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

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 Two of a four-part note.

Part One discussed the event.

Part Three will continue the market impact and detail vendor challenges.

Part Four will cover competitors and make user recommendations.

Market Impact

Clearly, FRx Software has had more than an interesting voyage since its inception in 1989 when its first product was developed and commercialized. At that time, the company's strategy was to create a product that would empower financial professionals to develop financial reports without necessarily requesting the services of external programmers or IT staffers. The former Platinum Software (now Epicor) and IBM were both the first customers of FRx Software and the exclusive distributors for the erstwhile product. In 1993 Platinum Software purchased FRx Software and became its exclusive distributor before divesting FRx in 1994. FRx Software was re-founded and established more than thirty strategic partner-distributor relationships, most of which are still very much active.

As mentioned earlier, both Great Plains and then MBS have continued to act as one of FRx Software's most powerful resellers to the mid-market, ever since acquiring it in March 2000. In early 2003, FRx Software aligned itself more directly with the parent company, Microsoft Corporation, and became known as FRx Software Corporation, a Microsoft company and a part of MBS. FRx Software is headquartered in Denver, CO, with consulting offices located across the US, and an international presence established with its partner assistance centers in Australia, Singapore, and the UK. Our estimate is that FRx Software nowadays also contributes around 5 percent of the total MBS revenues of ~$550 million.

While ERP and accounting back-office systems and analytics have been inseparable ever since the idea of business automation via IT way back in the 1960s, they have nonetheless had different user experiences, evolutionary paths, and so on. Namely, although ERP systems have positively transformed many enterprises' business processes, many users have still been left feeling as oversold to, due to the overwhelming notion that these systems inhibit access to the vital information jailed' in them. Many will have inevitably felt that mixing real-time back-office transactions with astute reporting is like mixing oil and water.

For a detailed discussion of how financial reporting, budgeting, and planning are a cornerstone of enterprise performance management (EPM), see Financial Reporting, Planning & Budgeting As Necessary Pieces Of EPM.

Business intelligence (BI) and analytics provide an environment in which business users receive information that is reliable, consistent, understandable, and easily manipulated (i.e., flexible). Therefore, C-level executives and middle management have always had a need to understand their business' performance regardless of good or bad economic times—while the output from BI might change, the need is always there. New disclosure rules are prompting companies to share information faster (for example, accelerated filling of 10Q quarterly statements and 10K annual reports, reporting sales of stock by executives [insider trading] within days of the transaction, expanded lists of "significant events" to include changes in debt ratings, inclusion of financial results of partnerships in earnings reports), and sophisticated data-collection and data-analysis applications come in handy in that regard.

The creation, maintenance, and dissemination or publishing of financial statements (for example, profit and loss [P&L] statements, balance sheets, and cash flow reports) have traditionally been maintenance-intensive tasks, with users expending significant effort just to meet basic requirements. Not to mention that everyone amongst the top brass always wants something more, such as different views, complex comparative reports, and drill-down analyses, but still all within the familiar form of the financial statements. Unfortunately, the financial reporting programs delivered with the traditional back-office financial management and accounting applications have proven only their rudimentary or pesky nature. Consequently, financial savvy users, having a strong preference to see results in the traditional P&L statement or balance sheet form, have long sought for ways to improve the report creation and maintenance process. On the other hand, the formatting and calculation constraints of the above statements, which require user-defined sorting and grouping, have also been nearly impossible for generalist BI providers to fully accomplish.

For the above reasons, FRx Software has been in the right place at the right time to establish an enviable market position as a slick financial reporting engine for a variety of different financial software packages. An army of accountants, financial managers and business analysts has been infatuated with the product. Most ERP products have a rich database but translating the data stored within the database to information useful for making enterprise decisions has proven difficult. With the availability of FRx Software's analytic solutions, several dozen ERP providers can provide their customers with a valuable tool for harvesting the business value out of their database. The list of current back-office solutions whose GLs have been integrated with FRx is impressive, and the following are just some of the more prominent ones: Advanced Data Systems; Best Software; Epicor Software; Expandable Software; Flexi International; Geac Enterprise Solutions; IQMS; Made2Manage Systems; MAPICS; McKesson; Ross Systems; Softrax Corporation; and naturally MBS Great Plains, Solomon, and Axapta (integration with Navision is under way).

