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Microsoft to Enter Market for Business Intelligence

Posted by iMark - 2005-10-24

Microsoft Office, the familiar toolbox of desktop computing, is a huge and lucrative business, but demand has slowed. In a new bid for growth, the Microsoft Corporation plans to announce today that it is making an ambitious push into the $13 billion-a-year market for business intelligence software.

The company is trying to lure new business by extending Office well beyond its well-known programs for creating documents, spreadsheets and presentations. Business intelligence software is used to help workers quickly find and analyze information inside their corporations. The programs offered by a variety of suppliers range from software used to automatically retrieve hourly or daily sales results to sophisticated analytics programs used to detect fraud and money-laundering.

The company is positioning its new product, Microsoft Office Business Scorecard Manager, as an inexpensive, easy-to-use entry in the business intelligence market.

"What Microsoft has done over the years is bring technology to mass markets, and we think the time has come to do that with business intelligence software," said Jeff Raikes, president of the company's business division. "And we're building it into the Office tools that are familiar to everyone."

Microsoft will also announce today that the new version of Office, scheduled to be introduced in the fall of 2006, will have added business intelligence features. From an Excel spreadsheet, a user will be able to use Web links to tap into corporate databases. And groups of workers will be able to use business intelligence features on SharePoint, a digital work space that can be shared by teams of workers.

The Business Scorecard Manager is much like a desktop dashboard for information, which the user can configure to fetch and display relevant data on sales, manufacturing, finance or other areas. A sales manager, for example, might see that daily sales reports are falling behind forecasts. The manager can then query several databases, see which accounts are falling behind, determine the common characteristics and jointly draft a catch-up plan with the company's account managers.

The move by Microsoft is its latest step to breathe new life into its big Office business. The company's information worker group, which is mainly Office, had sales of $11 billion in the year ended in June, and operating profits of $7.9 billion. But revenue growth has since slowed.

"Microsoft is looking for whole new markets for Office," said Richard Sherlund, an analyst for Goldman Sachs.

Microsoft must also add new capabilities and bind them to the basic Office programs - Word, Excel and PowerPoint - to try to fend off competition from free open-source products, like OpenOffice, and free Web-based alternatives, like Writely.com (a word processor) and NumSum.com (for spreadsheets).

The Microsoft growth strategy includes a technical overhaul. The company is trying to transform Office from an isolated set of desktop programs to a workbench with links into all of the corporate information used to manage a business, using Web-based technology. "Fundamentally, it's a shift from Office as a bag of tools to a platform that companies use to run their business," said Peter O'Kelly, an analyst at the Burton Group, a research firm, who has been briefed on Microsoft's plans.

In the business intelligence market, Microsoft will confront a range of companies, including SAS, Hyperion, MicroStrategy, Business Objects, Cognos and others.

Industry analysts say Microsoft is not competing in the market for the most complex tasks like fraud detection and financial risk management, where SAS and others do well.

"Microsoft is coming at the market from the bottom-up first," said Andreas Bitterer, an analyst at Gartner, a research firm. "It makes sense, but I'm not holding my breath for Microsoft to take over the business intelligence market - certainly not anytime soon."

Tightly integrating business intelligence with mature Office products like Excel could be a misstep, said Howard Dresner, chief strategy officer of Hyperion, a rival. Workers already use Excel as a business intelligence tool, he said, but as a poor one that traps valuable corporate information in personal islands.

"Excel is part of the problem," Mr. Dresner said.

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