Vendors Harness Excel (and Office) to Win the Lower-end of Business Intelligence Market

Excel Both Opportunity and Threat

The need for business intelligence (BI) is of real and increasing strategic importance for all enterprise applications users because of economic and regulatory pressures. Unfortunately, users rarely feel that they get all (or most) the information they need from their enterprise software systems. Business intelligence is also known as analytics, though there are some distinctions between the two. BI is a broader set of technologies and means, whereas analytics refers to specialized software that analyzes data about a particular functional area, like marketing, sales, real estates, etc. Both have been inseparable from enterprise resource planning (ERP) ever since the idea of business automation via information technology (IT) way back in the 1960s. However, ERP, and BI and analytics have had different user experiences, evolutionary paths.

Namely, although ERP systems have positively transformed many enterprises' business processes, many users have been left feeling oversold, and overwhelming feel that these systems inhibit access to the vital information that appears hopelessly locked in the system. Often, in most traditional ERP systems, a number of financial and other operational activities are grouped together to form artificially created processes, which bear little resemblance to actual business activities. For example, often the focus of an ERP system has appeared to only be about getting the correct figures into the general ledger (GL) and to create a transactional glut (for more information on the genesis of enterprise applications, see Enterprise Applications—The Genesis and Future, Revisited.).

Special attention needs to be given to small and medium business (SMB) customers, given that BI is also critical for them in today's fast-moving, competitive markets. However, special consideration must be given to the daunting nature of infrastructure investment. Typically, many SMBs go with what is inexpensive, available, and what gets them moving without a steep software learning curve. Almost by default, their solutions revolve around Microsoft Excel or other spreadsheet programs, and sometimes including reporting tools embedded in packaged applications.

Anecdotally, Excel is considered the world's most accepted analytic tool, and is often considered to be a competitive product and even a barrier to entry for BI vendors, partly because Excel ships with every copy of Microsoft Office, which, in turn is a standard component on millions of corporate and individual desktops. Further, almost everyone is familiar with Excel, and some users have already become spreadsheet buffs, and Excel covers many required bases in terms of visualizing, manipulating, publishing, and sharing information.

Many SMBs do not want to fork out a sizeable amount of money an "enterprise-level" BI suite that they have to wait to grow into before realizing the system's full potential. Yet, sticking with their rudimentary, built-in reporting and analytics package that came with their introductory-level accounting or other niche enterprise application is not a solution in the long run either. However, the availability of PivotTables and PivotCharts and the ability to handle real time data feeds has increased the potential of using Excel as an analytic user interface (UI) for many SMB enterprise applications. PivotTables are interactive, cross-tabulated Excel reports that summarize and analyze data, such as database records, from various sources, including ones that are external to Excel; and PivotCharts are charts that provide an interactive analysis of data, whereby users can change views of data, see different levels of detail, or reorganize the chart layout by dragging fields and by showing or hiding items in fields.

Moreover, integration with Microsoft SQL Server Analysis Services' online analytical processing (OLAP) cubes provides a type of optimized, multidimensional data source for BI analysts. As the Microsoft SQL Server database moves further down the market with lighter releases for SMBs, and is shipped almost as the default database engine for more SMB enterprise applications, the ability to increasingly leverage data in SQL Server becomes another important functional asset of Excel.

It is thus a small wonder to see the recent proliferation of Excel-based BI and analytics tools that leverage add-in applications from a raft of vendors. These may be a viable alternative for SMBs, since the tools are usually easy to install and integrate fully into Excel's menu, help system, and worksheet and workbook pattern. They usually cost a few hundreds dollars or less, and can be bought one at a time, often by merely downloading them from the Web. Conversely, mainstream BI vendors who sell BI or corporate performance management (CPM) add-ins to larger enterprises, usually expect multi-user seats that alone can push software license fees up into thousands or even tens of thousands of dollars, which, in part, funds their expensive, direct sales model and future product development that not all users will ever need.

This is Part One of a two-part note.

Part Two will discuss additional MBS applications and present a competitive analysis.

MBS Analytical Tools

Given its parent's database and BI platform forays, Microsoft Business Solutions (MBS) has also increased the number of analytical tools available through its four ERP product lines and the Microsoft CRM product. So far it has mainly relied on its FRx Software division for much of its analytical functionality, albeit only in the realm of financial management, reporting, budgeting, planning, and forecasting (see FRx Poised to Permeate Many More General Ledgers). The Microsoft Great Plains and Solomon ERP products have predominantly relied on FRx and the financial reporting area. Both Navision and Axapta will be offering the FRx integration (already the case for Axapta and on roadmap for Navision) and have been focusing on the build-in report writers in addition to the OLAP solutions too.

Some of MBS' improved BI functionalities reach outside of the financial reporting domain, and there are some notable examples including.