MBS for Analytics

MBS for Analytics FRx (formerly FRx Financial Reporter), with its spreadsheet-like interface, can also consolidate financial data from disparate accounting systems even if they use different code structures, fiscal years, or server sites. By pulling information already set up in the GL, the product automatically understands the fiscal periods, chart of accounts, detail transactions and various types of balances. Due to built-in accounting intelligence, it even recognizes concepts such as current and year-to-date amounts, debit versus credit balances, positive and negative variances, and posted and un-posted transactions. Furthermore, users can leverage the rows, columns, and formulas that they may have created in Excel and import the information with all data intact, directly into FRx. The key tenets of FRx's flexibility have been the following three building blocks:

  1. Row format, which lets users specify the data source and what they want to do with each row of a report. By using a link to the GL, users can select individual accounts, a range of accounts, or a list of non-continuous accounts to be included in a report. Once created, a row format can be saved and used again as required.

  2. Column layout, which lets users specify the data source and select the type of column they want from a list. Combined with row format, column layout lets users include period actuals, budget information, or other types of data in a report, either from the GL or from another data source, like a spreadsheet. Math formulas across columns can be applied too, as to identify variances, projections or percentages. Like with row format, once created, a column layout can be saved and used again.

  3. Reporting trees, which let users create a hierarchical picture of their organization to understand or change their organizational and reporting structures. An auto-build function constructs reporting trees directly from the organization's chart of accounts, while intuitive drag-and-drop functionality enables users to create alternative structures and multiple roll ups of various accounts without having to make costly modifications to their GL or charts of accounts. Once created, a reporting tree can be saved and used again.

In addition to the on-the-fly report creation option, application servers provide report scheduling and automatic e-mail report distribution. Using one of many customizable report templates, users can often get started creating relevant financial reports right away, using the building-block approach and auto-build functionality, without much help from IT resources or other technically-minded personnel. To that end, the FRx Report Designer module allows users to create, view, distribute, and manage financial reports from their desktop. Point-and-click capabilities let users extend their analyses and access to reports by exporting them to a variety of traditional or graphical output options, including: Excel or other spreadsheet, ASCII, FRx DrillDown Viewer, Microsoft OLAP cube, or XBRL, and via a selected delivery method. Customized fonts, formatting, and formulas remain with the report when it is exported from FRx to other formats, which preserves presentation quality and functionality of the original report. These reports can be posted to the Web or be sent via e-mail to be accessed immediately by on-site and off-site users alike; a connection to the GL is not required.

FRx Report Launcher is the module that helps users select pre-designed reports, specify the output option and generate the needed reports as required. Through the above-mentioned FRx DrillDown Viewer module, users and even authorized trading partners can often answer their own questions about the data by "drilling down" all the way to the transaction detail level, perform necessary analysis, and make better, more informed decisions. Because security rights are predefined at the reporting tree level, each recipient can access only the information that is appropriate to his or her viewing rights. Thus, users can make important, proactive decisions to address the economic highs and lows, without having to wait until the books are closed. Financial reports of all types can be called up from the Report Catalog, automatically updated with the most current information, generated using a variety of traditional or graphical output options, then distributed to decision makers over the Web or through e-mail to facilitate the timely analysis that today's turbulent market demands.

Optional modules include: FRx Report Server, which allows users to schedule reports for automatic generation and distribution; FRx WebView, which allows users to publish, store and manage FRx reports over the Web; FRx WebPort, which offers publishing non-FRx reports, such as Excel spreadsheets, PowerPoint presentations and Word documents to the Web; and FRx instant!OLAP, which generates Microsoft SQL Server Analysis Services OLAP cubes as an additional method of exporting data from FRx. Last but not least, the product offers currency translation as an add-on component for organizations that might need it. The module allows entries made in the GL's home currency to be translated into specific currencies for reporting purposes.

