WHITE PAPER Microsoft SQL Server 2005: Bringing Business Intelligence to the Masses

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1 Global Headquarters: 5 Speen Street Framingham, MA USA P F WHITE PAPER Microsoft SQL Server 2005: Bringing Business Intelligence to the Masses Sponsored by: Microsoft Dan Vesset December 2005 SITUATION OVERVIEW Organizations operating in today's global economy are faced with unprecedented competitive and regulatory pressures and a heightened level of uncertainty. In this market environment, there is a trend toward continuously shrinking decision cycles where improved faster, more accurate, insightful, and flexible decision making commands a premium and serves as a basis for competitive advantage. To address this market need, organizations need to focus on providing decision makers with appropriate software support based on a robust business analytics architecture. The business analytics (BA) software market comprises tools and applications for tracking, storing, analyzing, modeling, and delivering information in support of automating decision-making and reporting processes. This software market includes both application development tools and packaged analytic applications. The major components of the tools segment of the market include data warehouse generation, data warehouse management, and business intelligence (BI) tools. The applications segment of the market includes customer relationship management (CRM), supply chain and operational, and financial and business performance management analytic applications. Whether you are planning to develop your own analytic applications using BI tools or purchase packaged analytic applications, the deployment of such end user facing decision support software will be executed on a platform consisting of data integration, data management, analysis, and information delivery software. Components of Business Analytics Platforms As the business analytics market has matured, the requirements of a platform to support decision-making processes have evolved from standalone components for data extraction, transformation, and loading (ETL) and standalone servers for OLAP, reporting, and data mining to integrated platforms that combine data integration, multidimensional analysis, data mining, and reporting in a single solution. This trend toward integrated platforms began in 1998 with Microsoft's introduction of SQL Server OLAP Services (now called SQL Server Analysis Services) and has been followed by other database vendors. Today, bundled business analytics platforms are a permanent fixture on the short list of software being evaluated by organizations of all sizes.

2 In addition, the market is evolving from traditional BI and data warehousing that was mostly concerned with information delivery to decision process automation a process that will require support for other related services, such as workflow management, collaboration, and business-activity monitoring. These requirements complement the traditional BI functionality by enabling organizations to develop business analytics solutions that match and support the decision-making processes of their users. Business Analytics Platform Selection Requirements Organizations refer to their business analytics software using various terminology. The naming conventions range from business intelligence and data warehousing to decision support systems and analytic applications. Regardless of the naming standards, a common trend that has emerged in the last couple of years is to focus on operational BI. In other words, the requirements for a business analytics platform are increasingly beginning to resemble those of other operational systems. There is a general thrust to bring BI to the masses, to extend the reach of BI beyond the few analysts or power users to every knowledge worker in an organization. This requirement brings with it new technical considerations when evaluating business analytics software. Therefore the four primary criteria to consider when evaluating the business analytics platform are:! Scope of functionality! Scalability! Availability! Simplicity Scope of Functionality Today, business analytics platforms must be able to support a spectrum of end-user requirements, ranging from statutory reporting and dashboards to ad-hoc query and data mining. A robust business analytics platform should have enough scope to address all these needs while being open to supporting third-party tools that, in some cases, may provide further enhancements to the end-user communities. It is therefore important to make sure that all the basic functionality of business analytics is supported. This includes:! Data integration! Data warehouse management! Ad-hoc query! Production reporting 2 # IDC