• The availability of OLAP offerings for the majority of the ERP product lines, allowing for ad hoc analysis of operational, as well as financial data;
  
  
• The introduction of Microsoft SQL Reporting Services Report Packs for Microsoft Great Plains and Microsoft CRM (and Axapta soon to come); and
  
  
• The embedded use of notification services allowing both Navision and Great Plains users to subscribe for an automatic notification when data changes occur.

Further, financial statements created in Microsoft FRx or budgets created in Microsoft Forecaster can be exported to Excel for further analysis and distribution or they can be converted into an Excel PivotTable for enhanced analysis and charting of key data. The export capability to Excel PivotCharts and PivotTables was not really meant to help in navigation, since FRx DrillDown Viewer supports good navigation. However, they do support deeper or enhanced level of analysis of GL data, along with the ability to support the charting of data while using one version of truth.

The latest service pack product release for Microsoft FRx 6.7 (SP3) features Microsoft FRx Report Wizard that was designed to provide a simpler way to design and produce reports. It offers three versions of profit and loss (P&L) statements (rolling quarter, actual to budget variance, current and year to date); balance sheets; and trial balances from accounts in a variety of ERP and accounting packages. All of these reports have limited formatting choices (seven or less).

To be a bit clearer here, depending on what type of report is being developed, it will take the user seven or fewer steps to complete the wizard and execute the report. For example, a trial balance report can be accomplished in four steps, one of which is a final confirmation step. Along the way, the user has the ability to apply some formatting changes to the report, such as changing row titles, adjusting row order, changing fonts, and formatting of the report. The user also can produce a report based on organizational hierarchy, and can select the period to run the report against. The FRx Report Wizard was not designed only for small business customers, but for any customer in MBS' target market of small, medium, and large businesses, and divisions of global enterprises. The initial thought was that this capability would be especially useful for new or infrequent users. However, the vendor has reportedly found that experienced customers are using this capability too, because of how quickly they can set up and run a key report.

The release also features Microsoft FRx Report Manager (for creating managerial report books), Microsoft FRx WebPort (for web-based distribution and access of Microsoft FRx report output, along with other Microsoft Office document types), and Microsoft FRx Currency Translation add-on's and output directly to Microsoft Excel PivotCharts and PivotTables. The only remaining MBS product that has yet to be integrated with Microsoft FRx is Microsoft Navision; however this won't be the case for long. During the recent MBS Convergence 2005 conference, MBS announced that in the first half of 2006, Microsoft FRx 6.7 will be integrated with Microsoft Navision 3.0, and Microsoft Navision 4.0 will also be introduced. Also, in the first half of 2006, Microsoft FRx 7.0 will be introduced, with more Microsoft Business Portal features and contemporary Office products metaphors.

As for the other FRx Software product, Microsoft Forecaster, its upcoming release 7.0 will feature a new Microsoft Outlook-like UI, enhanced calculation capabilities, sophisticated "what-if" modeling support, workflow, and security capabilities. These will further facilitate the Web-based, collaborative nature of this periodical, time-consuming budgeting and planning process that involves the input of several departments. The version is planned for release in the third quarter of 2005 and will be completely based on Microsoft .NET managed code.

Microsoft Forecaster 8.0 is scheduled for launch in the second half of 2006, which will further expand current human resources (HR) management, revenue, allocations, and adjustments capabilities. Both the Microsoft FRx and Microsoft Forecaster products will, in the long run, be rewritten completely in the Microsoft .NET managed code, and will eventually share common functionality. Currently, they feature only a limited number of common data and cross-over functionality, not to mention two different "look-and-feel" paradigms.

MBS has also increased the analytic abilities of its ERP and accounting packages, which already provide some Excel capabilities for analytics. Namely, the reporting and analytic capabilities in Microsoft Axapta, Great Plains, Solomon, and Navision allow users to export reports to Excel. Furthermore, the predefined OLAP cubes hosted on Microsoft SQL Analysis Services are available with MBS Axapta, MBS Great Plains, and MBS Navision and allow users access their OLAP-based ERP data directly from within Excel. As will be explained, this is possible through the use of Microsoft Office Excel Add-in for SQL Server Analysis. GL budgeting in these applications also generally allows users to export budget and actual data to Excel and then import the data back into the application.

However, although in the future all MBS ERP product lines will be able to access Microsoft OLAP cubes via Web services, for the time being, the company is still recommending tools developed by some of its resellers, such as Professional Advantage for the MBS Great Plains line, NexVue Information Systems, and MaxQ Technologies for MBS Solomon. Not only do these products provide analysis, but they are currently better suited for serving certain vertical markets. This is subject to change due to the release of the Microsoft Great Plains Analysis Cubes for Excel.

