Event Summary
FRx
Software (www.frxsoftware.com)
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 Four of a four-part note.
Part
One discussed the event.
Parts
Two and Three detailed the market impact and vendor challenges.
Competitors
Thus,
the competition from more rounded BI providers, such as Cognos, Business
Objects, SAS Institute, Informatica,
and Hyperion, and from tier one ERP providers, will only become a greater challenge
for FRx, despite many of these vendors' likely less sharp focus on financial
reporting, planning, and budgeting at this stage. It will be particularly interesting
to watch the approach of the parent, Microsoft, to Crystal Reports (now part
of Business Objects), which made quite a splash a decade ago when selected as
the reporting engine for Microsoft Visual Basic. Its technology partners largely
overlap with FRx to include Best, ACCPAC, MBS, Exact Macola, and Epicor.
For
example, across all Solomon series of modules, there is the OEM embedded, industry-accepted,
and familiar Crystal report writer, which can publish reports directly to the
Web (using an embedded Crystal Reports Smart Viewer) or into
Excel. Crystal is also designed to consolidate data from existing front- and
back-office applications, and provide speedy analysis and distribution of this
information in a suitable reporting format. Web-enabled Crystal Enterprise
allows reports to be deployed over the Internet or a corporate intranet, and
to a variety of formats including XML, PDF, DHTML, RTF, Word, Excel, text, e-mail,
and version 7 .rpt.
Any
report can easily incorporate charts, pictures, logos, colors, field highlighting,
or running totals. However, given Microsoft's intended foray into the reporting
sector of the broader BI market with its recent unveiling of SQL Server
Reporting Services, slated for a foreseeable future, may seriously
strain the partnership with Crystal Decisions, which could deprive MBS products'
users of this sleek reporting feature. While a complementary, tandem strategy
is more likely than a replacement strategy, given MBS is still currently evaluating
the latest offering from Crystal Decisions for incorporation in future versions
of MBS's products, one can never be sure of how any co-opetitive software partnership
may turn out in the end.
Also,
while FRx Software and Microsoft will address the unification of the above islands
of analytics under the Microsoft BI umbrella, through Web parts leveraging FRx
and Forecaster data; integration to Microsoft SharePoint 2.0
and Digital Dashboards portals; more specific details are not
available at this stage, which will likely mean several years lag behind competitive
products.
The
competition does not end with more rounded BI providers either, given a slew
of slick budgeting and planning products that many go well beyond leveraging
GL data. In addition to the above-mentioned BI powerhouses, Applix,
Cartesis, Longview, Comshare
(now part of Geac), Closedloop (now part of Lawson), OutlookSoft,
Prophix, and SRC Software would be only some.
For example, OutlookSoft's software allows for bidirectional data collection,
analysis, and communication of information contained in internal and external
data stores such as ERP and CRM systems.
Further,
while FRx Software's advantage is its interface's familiar look to financial
personnel, it still requires certain training, given its particular spreadsheet-like
interface is not exactly Excel-like. Some competitors are lowering customer's
training and ongoing costs by taking advantage of functionality in Microsoft
Excel and Outlook, while streamlining consolidation and preserving
data and referential integrity issues. Web services will accelerate this trend
by making it easy to combine Microsoft Office functionality
with corporate procedures.
Possibly
the best example would be the financial reporting archrival F9
product delivered formerly by Synex Systems, and now owned
by Lasata, which promotes itself with the tag line: "You know
Excel ... you know F9." It also integrates with more than forty accounting packages,
many of which are also from the FRx Software fold, and it can easily populate
a spreadsheet with "live" data from the GL to create a custom report publishable
on paper or digitally. Users can create reports for any time period, and F9
can consolidate GLs that do not share the same account structure. Another competitor,
Timeline, with its slew of patented "accounting intelligent"
and analytically richer products like Analyst Reporting, Analyst
Filter, and Analyst Consolidations has also occupied
some space and thereby limited FRx's opportunities through a number of private
label agreements, such as with Sage, ACCPAC, Lawson, and Deltek
Systems.
Another
intruder into FRx Software's hunting grounds would be Cetova,
a spin-off of consulting firm GL Associates, which has created
a financial statement reporting product, C-FAR, leveraging
its years of implementation experience with former J.D. Edwards World
and OneWorld product lines (now part of PeopleSoft), which
has been a coveted but never penetrated market for FRx. Given Geac and Lawson's
recent acquisitions of former FRx Software competitors, the opportunity shrinkage
for FRx is likely to occur in that manner too. To possibly wrap up FRx Software's
potential market erosion, one should mention Epicor's own eIntelligence
Reporting offering, as well as Bennet/Porter & Associates'
Crystal Vision product's existence too.
Ironically, FRx Software's competition often comes from its sibling (or at least a remote cousin) product Excel, albeit a crumb of consolation could be that all the above competitors are in a similar conundrum. The traditional spreadsheet approach remains popular despite its tendency to be labor-intensive, time-consuming, and error-prone. FRx Software needs to educate the market about the fact that, while Excel might suffice for ad hoc analysis and data storage for individuals or small groups, the technological flaw of data and referential integrity prevents it from a corporate-wide, collaborative effort like planning and budgeting.