The product also comes in different editions. The FRx 6.5 Desktop edition is best suited for companies that have multiple departments and cost centers, have multiple companies with consolidation requirements, or maintain budgets in spreadsheets. Generation occurs on a local workstation with the ability to distribute reports via the organization's network or via e-mail.

The FRx 6.5 Professional edition however, is targeted to companies that have a large number of reports to process on a daily basis or at month-end, have a large number of users who generate and review reports, need a Web-based storage and report distribution mechanism, or a need to create OLAP cubes for additional analysis. It comprises all the functionality of the desktop edition, plus FRx WebView, FRx Report Server (one instance only), and FRx instant!OLAP.

The FRx Enterprise 6.5 edition is the third application rounding out the product suite. It gives companies the flexibility to create the most efficient solution for complex, distributed reporting requirements with a large transaction volume. With the enterprise edition, companies can automate procedures unique to their business environments to give them more control over consolidations, statutory reporting, budgeting and analysis. It comprises all the functionality of the professional edition, plus FRx Report Server (four instances) and FRx WebPort.

Many of the above features apparently were implemented in release 6.5 in 2002 with the aim of helping customers streamline report generation and distribution on the FRx Report Server, increasing options when using the Web, support for XBRL enhanced usability of OLAP output, and allowing for more complex currency translation scenarios. Version 6.7, which is slated for early 2004, should feature a new module called FRx Report Manager, support for XBRL 2.0, ability to export directly to Excel graphs, OLAP output from Report Designer, and so on.

Expanding the Opportunity

Although FRx Software is known for its reporting and analysis tool that interfaces directly with nearly fifty mid-market accounting package vendors, the company had to further expand its opportunities. Namely, despite FRx instant!OLAP, which contains predefined interfaces that extract data out of accounting systems and then populate Hyperion Essbase and Microsoft Analyses Services OLAP cubes (the capability which is coming out in version 6.7), until now FRx was readily available only to those ERP products whose purveyors had a partnership in place with either FRx or with one of its VARs.

The idea behind the new Integration Designer product was to make it possible for VARs to avail the prospects with FRx Software's products regardless of the existence of a partnership. To that end, a VAR will supposedly have the initial interface with Integration Designer and will configure scripts created by Data Integrator to make them specific to the GL in place. Using Data Refresher, the VAR may then run the scripts that will be distributed to the customers—the FRx' end users. The VARs will nevertheless have to posses a sound knowledge of Microsoft SQL Server, of a scripting language, and general knowledge of relational databases including the GL database.

Namely, despite many commonalities, every GL has its own fingerprint uniqueness. To illustrate, MBS Solomon (a product that features a built-in version of the FRx Desktop and Forecaster) GL account and sub-account numbers can be up to thirty characters in length, whereby the main account number can be up to ten characters, and the remaining twenty characters can include up to eight user-defined segments. GL transactions can be entered using several types of transaction batches, including non-recurring, recurring, manual, and one-sided adjustment, and the GL account determines whether the transaction will operate in multi- or single-company mode. Transactions can be entered for any prior fiscal period or year as well as for future periods, which allows for things such as installments and prepayments to be managed at a single time rather than month after month.

On the other hand, MBS Navision's (where the integration is slated for Navision some time in 2004/2005) chart of accounts lets users define an unlimited number of "dimensions" and "dimension values" at any time. A dimension is data that users can add to an entry as a kind of marker so that the program can group entries with similar characteristics and retrieve these groups for analysis purposes. Dimensions are not limited to the GL accounts, since they can be set on all master records stored in the database such as customers, vendors, items, fixed assets, and so on. Dimension values are sub-units of dimensions. For example, a dimension called department can have sub-units such as sales, administration, and so forth. This is a powerful concept and tool, allowing nearly unlimited configurations to meet a company's needs and business processes, but it will certainly present some challenges to the integration to FRx.

This concludes Part Two of a four-part note.

Part One discussed the event.

Part Three will continue the market impact and detail vendor challenges.

Part Four will cover competitors and make user recommendations.

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