Microsoft Releases Office PerformancePoint Server 2007 in Major CPM Push

| September 21, 2007 | Data Management | Competitive Intelligence Report

| Analyst: James Kobielus

Current Perspective: Positive
Vendor Importance: High
Market Impact: High

Event Summary

On September 19th Microsoft announced the general availability of Microsoft Office PerformancePoint Server 2007, its new corporate performance management (CPM) application/platform that addresses the analytics requirements of chief financial officer (CFO) organizations. Microsoft Office PerformancePoint Server 2007 is an integrated financial CPM application that provides planning, forecasting, budgeting, and modeling; reporting and consolidation, monitoring; and analysis and visualization capabilities.

Analytical Summary

• Current Perspective: Positive on Microsoft’s release of the long-awaited Office PerformancePoint Server 2007, which re-launches the vendor into the hotly competitive financial corporate performance management (CPM) arena with a feature-rich, user-friendly, mid market-focused solution that integrates tightly with SQL Server 2005, SharePoint Server 2007, and Office/Excel 2007. The new Office PerformancePoint Server 2007, which follows nearly a year of extensive worldwide beta-testing, addresses the core planning, forecasting, modeling, budgeting, consolidation, monitoring, analysis, and reporting requirements of chief financial officer (CFO) organizations.

• Vendor Importance: High to Microsoft, because it recognized that its prior CPM offerings—Business Scorecard Manager and the ProClarity offerings—could not compete against aggressive, well-entrenched, deep-pocketed rivals such as Oracle/Hyperion, Business Objects/Cartesis, SAP/Outlooksoft, Cognos/Applix, and SAS for the core financial analytics market. In addition, Microsoft recognized that it needed a feature-competitive, user-friendly, cost-effective, and CFO-focused offering that integrates fully with its ubiquitous Office/Excel desktop into order to penetrate the core of the enterprise CPM market. In the new Office PerformancePoint Server 2007 product, Microsoft has delivered a strong offering that positions it well for CPM customer wins in both the enterprise and mid-market.

• Market Impact: High on the business intelligence BI/CPM market, because Microsoft has, over the entire course of its corporate history, proven itself a formidable competitor in any market, such as BI/CPM, that it has identified as key to its diversification, growth, and profitability.

Recommended Competitor Actions

• Rival BI/CPM vendors should step up their ongoing efforts to sell into the financial analytics segment that Microsoft is targeting. For starters, competitors should make sure that the pricing of their financial planning, budgeting, consolidation, analytics, and reporting applications is comparable to that of Office PerformancePoint Server 2007. Also, CPM vendors should continue to emphasize the depth to which they have long integrated their applications with SQL Server, SharePoint, Office, and other Microsoft platform components.

• Rival BI/CPM vendors should immediately start to price their core CFO-focused suites aggressively while ramping up the marketing, development, and bundling of premium add-on analytics applications. In the enterprise CPM market, the core financial applications are rapidly becoming low-margin commodities, so most of the profit potential is in premium add-ons that incorporate deep domain expertise from the channels.

• Competitors should point out that Office PerformancePoint Server 2007 is neither a mature offering (i.e., it is a 1.0 release that has just emerged from beta-testing) nor a feature complete financial CPM suite (e.g., it lacks financial governance, activity-based costing, profitability analysis). CPM vendors should provide detailed comparison matrices showing how they provide broader and deeper CFO-focused functionality, and integrated DQ, than Microsoft, either now or through promised enhancements.

Recommended End User / Customer Actions

• Customers that have committed to Microsoft as their strategic BI/CPM solution vendor should strongly evaluate the newly released Office PerformancePoint Server 2007. This commercial offering provides a more feature-complete, CFO-focused analytics suite than the vendor’s prior CPM solutions: Business Scorecard Manager and ProClarity.

• Customers that have already adopted Microsoft’s Business Scorecard Manager and ProClarity products should, after completing their testing/evaluation of Office PerformancePoint Server 2007 in their enterprise environments, begin to prepare their migration plans. They can migrate to Office PerformancePoint Server 2007 at no additional charge under their existing licenses.

• Existing Microsoft CPM customers should ask the vendor to publish, as soon as possible, a clear statement of how long it intends to continue supporting its legacy Business Scorecard Manager and ProClarity applications. Customers planning to migrate to Office PerformancePoint Server 2007 should ask the vendor and its channel partners for guidelines, tools, and support personnel to facilitate such efforts.

• Customers that have adopted Microsoft SQL Server 2005, SharePoint Server 2007, and Office/Excel 2007 and who seek a feature-competitive financial CPM offering that integrates fully with that environment should evaluate Office PerformancePoint Server 2007 vis-à-vis the many rival, Windows-integrated financial CPM suites on the market. Users should keep in mind that, though Microsoft’s user-friendly product integrates well with its Windows server and desktop products, so do most rival offerings in this segment.

• Customers looking for a feature-complete financial CPM suite should look elsewhere. Though Office PerformancePoint Server 2007 addresses core CFO functions in financial planning, budgeting, consolidation, analysis, and reporting, it lacks packaged modules for activity-based costing, profitability analysis, inter-company reconciliation, and other financial requirements that are addressed by various rival CPM suites.

• Customers looking for a strategic BI/CPM platform that includes packaged applications both for financial analytics and for non-financial (e.g., HR, procurement, manufacturing, logistics, supply chain management) horizontal and vertical applications should look elsewhere. Microsoft’s new CPM solution only addresses core CFO functions in financial planning, budgeting, consolidation, analysis, and reporting.

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