3 ! Data mining! Spatial information management Scalability The business analytics platform must be able to support growing data volumes and end-user populations. Some of the recent market research indicators that support this trend include:! 30% of companies with $500 million or more in revenue expect their data warehouses to grow at least 100% over the next three years.! 44% of large companies today provide business intelligence reports to external users. This trend suggests that the number of users will continue to grow not only inside the organization but also outside to suppliers, partners, customers, and other stakeholders. Availability As the business analytics market grows and matures there has been an increased focus on operational BI. Defined alternately as "real-time'' or tactical, the primary characteristic of operational BI is that the software deployed to support decisionmaking processes is part of the operational workflow of end users. In some cases, operational BI does require real-time data feeds and alerts. In other cases there is no real value to real-time data because the business processes are not set up to handle such data. A recent IDC research study identified that:! 43% of organizations say that the BI solution can't be down for more than a few hours. This finding suggests that a sizable portion of the market is getting away from deploying BI systems as standalone, "nice-to-have" solutions. Instead, organizations consider them as being part of the operational workflow. Although longitudinal survey data on this particular finding does not yet exist, case-based research indicates that this is a strong emerging trend at many organizations. Simplicity The final major requirement for business analytics platforms is simplicity. Simplicity both in development, deployment, and maintenance as well as end-user functionality. If the goal of bringing BI to the masses is to be achieved, then simplicity of the platform will need to become a key focus area for software developers, systems integrators, and IT departments.! From the IT perspective there is a constant demand for a flexible analytic applications development platform that enables fast response to end-user requests, efficient security, and end-user rights management. As organizations face increasing pressure to provide IT support with constrained IT resources, functionality that enables faster deployment, centralized maintenance, and enduser self service are attractive platform attributes IDC #

4 ! From the end user's perspective there is a need for more precise consideration of the requirements of different user groups. Not only are the information requirements of executives different from managers, line-of-business employees, or suppliers, but the information presentation and delivery mechanisms also differ. As BI solutions are deployed to more users, the traditional ad-hoc query and OLAP client interactivity features will prove to be too complicated. These features retain their important role in the analyst or power user communities, but the vast majority of other end users will be looking for features that include new data visualization techniques, the use of search paradigm for "finding" information, customized dashboards, and alerts. Software Vendor Business Model Finally, there is the issue of evaluating the software vendor itself and the ease of acquisition of the software. Key questions in this evaluation process should include:! Is the vendor committed to business analytics software?! What type of support network does the vendor have in place for business analytics? This support network should include both an active user community as well as vendor-provided customer support.! How is the software priced and packaged? Are there flexible alternatives to match your organization's particular needs? Not everyone needs a multiterabyte data warehouse, and not everyone can get by with a low-end database without the other associated business analytics components.! How well does the software fit into the existing IT infrastructure? How well do current IT skills match those needed to develop and support the business analytics solution? These are standard considerations that need to be addressed in the software selection process. In selecting a software platform for business analytics, organizations have several choices. One of these is Microsoft with its SQL Server 2005 product offering. SQL Server 2005 is the first major database from Microsoft since SQL Server In 1998 Microsoft was the first database vendor to bundle an OLAP server within the relational database. In 2000, the company was the first to include data mining capabilities within the database. In 2003 the company was again the first vendor to bundle a reporting server within the relational database. With the release of SQL Server 2005, Microsoft has the opportunity to tip the market from its traditional focus on analysts and power users to the broader masses. 4 # IDC

5 AN OVERVIEW OF MICROSOFT SQL SERVER 2005 AS A BUSINESS ANALYTICS PLATFORM SQL Server 2005 has three primary components that address the fundamental requirements of any business analytics platform: extracting data from source systems, transforming and loading it into a data warehouse, analyzing the data and delivering it to end users (i.e., decision makers). The three primary BI components of SQL Server 2005 are Integration Services, Analysis Services, and Reporting Services. Integration Services SQL Server 2005 Integration Services is the extract, transform, load (ETL) component of the platform. It replaces the former SQL Server 2000 DTS (Data Transformation Services) with several enhancements meant to improve the development and scalability parameters. One of the new requirements supported by Integration Services is the ability to integrate low-latency data. Historically data warehousing tools have been primarily used as batch data loads with the associated built-in latency. However, competitive pressures are forcing organizations increasingly into data integration practices that are not based on monthly, weekly, or even daily loads. A recent IDC survey showed that 30% of organizations use intraday or continuous data feeds for their business analytics solutions. With SQL Server 2005, organizations can either report directly on the data in the Integration Services pipeline or data from the pipeline can be pushed directly into Analysis Services without intermitted storage. As a data integration module, Microsoft Integration Services can and is being used to extract and transform data from multiple Microsoft and non-microsoft data sources. Similarly, Information Services can load data into any standard data management target. Analysis Services Analysis services supports two primary analytic methods. First is multidimensional analysis or OLAP. The second is data mining. Analysis Services is not a new component of SQL Server, but here again Microsoft has made enhancements to its latest product. Multidimensional Analysis One of these enhancements is a further improvement to unified access to relational and multidimensional data. This is accomplished through the Unified Dimensional Model (UDM), which is a set of cubes and dimensions defined in SQL Server The UDM makes it easier for developers to focus on the business model and rules rather than on the specific data access and delivery aspects of developing analytic applications. In other words, the UDM simplifies the traditional architectural 2005 IDC #

