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Microsoft Office PerformancePoint Server 2007 hits the street

Microsoft recently released Office PerformancePoint Server 2007. Get analyst advice about the expected market impact and viability of the new corporate performance management product.

Microsoft released Office PerformancePoint Server 2007 today -- a move that could affect products and pricing across the entire corporate performance management (CPM) market, according to one IT industry analyst.

Microsoft first announced plans for the CPM product over a year ago, which some experts saw as a strategic action meant to inject uncertainty into the market. But today's product release and Microsoft's official entry into the CPM market is genuinely big news, according to John Hagerty, vice president and research fellow with Boston-based AMR Research Inc.

"This is a product that will appeal to a really broad range of users -- both [Microsoft's] traditional target of midmarket companies as well as larger enterprises that may work with service providers to build out custom solutions based on the PerformancePoint Server," Hagerty said. "Microsoft's presence here is going to shake up the market."

Many users have already gotten to try early versions of the product, according to Alex Payne, director of office business applications for Microsoft. It's been tested by more than 10,000 users through "community technology preview" releases, he said.

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The CPM tool is designed to help enterprises monitor, analyze and plan more efficiently, Payne explained, and it is an integral part of Microsoft's business intelligence stack.

PerformancePoint brings together, and augments, functions from Microsoft's Business Scorecard Manager product and ProClarity, an analytics vendor that Microsoft acquired last year. Despite other vendors' claims, Microsoft believes that PerformancePoint Server is the only fully integrated BI and CPM platform available, Payne said.

"With other vendors, we think the integration ends at the price sheet," he said. "They're not actually integrated in the infrastructure. We have the only integrated solution in this space."

PerformancePoint Server features and pricing

PerformancePoint Server brings together BI and CPM functions built on a common infrastructure, Payne said, so that organizations can:

  • Monitor data and business functions, answering questions such as "what happened?" and "what is happening?" through the use of Excel-based reporting, dashboards and scorecards.
  • Analyze business data using many ProClarity analytics functions to answer questions like "why did [an event] happen?"
  • Plan and forecast budgets and other financial projections, in order to answer questions like "what will happen?" and "what do I want to happen?"

For example, a manager might use the tool to automate budget and forecasting processes, Payne explained. Rather than sending standalone spreadsheets to multiple users, then manually collating responses, PerformancePoint Server would manage the workflows and information collection. In this process, as with other business functions automated with PerformancePoint Server, end users would see information displayed in Excel spreadsheets or Web-based dashboards and scorecards, which are considered the primary front-ends for the product.

People managing the processes supported by PerformancePoint Server would use the product's business modeler functions to set up workflows, business rules and hierarchies, Payne explained. The product ships with many pre-built templates, he said, many of which are designed for financial performance management functions like planning, budgeting and forecasting. Microsoft partners are developing additional content and applications that cover other areas, including sales performance management and human resources performance management. Also, Payne said, organizations can develop their own custom content.

PerformancePoint Server requires Excel 2003 or 2007 and Windows Sharepoint Services or the full version of Sharepoint in order to access Web-based information. It also requires SQL Server 2005, Payne said. This is where information from various source systems is consolidated through SQL Server Integration Services and analytical cubes built with SQL Server Analysis Services. Ultimately, he said, future versions will have more master data management (MDM) functions gleaned from Microsoft's acquisition of analytic MDM vendor Stratature Inc.

PerformancePoint Server costs $20,000 per server license and $195 per client access license, before any Microsoft discounts, Payne said. Organizations currently on maintenance for Business Scorecard Manager or ProClarity will get equivalent licenses for PerformancePoint Server at no cost, he added.

Analyzing PerformancePoint's market impact

This pricing model could have an impact on the entire CPM market, AMR's Hagerty said.

"Microsoft's pricing policy is significantly different than the pricing of other performance management vendors," Hagerty said. "When you price performance management technology like desktop productivity software, the economic dynamics are going to change. My expectation is that there will be some longer-term price erosion with other vendors."

For organizations that have Microsoft technology in house, Hagerty recommends "kicking the tires" on PerformancePoint Server and deciding whether it's ready for use in a production environment. Many people may wait until later releases to buy PerformancePoint Server, and Microsoft probably expects that, he said. This release is part of a larger overall BI strategy, he added, and Microsoft will become "much more aggressive" in the market.

Hagerty had only one caution for those considering an immediate investment -- and clarified that it's primarily an issue of timing, as opposed to a substantive product issue.

"Because [PerformancePoint Server] is a relatively new product, [potential buyers] will have to figure out whether or not there are appropriate services and/or support available at the level that they need," Hagerty said. "Over the next six to 12 months, I think there will be a lot more service providers, both big and small, who will be available to help customers build out their performance management architecture."

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