present products like Excel and Office. "We see two markets for Performance Point," says Michael Smith, product manager for Microsoft Office business applications. "Established BPM users who are currently relying on spreadsheets, but who might have pockets of BPM operations that are not linked together, and then smaller companies that have not been able to adopt performance management because of cost and ease-of-use issues."

One might expect that Microsoft's move into this still-developing product area would have the current players on edge. Not so, says Mike Malwitz, senior product marketing manager at Santa Clara, Calif.-based Hyperion Solutions Corp., an industry leader in BPM solutions. "We've been getting a lot of questions from our customers since Microsoft announced its plans to enter the market that we've dominated for essentially 20 years. But our view is that you can't do BPM with just a simple product like Microsoft is proposing. You need BPM systems that contain multiple modules, all built on a common foundation. We learned early on that BPM encompasses many different processes."

Malwitz notes that Performance Point will work with Microsoft's widely used Office Suite software. He says Hyperion's Web-based System Nine performance management system can interface with Microsoft Office, but adds, "In fact, some of our customers tell us they want to get away from Excel–it's too full of errors–so we don't really view this new competition as high risk."

Doug Barton, a vice president of product marketing for performance management at Cognos, another leading BPM provider, agrees. "Our Web-based Cognos 8 Performance Management system works with elements of Microsoft, but doesn't depend on it. Very often, you find that companies don't want to be any more dependent on [Microsoft] than they have to be."

ut some analysts caution that vendors should not get too cocky. "What surprised me is that Microsoft has really developed a product with full enterprise-class functionality," says Paul Hamerman, vice president of enterprise applications at

Forrester Research. "They're targeting the top end of the market where companies like Hyperion, SAP and Cognos play. Their test market was Microsoft itself. So I think the product will have an impact on the whole industry."

Still, Hamerman does not think that the major players–Hyperion and Cognos, in particular–will be unseated. And while classical business theory would suggest that increased competition in a market should lead to lower prices, he does not expect very much impact at the high end, despite Microsoft's history as a discounter when

entering a new market, because BPM is not a volume business. The middle market could be a different story, with smaller providers facing potential consolidation or elimination.

One potential plus: Microsoft "could really raise awareness of performance management," says Cognos' Barton. And there's nothing bad about that.