FRx Poised to Permeate Many More General Ledgers Part Three: Market Impact continued

Event Summary

FRx Software ( is a prominent provider of financial analytic applications to mid-market and corporate businesses. FRx has largely remained on its established track after being acquired first by one of its erstwhile greatest partners (former Great Plains Software) in 2000, and particularly after its new owner subsequently ended up under Microsoft's roof in 2001 (see Microsoft And Great Plains - A Friendship That Turned Into A Marriage) to finally become a part of Microsoft Business Solutions (MBS).

It appears that the truly differentiating traits of the group of products recently renamed Microsoft Business Solutions for Analytics, have established the FRx financial reporting application as arguably a de facto financial analysis and reporting standard in the mid-market. This fact has also convinced Microsoft to continue to enhance the product for its loyal customer base and resellers, many of whom ironically belong to MBS's fierce competitors. Its flagship product, Microsoft Business Solutions for AnalyticsFRx (formerly FRx Financial Reporter), is used by more than 115,000 sites worldwide, primarily in the mid-market segment, to help them with financial reporting processes. Thus, the "if you can't beat them, join them" adage might be best described by FRx Software's continued autonomous operation despite changing owners twice during the last few years.

This is Part Three of a four-part note.

Part One discussed the event.

Part Two began to detail the market impact.

Part Four will cover competitors and make user recommendations.

MBS Forecaster Analytics

Nevertheless, since FRx already has direct integration built to over forty leading mid-market general ledgers (and now a scalable tool kit available to accommodate virtually all others), the idea behind that was for users to leverage the investment they have already made in their GL and to add on increased functionality as their needs become more sophisticated. To that end, another recent addition to the FRx stable, MBS for AnalyticsForecaster (formerly FRx Forecaster), a Web-based budgeting and planning application, depending upon the GL that is in use, can work with or without FRx. The product has been delivered as to cater for the growing needs of the companies to be able to produce "rolling budgets" that account for changing conditions instead of being static quarterly reports, and often after the fact. As an integral part of their corporate performance management strategy, more nimble companies are turning to iterative, continuous budgeting, and planning processes to better manage in today's volatile business climate.

In fact, planning and budgeting have become a means of translating strategy into a coherent set of objectives, as well as a basis for assessing achievement. As planning and budgeting should be a collaborative process (a forum on the future direction of the organization), there have been indications that even during unrelenting economic pressures, corporate managers are still seeing value in providing desktop portal views of key business process analytics to an increasing number of corporate workers. As a result, many financial executives have been marking active financial planning tools as a top investment. On the other hand, the majority of those annual plans are still completed in Excel spreadsheets, which wreaks havoc for business analysts and IT as they try to figure out complicated links and how to import and export data to and from the spreadsheets.

Contrary to that, Forecaster's collaborative capabilities should save time and help improve the quality of the final budget, making it more realistic and accurate. Users can collaborate using features such as automatic e-mail notification of upcoming deadlines and a centralized bulletin board where goals, objectives, business tactics, and instructions are posted for enterprise-wide access. Through the use of memos, notes and attachments, managers can understand the rationale behind important numbers and assumptions made by other departmental managers, reducing, or eliminating time spent in meetings.

Furthermore, Forecaster lets department managers interact with each other to insure their budgets complement each other's. For example, if a department budgets for a new program that impacts other departments, all budgets can reflect the impact of the new program. With the roll ups feature, reorganizing the company's chart of accounts is facilitated, since roll ups are parent-child relationships that control how the posting data summarizes. Users can create rollups for accounts, cost centers, and for many other accounting entities they choose to use in their application by defining roll ups using Forecaster' intuitive drag-and-drop interface, then run a simple restate function to consolidate the data.

Forecaster allows managers to input their own numbers, eliminating the duplicate entry or potential for errors. Managers can readily make changes to their cost centers by entering data directly to accounts or by using copy/grow functions, calculated accounts, or spread-back methods. In addition to improving the accuracy of the numbers, Forecaster should improve the quality of the numbers because totals and consolidated numbers are available for reporting as soon as they are input. If there are any problems or any adjustments required, they can be performed immediately by those who understand the numbers. Furthermore, by simply entering a dollar or percentage change, the budget administrator can make an adjustment that will ripple through the entire plan. As a result, budgets should be completed more quickly, allowing for more iterations and "what if" analyses as necessary.

Forecaster streamlines many of the tasks that comprise the budgeting process, including individual creation of budgets, changing the budget model, budget consolidations, and reporting and collaborating with interrelated departments to improve the chances of achieving set goals. This streamlining of tasks gives managers more time to construct a thoughtful budget that is based on valid data and assumptions (e.g., headcounts, project schedules, costs, etc. can be changed and simulated to reflect different economic assumptions) and thus more predictive of the future. Accessing up-to-date and historical information from the general ledger and existing financial reports, users can budget and plan with greater precision.

Through the use of views (the reporting mechanism in Forecaster) users are able to customize and analyze information that is important to their organization. Forecaster consists of the following modules that allow users to perform customized analysis:

  • Expense budgeting, allows customers to define templates specific to cost centers, and thereby enables managers to focus on the information that is important to them.

  • Human resource, allows a company to better understand the effect of salary adjustments, bonuses, overtime, and benefits, given employees often account for the highest part of the expense in a company's budget.

