what does this mean for businesses looking to invest in Business Intelligence? For starters, many organizations already license Microsoft technologies across their enterprise, including many components of Microsoft’s BI platform such as SQL Server, Microsoft Office, and SharePoint. This creates an opportunity to further leverage existing investments, and leaves PerformancePoint as the only addition necessary to have an end-to-end BI platform. With the recent consolidation in the marketplace and the resulting uncertainties around the direction of other platforms, Microsoft’s relative stability and cost competitiveness is even more compelling. By taking advantage of Software Assurance, PerformancePoint can be purchased and implemented now with no additional investment necessary to benefit from the enhancements in future versions. At the end of the day, this allows organizations to spend less on software, leaving more resources available to invest in the most important aspect of any Business Intelligence solution - implementation and use of the solution to capture value.

By Eric Melcher
TechLINKS