6 considerations and compromises that resulted in selecting either relational or multidimensional approaches. Once the UDM is completed, a developer can then select at which point in the OLAP spectrum they would like Analysis Services to operate. Figure 1 depicts the actual selection point where developers set the preferred choice. Another related enhancement is proactive caching that combines best of relational OLAP (ROLAP) and multidimensional OLAP (MOLAP) functionalities. Also, dimensions are not required to be loaded into memory and, therefore, can be very large enabling Analysis Services to be deployed in different business contexts. For example, traditionally finance-centric deployments have had fewer dimensions than CRM-centric deployments. FIGURE 1 OLAP Setting Interface Source: Microsoft, # IDC

7 Data Mining Enhancements to the data mining component of Analysis Services include the addition of five new algorithms. This brings the total number of data mining algorithms within SQL Server 2005 to seven. Although data mining is still best left to a few skilled professionals, the new wizard-driven development interface for building, testing, and deploying data mining models takes a further step toward simplifying these processes. IDC research has established that business analytics deployments using advanced analytics (data mining and statistics) on average produce higher returns on investment than deployments that simply focus on the information delivery aspect of business intelligence. Reporting Services Reporting Services was first released in 2004 within SQL Server The new version of Reporting Services continues Microsoft's push to bring BI to the masses. The latest version of the product offers greater integration with Analysis Services. For example, users can now run reports against cubes. Although this was doable in SQL Server 2000, the process has been automated and thus simplified. Another significant addition to Reporting Services is Report Builder, an end-user report development tool. Of the report development done today, 45% is done by business users, not IT, and any enhancement to support this growing population will assist in disseminating BI functionality throughout the organization. Report Builder allows end users to perform ad-hoc reporting off of the business model. It can access both relational and multidimensional sources. When developing reports, drill-down destination can either be inferred or predefined, where the particular approach will depend on the processing requirements of end users. Interaction Among the Components These three components work closely together to provide an integrated set of software to support decision-making processes. For example, data mining processes of Analysis Services can be run on the data extraction and transformation processes of Integration Services. In this scenario, the ETL pipeline can include data mining routines for data profiling and other data quality steps. In addition, reports can be run directly on the Integration Services data pipeline without loading the data into a warehouse. This functionality supports operational BI deployments that require data to be delivered to end users without the latency inherent in traditional data warehousing. To support the development, deployment, and maintenance processes of a business analytics solutions, Microsoft also provides an additional component for BI development within SQL Server 2005 called the Business Intelligence Development Studio IDC #

8 Business Intelligence Development Studio With SQL Server 2005 there is a single BI Development Studio with a visual debugger and other standard features that IT would expect in any robust application development environment. In fact, BI Development Studio is a version of Visual Studio and can be shared in the same environment with another development language, such as C#. The BI Development Studio provides an integrated development experience for all business analytics related development, including data integration, analysis, and reporting. For example, Figure 2 shows the key performance indicator (KPI) selector interface in the BI Development Studio. FIGURE 2 KPI Selector in the BI Developer Studio Source: Microsoft, 2005 With the release of SQL Server 2005, Microsoft has improved the scalability and availability characteristics of its software. Failover clustering, multi-instance deployment, server synchronization, centralized calculation server (with no calculations done on the client), disk-based dimension storage (dimension size is not constrained by memory limits) are some of the areas were enhancements have been made. To be fair, these are evolutionary improvements that enhance different scalability and availability indicators. However, they are all necessary if Microsoft is to succeed on its path of truly bringing BI to the masses. 8 # IDC

