Microsoft today announced major changes to its PerformancePoint BI product. The current version of the product, PerformancePoint 2007, provides three BI related capabilities: business performance management (BPM), BI analytics, and business planning.

The BPM component evolved from the Microsoft Business Scorecard Manager, whereas the analytics component is based on a subset of the functionality acquired from ProClarity. The planning component was a new component developed by the Microsoft BI group aimed specifically at financial planning and budgeting.

Today's announcement breaks out the BPM and analytics components from PerformancePoint and merges them into the Enterprise Edition of Microsoft SharePoint Server. Existing SharePoint Enterprise Edition users (with Software Assurance) will now get these components as a part of their licensing agreement. These customers will be able to download the PerformancePoint components starting April 1.

In the summer, Microsoft will release Service Pack 3 of PerformancePoint 2007. This will be the final release of the product, which will be supported for ten years.

Microsoft's strategy is to move the responsibility for financial planning and budgeting to the Microsoft Dynamics FRX and Forecaster products. However, horizontal planning capabilities will continue be added to Microsoft SQL Server, Excel, and SharePoint over future releases.

This new direction makes sense for Microsoft. Although Microsoft was emphasizing the BPM and planning capabilities of PerformancePoint, it was achieving limited success in these areas. Instead, the majority of customers were buying the product for its analytics capabilities. This was especially true for ProClarity users.

Another reason why this makes sense is that Microsoft SharePoint is a very successful product, and this is leading to companies purchasing related Microsoft solutions. Over 80 percent of PerformancePoint customers, for example, are also SharePoint Server users. The penetration of SharePoint in the market is also a key factor in the success of SQL Server and its BI components.

Given that Microsoft Office is also increasingly being integrated with Microsoft SharePoint, it means that customers will now be motivated to purchase Microsoft Office, SQL Server, and SharePoint Server as a product set in order to deploy business intelligence and related collaborative tools to a mass business user audience.