ProClarity: If You Can't Beat 'Em, Buy 'Em

April 13, 2006 from SQL Server Magazine - "Microsoft dramatically shook up the business intelligence (BI) market competitive landscape last week with the acquisition of ProClarity, one of the leading developers of third-party analysis and visualization tools for the Microsoft BI platform. The Microsoft press release emphasizes the compatibility of the two companies' visions. The release features a statement from Bill Baker, general manager of Microsoft Office Business Applications, who says the ProClarity acquisition will help Microsoft "build even more BI capabilities into the Microsoft Office system productivity tools people use every day." And ProClarity CEO Bob Lokken says his company shares "Microsoft's enthusiasm for making BI accessible to all decision maker's within an organization."

Although I haven't reviewed ProClarity's latest market-share data, I know that the company was one of the first third-party providers of tools for the Microsoft BI space and is widely regarded as one of the best BI providers in the market. Microsoft regularly buys small software companies to roll into its own product suites, but it's rare for Microsoft to acquire such a visible, leading player. I've been following the SQL Server space since the product's beginnings (when SQL Server ran on LAN Manager and OS/2), and I can't recall Microsoft ever acquiring a product that has such a significant market share in a mature market segment--at least in the SQL Server space. (I'm sure someone will quickly point out some major event I've missed, and I'll be glad to pass that info along next week!)

I worked with the first release of the ProClarity platform and attended one of the company's earliest partner-training events in the days of SQL Server 7.0. I remember joking with CEO Bob Lokken, "So, when is Microsoft going to buy you?" From the start, ProClarity's offering was strong, especially when compared to the weak Microsoft offerings of the time, which relied on Microsoft Office as a BI front end. In addition, the ProClarity platform did a great job of leveraging Microsoft technology.

The move to acquire the mature ProClarity product raises some interesting questions:
Will Microsoft integrate ProClarity into existing Microsoft tool offerings (i.e., Office), or will ProClarity become a standalone, high-end product? What does this acquisition mean for other third-party BI tool providers? Which companies will be able to compete, and which small tool companies may go out of business?

Microsoft hasn't revealed whether ProClarity's platform will be integrated into the Microsoft BI stack or be consumed by the upcoming Office 2007. But ProClarity Analytics is a best-of-breed product, and Microsoft has made great BI-related strides in the upcoming Office release. So tool choices for Microsoft customers are bound to be varied and rich.

I'm not sure I'd want to be a standalone-tool competitor in the Microsoft BI space. Competition in this arena will be tough given the massive upcoming BI improvements in Office 2007 and the acquisition of ProClarity. I'm sure BI competitors such as Cognos and Business Objects are also keenly interested in this acquisition. Microsoft BI has made enormous strides over the years, and the company has become recognized as a leading player in the BI space. The ProClarity acquisition can only make Microsoft an even stronger player."