Microsoft’s latest acquisition gives it advanced analysis and visualisation technology for business intelligence systems

Microsoft yesterday announced it had agreed to acquire business intelligence (BI) software specialist ProClarity to gain clout in the reporting tools market.

Microsoft said the deal gives it advanced analysis and visualisation technologies for its BI portfolio, which currently includes embedded reporting capability in SQL Server 2005 and SharePoint Portal Server, and is expected to be extended further next year with the launch of new BI functionality as part of Office 2007.

ProClarity has also been building analytics functionality on top of Microsoft's platform as a Microsoft partner since 1999, so a relatively smooth integration process is expected.

“ProClarity has been a valued Microsoft partner for many years, with a strong R&D organisation, more than 1,200 mutual customers and a sales force that already works closely with ours,” said Jeff Raikes, president of the Business Division at Microsoft.

The deal is likely to crank up the pressure on traditional BI vendors, such as Business Objects, Cognos, SAS, and Hyperion, which have long argued that Microsoft's BI functionality lacks the level of sophistication they offer.

Crispin Read, chief marketing officer of business performance management vendor and Microsoft partner Cartesis, said in a statement that the deal represented "a dark day" for incumbent BI providers. "Microsoft is shifting from a toolset that only competes with Crystal Reports to a full-capability BI platform," he added. "[It] will be a formidable competitor in the BI space moving forward.”

This view was endorsed by Richard Edwards of analyst Butler Group, who said the deal will increase Microsoft's appeal to medium-sized firms, whose demand for BI tools is growing.

"[Large organisations buying BI tools] is a small proportion of the market and the BI vendors are looking to better address the mid-market," Edwards said. "SQL server already has a strong foothold in the mid-market and this deal adds a substantial BI platform. Microsoft is going to compete strongly in the mid-market."