Built to run on Microsoft’s core SQL Server business intelligence and Office desktop infrastructure, Microsoft firmly believes that PerformancePoint has the potential to take performance management mainstream, much in the same way that its SQL Server Analysis Services has done for OLAP, by reaching out to more enterprise users than traditional products from Cognos, Hyperion Solutions (now part of Oracle) and Business Objects.
We’ve already built a highly scalable BI platform and BI tools that are easy to use, said Chris Caren, general manager of Office at Microsoft. Today we’re extending that by bringing an integrated performance management application to mainstream business user market.
He said that simplicity, in terms of deployment and use, and attractive pricing are the key selling points of PerformancePoint.
In the former case, much of that simplicity is because the application is based on the familiar Office tools interface. Microsoft is also expected to announce pricing for the product at $20,000 per server, plus a $195 per client access license (CAL) fee. That’s aggressive compared to competing performance management software already on the market.
Microsoft announced PerformancePoint back in April 2006 after it acquired ProClarity. The software helps companies to plan, monitor and analyze business performance using key performance metrics and indicators that are managed and surfaced through graphical scorecards and dashboards.
While the planning, budgeting, consolidation and forecasting capabilities of PerformancePoint are brand new, the application isn’t based on 100% newly developed code. It also incorporates Microsoft’s older Business Scorecard Manager software as well data analysis and visualization tools that it picked up from ProClarity.
According to Microsoft, Business Scorecard Manager and ProClarity customers that have maintenance agreements will receive upgrades to PerformancePoint.
From a platform perspective, PerformancePoint relies on Microsoft’s SQL Server database as an underlying data management platform and Office tools, notably Excel, as its main user interface. The software runs on SQL Server 2005 and Office 2003 and 2007. Windows SharePoint Services, which is part of windows Server 2003, will provide Web access to PerformancePoint.
While Microsoft is targeting large companies with PerformancePoint, the software will ideally appeal to small and mid-sized businesses, which has been historically been Microsoft’s business applications sweet-spot.
It’s fair to say that many customers looking for a performance management platform have delayed their purchasing decisions in anticipation of Microsoft’s release. Microsoft itself points to over 10,000 companies that have participated in the product’s four lengthy Community Technology Previews (CTPs). Microsoft claims that’s larger than the installed bases of most performance management application vendors.
Nor are these small companies looking for Mickey-Mouse performance management deployments. Many of the customers involved in the CTP program were large, multinational organizations with very complex requirements, Caren asserts.
Microsoft is expected to push Office PerformancePoint Server 2007 into production as by the end of this week, meaning that it will be within the reach of partners by as early as next week.
Indeed Microsoft’s vast eco-system of solutions and systems integration partners has already been busy. Microsoft claims that over 1,000 partners have already received extensive training on the software.
We’ve already seen a lot of demand for PerformancePoint even before its official launch today, said Alex Payne, Microsoft director of Office business applications at Microsoft.
PerformancePoint will provide reseller and consulting partners with a platform for building content such as industry-specific business logic and data definitions. On of those partners is Capgemini, which sees ample opportunity to leverage its industry-expertise to craft key performance indicators (KPIs), metrics, and dashboards specific to its customers’ business needs that run on PerformancePoint.
We’ve seen a growth in customers wanting solutions to truly help improve business performance, said Eddie Short, vice president and global lead of business information management at Capgemini.
PerformancePoint expands our portfolio of custom solutions and enables us to more easily meet the needs of our existing customers…and helps us build a stronger revenue stream around BI.
PerformancePoint will also help to reinvigorate and open up new channel revenue streams from partners that are already selling Microsoft’s SQL Server-based BI tools and Dynamics business applications suite.
PerformancePoint has been designed explicitly to work smoothly with both these sets of products as well and integration plans are already underway in order to help PerformancePoint users to access financial information held in its Dynamics suite.
Payne said that over the next six to twelve months Microsoft will incorporate into PerformancePoint general ledger reporting tools from FRx Software, which Microsoft bought in 2001 through its acquisition of Great Plains Software.
Predictably though, PerformancePoint has also drawn some nasty comments from established performance management rivals who snipe at the software lack of financial reporting capabilities and say that that the application forces customers to standardize on Microsoft infrastructure (SQL Server, SharePoint and Office).
Meanwhile others question PerformancePoint flexibility in working with directly working with non-OLAP data sources such as relational data sources and baulk at the idea of costly migration and consulting fees.
Our View
Office PerformancePoint Server 2007 allows Microsoft to put a much firmer stake in the performance management software market; and with an integrated product that puts into greater focus the technology that it acquired from ProClarity, not to mention its older Business Scorecard Manager software, as well as the new BI capabilities it has invested in Office.
Admittedly PerformancePoint might not be the finished article in its first full functional release. But it can only get better over time and subsequent releases. While not showing it publicly, Cognos, Oracle/Hyperion and Business Objects brows are probably quite furrowed, hoping that Microsoft’s poor track record in delivering enterprise business applications to market continues with this product. However, PerformancePoint has the potential to be quite a disruptive release, even if it just lengthens, and muddies, customer sales decision cycles for performance management going forwards.
That said PerformancePoint is unlikely to make much of an immediate dent in their high-end performance management accounts. But it does have the potential to take a large chunk of business in the mid-to-lower segment of the market. This is a sector which BI vendors, especially Business Objects, are banking heavily on to drive future revenue growth.
A boon to customers that Microsoft will now be able to assert sufficient price pressure on incumbent performance management providers that have been selling premium-priced software for years. Expect prices to drop in the coming months as they compete in deals to either attract new customers or hang on to existing ones.