9 At the same time the company made improvements in supporting IT management and service tasks for the SQL Server With improved diagnostics and administration functionality Microsoft has also taken a step forward in improving the productivity of IT, which was charged with an increasingly difficult task of supporting larger end-user populations with access to BI systems. Other Components of the Business Analytics Stack It's also important to note that as a platform, SQL Server 2005 serves as a foundation for several other components of the business analytics software stack. Microsoft provides some of these components, while others come from its extensive network of partners. Microsoft's own software includes Microsoft Office and Office Business Applications, a relatively new set of offerings, first of which is the Business Scorecarding Manager. The Microsoft Office link extends beyond the traditional use of Excel as the front-end tool for business analytics solutions. It also encompasses Outlook and SharePoint Portal server that complement core business analytics functionality with such features as collaboration (e.g., , chat, annotations) and workflow management. Examples of some of the partner software that are tightly linked with the SQL Server platform are ProClarity and Panorama Software as Web-based BI clients. There are also relationships with analytic applications vendors such as OutlookSoft and GEAC, whose analytic applications are built on the SQL Server platform. As Microsoft pursues the business analytics market with its latest software offerings, the company will encounter several opportunities as well as challenges. CHALLENGES/OPPORTUNITIES Opportunities Over the past 15 years the BI market has experienced a compound annual growth rate (CAGR) of 18%. Yet, by any objective measure, BI software is still not a mainstream technology. In other words there is room for the market to grow and for Microsoft to take advantage of the growing awareness about and interest in business analytics as a whole. Microsoft has the opportunity to:! Leverage current strong interest in Reporting Services by end users and ISV partners to extend the market penetration of other SQL Server 2005 business analytics components.! Capitalize on the pervasive requirement of end users to see BI data in Microsoft Excel. Although most other BI vendors have released Excel add-ins, there is no question that Microsoft is in the best position to leverage its own MS Office software for client-side BI purposes IDC #

10 ! Penetrate the BI market through its close relationship and historical focus on the developer community. With Business Intelligence Development Studio, Microsoft is providing what has been called "a standard skill set for a standard tool set." Organizations can leverage existing skills in Visual Studio or.net to build business analytics solutions.! Bring BI to the masses through an attractive pricing and packaging strategy. Today, Integration, Analysis, and Reporting Services are part of the SQL Server license. This does not mean that they are "free," because any organization that is looking to deploy a business analytics solution that has the processing and storage requirements that exceed those of a single SQL Server license would need to purchase additional licenses. So, while customers will not be paying for each of the separate components, they will in most cases have to buy additional SQL Server licenses. However, this pricing strategy makes it very attractive for customers to begin design work on the Microsoft platform. At that point, it will usually make sense for organizations to continue with the SQL Server platform. Challenges Although Microsoft's opportunities in the BI space are quite attractive, the company is not without challenges. Microsoft still needs to create more awareness about its data warehousing and business intelligence tools. The company has had a focus on IT developers in the past, but Microsoft will need to show that it can also focus on end users directly. When looking at the current satisfaction level of organizations with existing BI software, IDC has found that only 15% of managers say they are very confident that the reports developed in their organization deliver the right data to the right people at the right time. Many of these organizations are frustrated with the existing use of standalone Excel for BI purposes. Microsoft will need to expend considerable effort to demonstrate how the new business analytics platform links to the Excel front end while retaining all the benefits of a consolidated database foundation, such as scalability, security, and data consistency. For example, the SQL Server can hold all KPIs in a centralized repository accessible by multiple Microsoft and non-microsoft end-user tools. Some of the other challenges and future enhancements that Microsoft will need to address include parallelizing the Integration Services architecture and improving the Report Builder. Although many existing Reporting Services customers have expressed strong interest in the Report Builder, it's a first release of this product, and further enhancements are sure to follow. 10 # IDC

11 CONCLUSION IDC research suggests that there is only a 15% shelfware rate for BI tools. Furthermore, there are definite signs of software rationalization or consolidation of existing software investment to fewer vendors. About a third of organizations are actively trying to consolidate their BI tools to one corporate standard, another third is looking to decease the number of such tools from an average of eight at a typical large organization. These are some of the indicators that suggest continued robust interest and investment in business analytics software. With the release of SQL Server 2005, Microsoft is in a strong position to expand the market for business analytics and should be viewed as a one of the leading vendors in this space. Copyright Notice External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2005 IDC. Reproduction without written permission is completely forbidden IDC #