Microsoft moves into business reporting

Microsoft plans to embed a business reporting feature into its SQL Server database software, a move that is likely to cause jitters among specialised business reporting software companies.

The software giant said on Wednesday that in the first half of this year it will begin a testing programme for SQL Server Reporting Services, a planned add-on feature for a forthcoming SQL Server database code-named Yukon.

Business reporting tools pull information from databases and generate preformatted reports, such as regular updates on sales.

The company did not say when a final product would be generally available, although testing cycles for Microsoft products usually last several months or more than a year. But the announcement of the feature may make some potential customers postpone buying decisions in order to see what Microsoft has to offer, said John Hagerty, vice president of AMR Research.

"It's going to cause some consternation with some vendors - no question. But when people are buying business intelligence products, in a lot of cases they have very pressing needs," said Hagerty. Most businesses are closely tied to the providers of their existing reporting tools because they have already significant investment in that software, he added.

Hagerty pointed to two companies - Crystal Decisions and Actuate - as rivals in the business-reporting, or business intelligence, niche that might feel the most "heartburn" from Microsoft's plans. But several other companies in the category will adjust more comfortably, analysts said.

Actuate said on Thursday that Microsoft's announcement does not change its product strategy, which will remain focused on large-scale reporting applications that run on multiple databases and operating systems.

For its part, Crystal Decisions noted the company's long-standing partnership with Microsoft and said it will continue to extend the features of SQL Server with its own software.

With its new software, Microsoft is developing only the database server capabilities needed to generate the reports. Several companies, such as Cognos and Business Objects, also sell tools to write the actual reports.

Cognos, for example, is expected to announce on Monday an upgrade to Cognos Series 7 that expands on the analysis capabilities of the reporting tool and introduces a reworked Web interface.

Still, Microsoft's entry into business intelligence software does portend price pressure. Analysts expect a repeat of the effect the Redmond-based company produced when it incorporated data analysis and data transformation capabilities into SQL Server about five years ago.

"Both analysis services and data transformation services have had a strong impact on their niche markets. For instance, both have driven down prices and brought these technical capabilities within the technical and budgetary grasp of far more companies," said Philip Russom, an analyst at Giga Information Group. "I strongly suspect that reporting services will have a similar impact on its niche market, namely server-based enterprise reporting."

Despite a general slowdown in software spending, revenue for business intelligence software continues to grow. According to research firm Gartner Dataquest, information technology buyers will spend $2bn (£1.2bn) on business intelligence in 2003 and are forecast to spend $2.3bn (£1.4bn) by 2005.

By News.com's Martin LaMonica