Microsoft is trying to change the perception that its database, SQL Server 2005, is not ready for the big leagues in regards to handling large data warehouses.

The Computerworld article “Microsoft Aims High on Data Warehouses”, November 20, 2006, reporting on the annual conference of the Professional Association for SQL Server (PASS) user group, presents Microsoft’s case.

The article states that “Once characterized by its rivals as a database featherweight punching above its weight class…users and analysts at the PASS conference said that with SQL Server 2005, Microsoft is putting to rest lingering doubts about its ability to handle large enterprise workloads.”

The article quotes Kevin Kline, president of PASS, “It used to be rare that you could find a SQL Server database larger than a terabyte. Now there are hundreds and hundreds of multiterabyte SQL Server databases.”

Donald Feinberg, an analyst at Gartner, is quoted “They can scale and handle data warehouses of any size; we know that now.”

In addition the article reports that Microsoft announced, to foster the case that SQL Server 2005 can play with the big boys, that it is designing two large data warehouses – a 270TB multi-node data warehouse for a foreign government and a 162TB single-node installation for its own marketing department.

Playing with the big boys

As I noted in my July 6, 2006 posting “Database Market: Growing with Data Warehouse a Driving Force”, the top three databases by market share are Oracle, IBM and Microsoft. In the data warehousing market Oracle and IBM dominate in data warehouse implementations.  Microsoft is typically only being used either by the SMB (small to medium business) market or by large corporations for data marts. Although Teradata and Sybase have smaller database market shares, they are solid niche players in data warehousing, especially in large data warehouse implementations.

Microsoft wants to move SQL Server up market both in terms of database application size and the size of corporations using it. Microsoft wants to be considered for data warehouses and other large applications.

However, as I noted in my previous post, corporations are NOT going to migrate to another database unless there is a very compelling business case, such as their database vendor is going out of business (although these vendors get bought by other database vendors who continue to support their clients or switch the database to open source.)

The cost of migration is often very high compared to any potential cost savings and generally there is no business value associated with making the migration. That is the reason why several financial services companies that I know that have been using databases other than from the top three vendors for years cannot justify standardizing on one database vendor.

So these databases run, year in, year out providing the data to the business. Since most large corporations have multiple data warehouses, operational data stores and other data silos, it is unlikely that Microsoft is going to displace any significant number of Oracle or IBM data warehouses (or those built by Teradata or Sybase either) in the near future.

What are Microsoft’s real market opportunities?

First, in large corporations, Microsoft would like to be used when business intelligence or performance management initiatives need to build a new database, .i.e. data mart. There are a lot of those initiatives happening in the Fortune 500 today.

Second, in the SMB market, there are plenty of companies that have not built data warehousing or business intelligence environments yet. Microsoft thinks it can win those accounts because of its TCO (total cost of ownership) case. But, it wants to make these companies feel safe that regardless of how big they and their data warehouse needs grow, Microsoft can handle it.

Finally, across enterprises of all sizes, there are numerous data shadow systems that have grown too big and cumbersome (and are a significant drain on business and maybe IT resources) that should be replaced with an architected and flexible environment. Microsoft definitely feels that they can make a compelling business and cost case for SQL Server 2005 to be part of that new solution.

The database battle between Oracle, IBM and Microsoft has been going on for years now and is only going to intensify with Microsoft upscaling its capabilities. Is it on par
with Oracle and IBM? This is certainly open to debate. But given Microsoft’s
track record with applications before SQL Server, it ought to be able to satisfy
both business and IT requirements.

A final note.  Other than potentially putting pressure on prices, open source databases have not made a significant impact on the database or data warehousing market yet. I do not see them displacing the big three in any significant way except if they expand the overall market — especially in the SMB marketplace.