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| Research Report: Microsoft's Business Intelligence Strategy Introduction |
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By Chris Alliegro [bio]
The following an excerpt of a Research Report published by Directions on Microsoft, an independent research firm focused exclusively on Microsoft strategy & technology. More samples of our content, as well as a list of upcoming articles and reports are also available. Over the last two years, Microsoft has substantially expanded its product lines for business intelligence (BI), the process of extracting raw data from operational business applications and databases and analyzing the data to help organizations and workers make business decisions. Ideally, BI solutions allow workers to make better decisions based on hard data from day-to-day business activities. Typical BI users could include the following:
Historically, Microsoft's strategy has centered on the SQL Server BI platform, bundled tools and services for consolidating historical data from business applications and summarizing and distributing the data. (Consolidated data are frequently stored in specialized data warehouses, historical databases dedicated to BI.) While bundled with the SQL Server product, Microsoft's BI platform can work with data warehouses or application data managed with other technologies, including IBM DB2 databases, Oracle databases, flat files, and others. Microsoft also has an important presence in BI applications, which enable users to view and analyze historical data for BI. In fact, the Excel spreadsheet and charting application delivered with Office is the single most widely used BI application for end users. Excel in general supports expert users who rely on their own business expertise for analysis; for example, a regional sales manager analyzing historical sales data. In particular, Excel is often used for ad hoc charting and reporting of data in online analytic processing (OLAP) databases (also referred to as cubes), specialized multidimensional summaries of business measures typically derived from data warehouses. Until recently, however, Microsoft has had little presence in analytic applications, applications that incorporate expertise about specific industries and business processes (such as demand forecasting). For example, financial fraud detection now relies on analytic applications to identify suspect patterns of transactions, which can then be followed up by experts. Microsoft has designed its BI platform to support commercial or custom analytic applications created by others, and the platform includes some key supporting technologies such as data mining, which enables automated extraction of trends and patterns from large historical databases (e.g., patterns of likely fraud). However, several recent and planned releases take Microsoft beyond the generalized BI application features in Excel and into more specialized analytic applications. These releases build on SQL Server 2005, which shipped in Nov. 2005 and was a major overhaul of the company's strategic BI platform. (For a graphical overview of Microsoft's latest BI offerings, see the illustration "Business Intelligence Products Overview".) Microsoft's BI strategy for both platform and applications centers on a basic tenet: "BI for the masses." The company hopes that by putting BI functions into general purpose, widely purchased products like SQL Server and Excel, it can expand the overall number of users who benefit from BI. That in turn would enable Microsoft and its partners to benefit from overall BI market growth, and to sidestep incumbent BI vendors who already have a foothold in organizations. BI Platform Enhanced in 2005 Microsoft's SQL Server BI platform contains three distinct services:
Improved BI development tools and a more flexible, better-performing platform have helped encourage existing customers to upgrade to SQL Server 2005 and partners and prospective customers to select the platform for building BI infrastructure and applications. Development, Performance Improvements In general, improvements center on the following themes: Easier development. The BI Development Studio is a new integrated development environment based on Visual Studio 2005. It encompasses the functionality found in the stand-alone designers, tools, and wizards for developers in SQL Server 2000 and inherits useful Visual Studio capabilities, such as the ability to integrate with source-code control software. The new environment could help corporate developers working on larger BI projects: for example, it allows development teams to manage and organize separate development tasks (constructing Integration Services programs, or "packages," and Analysis Services cubes, for instance) within a single environment. SQL Server 2005's BI development environment should also make it easier for ISVs to build BI capabilities into their own products or create specialized analytic applications on top of the platform. Smarter applications. In addition to the new development environment, a range of new programming tools, features, and constructs could help developers deliver smarter BI applications with less custom or third-party code and create applications that would have been difficult or