Last
but not least, while FRx has strong currency translation capabilities, it currently
only supports English, French, German, and Spanish languages and its international
presence is limited to the countries speaking these languages. However, Forecaster
is currently available in English only. Thus, it continues to be challenged
on providing a multinational product in order to be selected as a global strategic
partner. That will likely be overcome through the integration with Navision
and Axapta, both of which are highly multinational products,
but that is yet to happen in earnest.
User Recommendations
With Integration Designer and Forecaster, FRx Software has taken critical steps forward in creating value for its customers and resellers. FRx Software should expend the marketing effort required to insure all its customers, prospects, and affiliates fully understand the value proposition of its products. FRx Software (and Microsoft) should invest further in the technology to insure that the power of financial reporting, budgeting and planning is available across all the MBS and Microsoft BI product lines including integration into its portal strategy. In the fast moving BI/CPM market, Microsoft and FRx Software should continue to invest in a cohesive CPM vision to maintain their competitive position.
Existing customers should review FRx Software's portfolio with their local affiliate to determine the additional value that can be generated from their GL database. Look for a quick return on investment (ROI) because financial planning, budgeting, and reporting processes should be improved by access to concise, targeted, information. While the budgeting and planning applications (FRx Software's and other vendors alike) might not account for perpetually changing variables like consumer confidence or fluctuating interest rates, their output certainly offers benefits over shooting in the dark. Still, challenge every vendor to help you re-plan and re-budget quickly in response to many unpredictable events abroad (e.g., natural disasters, stock market crashes, fuel price changes, general strikes, new competitive product's on the market, etc.).
However, as CPM involves more than business planning, with such initiatives like performance measuring, alerting and score-carding, it is not likely that all these components will come neither from FRx Software nor from Microsoft at this stage. Thus, existing users and prospects with custom systems or products from other vendors should review FRx Software's development capabilities, in order to gain data integration between their various systems. Familiarity with Web communication protocols and display standards, internal XML skills and knowledge of Web portal technology go without saying.
Despite
the plausible Longhorn and Project Green product
roadmap (the next-generation enterprise software suite built on the Microsoft
Business Framework, which will combine functionality from all the MBS
product lines) and the company's indisputable viability, any organization evaluating
any of the four major MBS products or pieces of Microsoft's BI offering should
keep itself informed. Organizations should consider existing functionality only
on a case-by-case base while making sure that what they buy today will (within
reason) painlessly meld into the future single-code platform. While the next-generation
suite will be unveiled neither sooner than 2005/2006 nor in a single large "big
bang" release, none of the unveiled pieces will necessarily be compatible in
a straightforward way with existing Microsoft BI and Microsoft Business Solutions
products.
On a more general note, CPM evaluations should involve the IT organization, finance, and operations. Most firms should create a joint committee or task force to evaluate how automation can improve enterprise-wide performance management. Although CPM starts with strong financial management, it will eventually extend beyond financial planning to almost all areas of corporate activity. Thus organizations choosing BI suites should consider both their financial management tools and future integration with key business-area solutions (for example PLM, CRM, or SCM). Enterprises should conduct business analysis in a single analytic environment, using data from many sources, rather than to regard reporting, planning, budgeting, and profit analysis as separate components.
The most important point for prospective buyers of CPM technology—do a very thorough analysis of your existing systems, where your corporation's business needs will be in the next few years, and how you intend to integrate the systems before you even talk to any vendor. Do not forget that mapping data from one place to another is not only the most arduous, expensive, and time consuming part of the whole process, but also one of the major reasons for the failure of BI projects. Be both open-eyed and open-minded, since it is tempting to create specialized data models and tactical data marts to support quick deployment of a CPM portfolio but this can lead to long-term inflexibility.
The best start for a CPM initiative towards building the entire corporate information factory (CIF) would be to identify the most painful points and to try solving them by leveraging existing BI/analytics initiatives, while staying aware of being inflexible and of automatically settling for an incumbent vendor if its products and plans do not match up well with your strategic requirements. One should not fall into the trap of "low-hanging fruit" and easily obtainable short-term return on investment benefits (ROI) at the expense of long-term strategic benefits that are either of a "soft" nature or are of lower value in the short-term.
While the needs of employees, customers, and business partners will vary, successful integration tools will need to provide access to such applications as inventory control, ERP, CRM, data stores, packaged applications, legacy systems, and a myriad of other applications. The effort will likely be immense, but the returns from an integrated information portal can be significant. As with any such purchase, users choosing point planning or BI products should consider the integration infrastructure and effort needed to combine these products versus the cost and functionality issues of choosing an integrated CPM product suite (if still possible to find). Mission-critical issues like scalability, reliability, manageability, and ease-of-use go without saying.
For smaller enterprises that are more inclined to rely on their ERP vendor on extended functionality such as BI and portals, the route to the complete CPM might be more straightforward. However, even as a first step, leveraging canned reports that come with ERP systems usually works if users do not need a real depth to what they are doing. It is however, a completely different case when they have to produce contextually astute financial reports such as, for example, owners, investors, business partners, and employees, and that is still the sweet spot for the likes of FRx Software.
Financial
reporting, budgeting, and planning are at the heart of a CPM solution. Without
financial reporting, budgeting, and planning CPM cannot be achieved. For more
information see Financial
Reporting, Planning & Budgeting As Necessary Pieces Of EPM.