Why Microsoft Might Bid for BI

Is Google (Nasdaq: GOOG) really this daring?

On Tuesday, the search king made few headlines when partner Panorama Software announced a new on-demand analytics service for its Google Docs suite of software.

Docs is, ostensibly, DoubleGoo's answer to Microsoft 's (Nasdaq: MSFT) ever-popular Office suite. Spreadsheet, for which Panorama created the service, is Google's answer to Excel. Neither is a serious threat to Mr. Softy.

Yet.

But notice how Google is attacking Excel -- by adding analytics, a common feature of what's referred to as business intelligence software, or BI. It's important stuff. BI measures effectiveness in numerous tangible ways -- from customer satisfaction to inventory turns to staffing capacity, and so on.

Microsoft's largest partners and competitors have been spending billions to acquire this capability. SAP (NYSE: SAP) acquired Business Objects for $6.8 billion in October. IBM (NYSE: IBM) shelled out $5 billion for Cognos less than a month later.

Even Oracle (Nasdaq: ORCL) has BI by virtue of last year's purchase of Hyperion Solutions. Of all the major enterprise software suppliers, Microsoft is the only one to not make a serious bid for business intelligence, preferring instead to build a BI capability in-house.

I understand why. Excel is sometimes referred to as BI in its most basic form. But that's unlikely to last now that Google has added analytics to its own (ahem) free spreadsheet program.

So, expect Microsoft to respond. Whether that's through a deal for any of the remaining independents, such as Actuate (Nasdaq: ACTU), MicroStrategy (Nasdaq: MSTR), or privately held SAS Institute , or through a massive internal effort, Excel won't soon be the same.