Racing Towards the Future, Stuck in the Past: Microsoft BI Moves… Not Far Enough

Attending Microsoft’s first Business Intelligence Conference has been an illuminating experience, mostly for how Microsoft’s major strengths in BI are becoming its major weaknesses. The issue is one that I’ve ranted about in the past, and it’s an industry-wide problem, not just Microsoft’s. After a day sitting through the pre-conference analyst summit, I’m convinced that my position is even more valid than ever before. And Microsoft’s hand-picked users – speaking to the analysts at the close of the day – agreed.

The main problem is Microsoft’s tools and technology approach – exactly the strength they tout in the market. And don’t get me wrong, their BI technology is looking better and better every day. Indeed, the other tools vendors in the market – Oracle and Business Objects, among others – should be very worried about how well Microsoft has pulled together tools like SharePoint and PerformancePoint, sitting on top of Excel, SQL Server, and other technologies, and turned them into a comprehensive BI platform.

But my bigger point is that everyone in the tools business – if that’s all they deliver to the market – should be very worried. The problem is that the value-add in the marketplace is more and more about industry-specific, and user-specific, requirements. Indeed, many of the very best and most valuable BI solutions today are rarely if ever even called BI. They’re called applications, and they have something built-in that all the tools in Redmond don’t: business IP about a problem or problem in an industry, both in terms of how to identify the specific problem (an outlier, anomaly, or exception) as well as how to recommend or guide the user towards fixing or remediating the problem. These applications take data from the transaction stream, from existing data in the data warehouse, from data sources outside the company, and, using the unique IP that the vendor has developed, deliver extremely high-value solutions to the user.

These high-value BI applications aren’t necessarily only industry-specific solutions. Some are more horizontal, targeting the important business processes that are used by key users. This is the thinking behind Oracle’s acquisition of Hyperion and SAP's acquisition of OutlookSoft – both of which are targeting the specific requirements of CFOs.

Meanwhile, Microsoft’s very able BI team is producing great tools but leaving the industry-specific and role-specific functionality to their partners. And herein lies the weakness in the strategy: the partners are a mixed bag. Some are really steeped in the business and end-user requirements of specific industries, but too many are technologists more in the mold of Microsoft than not. And too many of those who really grok the industry-specific issues – among them the global SIs – are not developing packaged solutions but concentrating on custom, one-off solutions that are by definition more costly than packaged alternatives.

This techno-centric focus highlights the disconnect between Microsoft BI and its customers’ requirements, as stated by the customers hand-picked by Microsoft to show off its BI technology to the analysts. While all were happy consumers of Microsoft technology, they all agreed that Microsoft and its partners lack sufficient knowledge of their businesses. One in particular confided in me that there was no one at Microsoft, or its partners, who could talk to his CFO about his company’s specific BI problems. It’s a problem I’ve heard of time and time again.

This self-limiting problem need not be the end of the line for Microsoft BI. What Microsoft needs to do is engage its customers in a discussion about solutions, and start highlighting the applications developed by partners – some of which are sitting in its Dynamics partner ecosystem, some of which are being developed by BI partners that don’t think of themselves as BI vendors at all.

Which is my final piece of advice for Microsoft: Expand your vision of what BI really means. Your customers need solutions that identify problems and suggest solutions: this is what BI is all about. Tools are to the future of BI the way Home Depot is to the future of the housing market. Most of us buy a house by talking to a good realtor, not by heading down to the hardware store to buy lumber and tools. The vendors that grok this will be the ones racking up the customers, and the revenues, in a market that will soon will relegate tools to their ultimate destiny – as least-common denominator commodities. At which point the BI market will have hit its stride.

Microsoft BI – where do you want to go today?