impossible in previous versions. For example, new Integration Services transformations will let developers build ETL processes that would require custom-built or third-party code in SQL Server 2000. Similarly, Analysis Services ships a number of new data-mining tools and provides infrastructure for creating key performance indicators (KPIs), which attempt to quantify factors (such as profits, customer satisfaction, and employee performance) that influence an organization's strategic goals. KPIs are important components of many business monitoring and dashboard applications. BI for a broader range of users. An end-user reporting feature (called Report Builder) in Reporting Services allows users to construct, format, and publish ad hoc reports without requiring those users to possess programming skills. In the previous version of Reporting Services, report creation and publishing was strictly a developer activity. Faster, more scalable platform. Integration Services gets a new, faster runtime engine and new management tools. These improvements could attract customers with complex, enterprise-class data integration needs, a segment that has traditionally been the domain of costly third-party products, such as Informatica's PowerCenter. Analysis Services gets a new cube-caching mechanism that allows administrators to configure when and how frequently cube data are refreshed from their underlying data source (a data warehouse, for instance). The feature will help administrators optimize the performance of user queries against those cubes. Finally, SQL Server 2005 includes 64-bit versions of most components and features of the BI platform. Support for 64-bit servers could help large shops consolidate BI infrastructure on fewer servers and reduce the processing time of memory-intensive operations, such as complex Integration Services data transformations or the processing of large, complex Analysis Services cubes. Low Cost, Independence Central Though SQL Server 2005 includes many technical enhancements, Microsoft continues to pursue the same business strategy with its BI platform as in past releases. By bundling the BI platform with SQL Server, but making it data source-independent, Microsoft gives SQL Server customers a relatively low-cost and convenient entry-point to BI, and gives customers of other database management systems a reason to add SQL Server installations. That in turn creates opportunities for integrators and third-party software developers. The BI platform is complex and addresses complex problems, so systems integrators can deliver expertise for the platform, integration with specific data sources, and overall system planning in addition to BI application development. Furthermore, the SQL Server BI platform can serve as a foundation for BI applications from partners. For example, OutlookSoft and Panorama create a variety of business monitoring, performance management, and reporting applications on the SQL Server BI platform. However, these partners could begin to feel squeezed as Microsoft expands its own BI applications. BI Applications: Beyond Excel In the arena of BI applications, Microsoft has continued to improve its flagship BI client, Excel, for OLAP and reporting. In addition, Microsoft has updated its SharePoint Server (formerly SharePoint Portal Server) portal and document management product to function as a BI application for browser users. The company has also announced plans for its first financial analytic application, called PerformancePoint. Excel 2007. Microsoft continues to improve Excel for BI purposes. Excel 2007, like earlier versions, allows users to connect to and analyze Analysis Services cubes using the product's PivotTable and PivotChart features, which get several usability improvements in the new release. In addition, Excel 2007 supports new Analysis Services features; for example, users can view Analysis Services KPIs in Excel. The improvements could widen the user audience for Analysis Services and help companies make more effective use of Analysis Services. However, Excel users must still understand data analysis methods and cube concepts, and administrators must maintain connection information for the cubes on the Excel client machines. SharePoint Server 2007. Formerly called SharePoint Portal Server and aimed at corporate portals, SharePoint Server gains many new BI features. The product enables generation and viewing of Web-based reports from Analysis Services cubes and other data sources, and provides its own Web-based scorecard and KPI tools separate from those of Excel 2007. In addition, SharePoint Server enables Excel 2007 users to publish spreadsheets to a server for viewing and calculation by browser users; this capability will particularly benefit organizations that want to publish Excel-based analytic models for specific business processes or application data sets. In general, SharePoint Server could work better than Excel for distributing reports and analysis methods to large numbers of users, particularly users who are not expert analysts. PerformancePoint Server. Planned for release in 2007, this budgeting and financial reporting application will enable analysis, tracking, and consolidation of financial information stored in Analysis Services cubes. Users will be able