Enhancing Microsoft Great Plains

Yet, not to let the "grass grow under its feet", MBS announced in mid-March, that it was continuing to build on its technology road map that was outlined at Convergence 2005. Through the acquisition of a business analytics tool and new enhancements to MBS Great Plains 8.0, the solution will have an improved fit for businesses within specific industries, greater flexibility, extensions to the product's availability to connect in new ways, and, particularly, a new BI foundation. In particular, it will extend a strategic new combination of BI components to Microsoft Great Plains 8.0 Professional Edition that will include Microsoft Great Plains Analysis Cubes for Excel, key performance indicators (KPI) for Microsoft Business Portal, and integration with Microsoft Office Solution Accelerator for SOX, among other features.

Critical to the ability to offer modules focused on business analytics, is Analysis Cubes for Excel. Analysis Cubes for Excel came from Webhouse code, intellectual property that Microsoft acquired from Professional Advantage. The code, a driver of the BI foundation layer for Microsoft Great Plains 8.0 Professional Edition, will facilitate the delivery of valuable BI across an organization by using OLAP cubes for more in-depth analysis that should allow organizations to examine and analyze data from different angles for deeper insight into the information critical to their business.

Other tools that will enhance the business analytics capabilities of Microsoft Great Plains 8.0 include Microsoft SQL Server 2000 Reporting Services Report Pack and SmartList Builder. By using the SmartList Builder, businesses should have flexibility in defining their SmartList ad hoc queries so that Microsoft Great Plains 8.0 data and third-party applications can be queried more thoroughly. The Microsoft SQL Server 2000 Reporting Services Report Pack will be available to allow customers to draw information from Microsoft Great Plains and create analytics reports specific to their business needs. To that end, eight templates will help businesses draw on the power of Microsoft SQL Server 2000 to create analytical reports for sales, purchasing, and manufacturing functions.

Challenges and Response

Nonetheless, while FRx Software's advantage is that its interface has a familiar look to financial personnel, it still requires training, given its particular spreadsheet-like interface is not exactly like Excel. Some competitors are mitigating 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 associated with dealing with Excel. Web services will further accelerate this trend by making it easy to combine Microsoft Office functionality with corporate procedures. Possibly the best example is the financial reporting archrival F9 product first delivered by Synex Systems, then later by Lasata, and is now owned by Systems Union. All have promoted the product with the tag line: "You know Excel ... you know F9." Similar products worth mentioning include XLCubed, Infommersion's Xcelcius, and Synergration's eXcelBooks.

This is not to imply, however, that customers cannot find both Microsoft FRx and Microsoft Forecaster affordable and easy to deploy and use. Although these products require training, end user training on Microsoft Forecaster can be accomplished in less than an hour, while there is virtually no training involved in using the Microsoft FRx Report Wizard. Even to use the Microsoft FRx Report Designer, a new user can be productive with a day's training. Users also need to be trained on competitor products using Excel as their front-end, as there are Excel add-ins and additional functionality the user must know and be trained on in order to successfully use the product. Having Excel as a front-end does not necessarily guarantee a lower total cost of ownership (TCO). These applications still require licensing, maintenance, installation, training, and ongoing support costs.

To that end, Microsoft has launched a multifront assault to muster BI capabilities that are as complete as possible, and many of these capabilities revolve around Excel. For one, some add-ins are currently provided as free downloads for existing Microsoft Office customers, such as the Microsoft Office Excel Add-in for SQL Server Analysis Services. The Microsoft Office Tool for eXtensible Business Reporting Language (XBRL) is no longer available from Microsoft, although it is being embedded within certain ISV offerings. To refresh our memory, XBRL is an extensible markup language-based (XML) specification for publishing the financial information of an enterprise. The standardization of the specification makes it easier for public and private companies to share information with each other and with industry analysts across all software formats and technologies, including the Internet. Accordingly, XBRL uses XML data tags based on standardized accounting industry definitions to describe financial information for public and private companies and other organizations. The financial information includes such data as annual and quarterly reports, the Security and Exchange Commission (SEC) filings, GL information, net revenue, and accountancy schedules.

Consequently, Microsoft Office Excel Add-in for SQL Server Analysis Services lets users of Excel XP/2003 create and access Microsoft SQL Server Analysis Services OLAP cubes, select and navigate data sourced from these cubes in Excel, and publish the information in the form of reports. The latter allows users to download or import XBRL reports into Excel (and even Microsoft Word) and perform limited analysis of data in XBRL reports. Users, for example, can compare and contrast the XBRL financial statements from the slew of US public companies now accessible via EDGAR Online. Another analytic download is Microsoft Office Business Scorecards Accelerator, which helps create KPI scorecards in a Microsoft SharePoint portal. These are some of the first steps for Microsoft to address metrics, alerts, report annotation, trend charting, KPIs based on non-GL data, variance analysis, and so on, and are part of the strategy to deliver a more comprehensive CPM offering down the track.

This concludes Part One of a two-part note.

Part Two will discuss additional MBS applications and present a competitive analysis.