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Update: Microsoft acquires analytics vendor ProClarity

Microsoft announced plans yesterday to acquire ProClarity, an analytics vendor it hopes will bolster its business intelligence platform.

In a bid to bolster its business intelligence (BI) platform, Microsoft plans to acquire an analytics company.

Microsoft said it will acquire analytics and visualization software company ProClarity Corp., based in Boise, Idaho. ProClarity develops analysis and visualization technologies that work in association with Microsoft SQL Server 2005, Microsoft Office Business Scorecard Manager 2005, and other elements of the Redmond software giant's BI platform. ProClarity is a longtime sales and development partner of Microsoft, and the two companies say they share more than 1,000 customers. The announcement was made on April 3; terms of the deal were not disclosed.

"ProClarity has been a valued Microsoft partner for many years, with a strong R&D organization, more than 1,200 mutual customers, and a salesforce that already works closely with ours," Jeff Raikes, president of the business division at Microsoft, said in a statement. "This acquisition advances our BI strategy and our ability to deliver performance management applications to customers."

The move comes shortly after Microsoft announced plans to expand its BI platform in an effort to increase its reach and support more decision makers in an organization. It's in line with an industry-wide shift toward information democratization and integrated BI and performance management applications. The acquisition of ProClarity follows introductions of updated versions of SQL Server 2005 and Office Business Scorecard Manager 2005 last fall, and the planned 2007 releases of Microsoft Excel and SharePoint. ProClarity's Analytics Server is intended to augment the analysis capabilities of SQL Server and is integrated with other components of Microsoft's BI platform.

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The move gives Microsoft a "credible" front end for its popular database engine and makes a lot of sense, according to Keith Gile, principal analyst at Cambridge, Mass.-based Forrester Research Inc. ProClarity's tools are already in use at many SQL shops, and the analysis vendor had already done most of the difficult integration work.

"This is a strong move on Microsoft's part to fill in a real void that they have had," Gile said. "Before, companies either bought a different BI tool or used the marginally acceptable tools that Microsoft provides."

One organization that chose the first route was the Veterans Health Administration (VHA), a division of the Department of Veterans Affairs, based in Washington, D.C. The VHA has been a longtime user of SQL Server and first adopted ProClarity's tools in 1997, said Jack Bates, manager of the corporate data warehouse. At that time, SQL didn't offer analysis services, so the VHA had no choice but to seek another vendor for those functions.

ProClarity has proved itself as a leader in visualization for SQL Server, so the acquisition is a "logical evolution," Bates said. There has been no official word on how support and maintenance of the ProClarity tools will change for the VHA, but Bates has no concerns for the future. The VHA already uses the whole BI suite available from Microsoft, along with ProClarity.

"I think [the acquisition] will only strengthen the product line for them both. The gaping hole for Microsoft was the presentation. This makes them a force to reckon with," Bates said.

Microsoft will now be in a newly competitive position against traditional pure-play BI vendors, Bates and Gile agreed. The acquisition, and recent BI platform enhancements, clearly show that Microsoft is no longer content to provide just the platform and online analytical processing (OLAP) tools, Gile said. It wants to be a more aggressive player in all parts of the BI market and will target small and midsized businesses and large enterprises. How the new ProClarity analysis product will be bundled and sold is still unknown, but Gile predicted that pricing will be "very attractive to customers."

"All bets are off," Gile concluded. "Microsoft is now a pure-play BI competitor, and that changes the dynamics competitively for everyone."

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