...attracted by a rip-and-replace strategy and more interested in standards-based frameworks that can tie all of these disparate domains together, particularly as the usage of BI continues to broaden out.
"The framework will be where the real battleground is for BI. Microsoft would dearly love the .Net framework that underpins its BI stuff to be the default, but so would Oracle with its database and Fusion and SAP with NetWeaver and its Business Information Warehouse — and they are big players in the enterprise", Vile explained.
These vendors have been extending out their core applications and building in BI functionality to try and position themselves as a hub for some years now. But IBM is another key player with its high-end DB2 database and data-integration software, although it currently has no reporting or analytics applications in its portfolio.
"The large enterprise is quite a complex landscape so there's no way that Microsoft is going to go in there and just take control, because there are big powerful incumbents that are after the same space. So here Microsoft will push the interoperability message and the situation will play out on an account-by-account basis," said Vile.
A key issue around investment, however, will be where customers place their emphasis in terms of decision-making. If the back-end large data-warehouse layer is perceived to be the most important, the traditional enterprise players are more likely to win out.
If the focus is on the middle layer, which is about pulling together disparate back-end data sources, Microsoft is in with a fighting chance against vendors such as IBM with Notes, and Bea Systems with its WebLogic portal. But if the front end is considered the most crucial area, then Microsoft is well placed to gain.
As history tells us, when Microsoft goes after a market, it's there for good
Andreas Bitterer, Gartner
But Redmond may also make some headway as customers increasingly look to rationalise their disparate BI offerings and standardise on fewer vendors, in order to reduce costs and cut maintenance and support burdens. It may also appeal because of its pricing strategy, which is already having a commoditising effect on the wider market.
"Microsoft will try to move higher up the food chain, as that's where the money is, and it is likely to have some success due to its very aggressive pricing. So the pure-play vendors will have to look over their shoulders because, as history tells us, when Microsoft goes after a market it's there for good. It may lose money at the start, but it's got deep pockets and it's in this for the long-term," Gartner's Bitterer said.
Moreover, although the vendor may currently be positioning its portfolio as a discrete set of offerings and will continue to do so for some time, as evidenced by the planned release of its PerformancePoint Server 2007 business performance management (BPM) application in the autumn, this will change over time.
"Microsoft needs to do what it's doing now to earn its stripes as there's a perception that the BI market is about specific solutions, and so it needs to explicitly position its deliverables. But over time, we'll see its BI capabilities being increasingly positioned as options and they'll move from being discrete to being an integral part of other products," said Vile.
This will inevitably lead to market consolidation, with Oracle's acquisition of BPM supplier Hyperion in March being the first indication of the move about to take place.
The most likely purchasers are the big infrastructure players such as IBM and HP, and the most obvious targets are the pure-play BI vendors.
"Whenever Microsoft goes to a market, it becomes a key player, which means that other vendors have a habit of being acquired or being pushed into niches. So in a few years' time, when the big infrastructure players have moved in, the market will look very different, and it's pretty much ready to make a big shift now," Bitterer said.
