Microsoft Office joins the cloud add-on club

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Microsoft is returning to the world of small business accounting through alliances with cloud platforms such as QuickBooks Online and Xero.

The focus for this activity is Office 365, the web-friendly evolution of Microsoft’s productivity pack. But when Xero told 1,000 of its accountant users and third party software developers about its integration plans with Office 365, talk very quickly moved on to Power BI, the analysis suite in Excel 2016 that bolts data warehousing tools on to Excel’s existing PivotTable and charting capabilities.

The announcement of an Office 365 link with Xero stirred up a buzz at Xerocon in London this week, but full details and working tools were thin on the ground. Xero chief technology officer Craig Walker told developers he had worked on the Office 365 integration on the plane over from New Zealand and hadn’t had much time to brief his colleagues.

Microsoft’s head of technology for partners, James Akigg said: “We’ve been working with partners like Xero to create content packs that include report templates and dashboard layouts that users can customise to their own needs.”

The Power BI content pack for Xero was being refined in collaboration with Xero and its users and would be available in the near future. A QuickBooks Online pack is already available, as is one for those who want to examine Google Analytics data.

According to Akigg, Power BI’s strength lies in combining data from different sources, so that companies can get insights by analysing financial figures alongside data from payroll, HR or Google Applications.

The people who have been using Power BI love it, but it still remains a minority interest. Commenting on the Microsoft alliance at Xerocon this week, Xero’s chief executive Rod Drury told AccountingWEB: “Accountants are big on analysis in Excel and do a lot of document construction. Microsoft Office in cloud makes sense for them. So they’re going for Office 365 integration. Google Apps are more compelling for small businesses.”

Microsoft used to have its own small business accounting package, which failed to make a dent as online contenders such as KashFlow, FreeAgent and Xero started eating into that market. Around the time it withdrew Microsoft Online Accounting Professional, the company positioned Excel as a window into data on other systems.

Within the financial world, these connections were shaped by larger accounting and ERP systems running on Microsoft’s SQL Server database, but the latest round of partnerships shows that having decided it couldn’t beat the cloud generation at accounting, it could join them as an add-on partner.

Each move Xero and other cloud bookkeeping systems make into analytic tools can potentially cause trouble for its other third party reporting developers. If accountants and other users can get sophisticated reporting and analysis tools for free as part of their Microsoft subscription, they may be less likely to invest in specialist reporting add-ons.

But representatives from Float, Fathom and Spotlight Reporting at Xerocon were sanguine as usual about the latest incursion. And the one plus from Microsoft’s entry on the cloud accounting scene is that it opened doors for them to exploit Excel’s capabilities alongside their own tools.

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Ah. Don't you just love that fresh ripe smell of vapourware.

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