  • Capital expense, lets the company standardize the accounting of capital expenditures by cost centers;

  • Revenue planning, allows customized accounts and formulas to be used to calculate revenues and cost of sales, whereby formulas can be customized to meet organizational needs such as production, staffing, raw materials, and outside revenue planning.

Vendor Challenges

Naturally, the FRx Software product offering has certain weaknesses as well. For one, it is still limited to only the data within general ledgers. Optimizing financial management processes is only a first step on the road to their better alignment with other organizational business processes. Hence, various enterprise business intelligence (BI) solutions enable organizations to track, understand, and manage enterprise-wide performance, and they leverage the information that is stored in an array of corporate databases/data-warehouses, legacy systems, ERP, supply chain management (SCM) or customer relationship management (CRM) applications. Once limited to the finance department of large companies, BI/analytics has long expanded across departments and now even addresses the needs of customers, suppliers, and partners outside of the firm, given that if BI can help any department understand and serve customers better, that should in turn lead to better financial results.

Companies have become adept at storing huge quantities of data about customers, products, and employees. However, this valuable data is often wasted, because it is analyzed in pockets, thus preventing valuable insight throughout the enterprise and beyond. To that end, nowadays popular uses of BI include management dashboards and scorecards, collaborative applications, workflow, analytics, enterprise reporting, financial reporting, and both customer and partner extranets, to name some. These solutions enable companies to, for example, gain visibility into their business, acquire and retain profitable customers, reduce costs, detect patterns, optimize the supply chain, analyze project and product portfolio, increase productivity and improve financial performance.

The latest evolutionary step even introduces the concept of corporate performance management (CPM) (often interchangeably referred to as enterprise performance management [EPM] or business performance management [BPM]), which is an emerging portfolio of applications and methodologies with business intelligence (BI) architectures and technologies at its core. Historically, BI applications have focused on measuring sales, profit, quality, costs, and many other indicators within an enterprise, but CPM goes well beyond these by introducing the concepts of management and feedback, i.e., by embracing processes such as planning and forecasting as core tenets of a business strategy.

CPM also crosses traditional department boundaries (i.e., silos) to manage the full life cycle of business decision-making, combining business strategy alignment with business planning, forecasting, and modeling capabilities. In other words, it would entail mapping a structured set of data against predefined reports, alerts, dashboards, analysis tools, key performance indicators (KPIs), etc., to monitor and improve business processes based on the upfront established corporate strategic objectives. Further, CPM creates a closed-loop process, starting with developing high-level corporate goals and subsequent predefined KPIs, through measuring actual results against the KPIs and representing this comparison in a scorecard, with the results reported to management through intuitive reporting tools, and ultimately feeding these results back into the business modeling process for corrections in the next planning cycle.

CPM leverages the performance methodologies such as the balanced scorecard or activity-based costing (ABC), and although these approaches help determine how and what to measure, they lack a mechanism for dynamically changing values to keep abreast of the business reality. Ensuring the closed-loop management is CPM's enhancement of BI applications, which traditionally focus on measurement, which is basically worthless without the ability to act on it. Consequently, a perplexing variety of existing tools and techniques can lay claim to being part of the CPM trend—ranging from business intelligence tools and analytics (packaged data-marts, data mining tools, extract, transform and load [ETL] tools, dashboards/executive information system [EIS]) to business process management (BPM) applications and scorecard products.

Thus, CPM is the evolutionary combination of technology and philosophy, building on the foundation of technology and applications that many enterprises will have likely already implemented. The demand for these applications lies in the fact that they incrementally add value to already installed business applications, even the legacy ones, to a degree that the enterprises may finally see some long belated benefits and feel somewhat better about implementing cumbersome ERP systems. Indeed, many enterprises have already deployed some BI products, such as querying and reporting tools, planning and budgeting applications, analytic applications, incentive management systems, portals, and scorecards, along with data warehouse technology, data models, and integration software, and what not. Anyone attempting to conduct the technology inventory stocktaking will likely find some CPM components already in use.

For the above reasons, the vendor landscape remains diverse, with every vendor touting some (or total) CPM capabilities. Thus, the arms race to marshal the most complete CPM platform has intensified, especially following up on the recent Cognos acquisition of Adaytum for its planning and budgeting functionality. Eventually, more organizations will turn away from best-of-breed point solutions to pursue integrated CPM suites, possibly with the idea of having a corporate-wide BI/CPM standard, as they seek to source components from a single vendor rather than integrate disparate product sets themselves. Still, the point solutions might be safe for some time to come, due to the fickle nature of BI users' brand loyalty. Analytic technology has a good staying power within its satisfied users (CIOs and CEOs), and thus some specialists like the omnipresent FRx financial, budgeting and forecasting reporting products will not be that easily displaced. While there is an opportunity for FRx to become a main pillar within the entire Microsoft BI product strategy, there is not yet an overall cohesive BI/CPM strategy or architecture to guide the product plans to an integrated BI solution set. BI products and technologies are still offered by several Microsoft product groups as bits and pieces, which often create "islands of analysis" rather than the consistency needed for collaborative decision making.

This concludes Part Three of a four-part note. Part One discussed the event. Part Two began the market impact. Part Four will cover competitors and make user recommendations.

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