to access PerformancePoint Server through Excel or SharePoint Server, but unlike these two applications, PerformancePoint Server will deliver specific analytic methods for financial information, and will set up the appropriate Analysis Services cubes for those methods. Consequently, it could open up Microsoft's BI platform to many users who need to work with financial information but don't have the access or expertise to set up cubes and design reports. BI for the Masses? The 2007 lineup of BI applications and the SQL Server 2005 BI platform represent significant steps forward in Microsoft's BI strategy. However, that strategy presents several weak points for customers and partners. Version 1.0 features. Many of the new BI products and features have problems typical for first versions, and some show signs of being rushed to market. For example, SharePoint Server's Excel Services feature for Web-based spreadsheets cannot handle many spreadsheet features, and SharePoint in general shipped with relatively sparse documentation for such a complex product. These kinds of teething problems will be addressed in future service packs and releases, but they could hamper use of the new technology for the first wave of customers and partners. Overlapping features and products. As is common when Microsoft invests heavily in a new area, it has delivered multiple competing technologies and products for some BI functions. For example, a customer who wants to use scorecards and KPIs to track business performance could build a solution on Excel 2007, SharePoint Server 2007, Business Scorecard Manager (the predecessor to PerformancePoint Server), PerformancePoint Server, or ProClarity Analytics (a BI application Microsoft acquired from a partner in 2006). Microsoft is unlikely to continue development on all of these technologies indefinitely; it will probably consolidate them over the next few years. Such consolidation could mean painful migrations for customers and partners who build solutions on the wrong technologies. Complexity. BI solutions remain complex. Building them requires a good understanding of an organization's specific business processes, its key business applications and databases, and Microsoft's array of BI components and products. Microsoft's size and business strategy prevent it from delivering tailored BI solutions for specific organizations. That creates opportunities for systems integrators, solution providers, and software vendors with BI expertise in specific industries, business processes, and business applications, but it also limits how quickly Microsoft-based BI solutions can really reach "the masses." Partner competition. Finally, Microsoft has steadily moved "up the stack" in BI: The company has added analytic knowledge (such as data-mining methods) to its BI platform; moved from a single, horizontal BI application, Excel, to an array of thin- and thick-client BI applications; and now is entering the realm of specialized analytic applications with PerformancePoint Server. Inevitably, Microsoft's expansion has reduced opportunities for its BI software partners, and has turned some partners into competitors. BI partners will have to continually monitor Microsoft's strategies and offerings and adjust their own; in some instances, these moves could deprive Microsoft of partners that it needs to create specific kinds of BI solutions. What's Ahead This report summarizes recent evolution of Microsoft's BI strategy and offerings. Three chapters cover the SQL Server 2005 BI platform and explain its improvements over the previous generation: "Analysis Services Extends the OLAP Cube" describes improvements to SQL Server Analysis Services to simplify cube setup and enhance scalability and management. "End-User Report Creation in Reporting Services" outlines improvements to SQL Server's managed reporting component, including support for report design by users who are not software developers. "Integration Services Overhauled" describes the new SQL Server component that supports ETL processes for BI and explains its performance and development benefits. Three additional chapters outline the latest and upcoming versions of Microsoft's BI applications: "New OLAP Features for Excel" explains how Excel 2007 improves support for Analysis Services cubes and delivers scorecard and other reporting improvements. "SharePoint 2007 Expands Business Intelligence" explains the new features in SharePoint Server 2007 for BI, including report distribution and the Excel Services feature for Web-based spreadsheets. "New Product for Performance Management" previews the PerformancePoint Server financial BI application and briefly summarizes two other BI applications—Business Scorecard Manager and ProClarity Analytics—that will be merged into PerformancePoint Server. "Future Directions and Considerations", the final chapter, projects the near-term future for Microsoft's BI products and notes some important problems that customers and partners may face when moving to the products covered in this report. "Resources" contains links and pointers to additional material about BI. "Appendix: SQL Server 2005 Availability, Pricing, and Packaging" outlines how to buy SQL Server and its BI components.
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