|Getting Rid of Paper Nobody believes in the paperless office, but paperless audits and online document management are real and growing in popularity. |
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In between is the mid-range, which has some of the features of both. Like retail, it sometimes comes in a single box, not in separately packaged modules. It is usually sold by resellers, although at a price between the other two levels. But it has never been clear if the mid-range is a market opportunity for vendors seeking to go down or up market. Or perhaps, it is a no man’s land where vendors can only survive, not prosper.
There’s always seemed to be a need for a "second-banana" product from such players that can be sold by VARs that sell Great Plains or Best Software products, but who want another line for customers who are more price sensitive. That lure draws new competitors, such as BusinessVision, which has signed up many VARs during the last year.
Still, mid-range vendors are generally not powerhouses. These include Cougar Mountain Software, Cyma, and Red Wing, whose products now encompass the lines formerly sold by both Red Wing and Champion.
Sometimes, it appears the mid-range represents just another problem for users because no vendor has products in the low, middle, or high end that share a common architecture. Small companies that expect to grow face the need to switch products at every level. I think this has held back the mid-range, leading users to hang on to Peachtree and QuickBooks applications long after those packages cease to be appropriate. Who wants to switch products from retail, to mid-range, to mid-market? That’s an expensive, time-consuming prospect.
Just how weak the mid-range is was illustrated when Active IQ reported results for both Champion and Red Wing. Both had rising revenue during the Year 2000 hype. Both had revenue that fell off in 2000 and 2001, right before their acquisition. Red Wing went from $2.7 million in sales in 1999 to $2.4 million in 2000. Champion sales fell from $2.2 million to $1.7 million for the same years.
Accpac International has a mid-range entry with its Advantage Small Business Edition. But this package is a step up from Simply Accounting which is Access-based while SBE is Pervasive SQL based. There’s no true migration path, just import/export capabilities. Best Software has BusinessWorks, something of an anomaly that doesn’t relate either to Peachtree or MAS 90, and has been plagued with problems in its Gold edition.
Life for mid-range vendors will only get tougher. Microsoft Great Plains is trying to come down with Small Business Manager, while Intuit tries to move upstream with QuickBooks Enterprise Solutions. QES uses the QuickBooks database engine. SBM is Dynamics. It’s not a wide-ranging migration path. But it is a migration path for both companies.
Rather than threatening each other, SBM and QES will squeeze the existing mid-range because these two powerhouses have more marketing muscle and brand-name awareness than do mid-range players. QES will pick up QB users, who want to grow. SBM will enroll those users in the mid-market who have stuck with DOS, or legacy systems users who have been too price-sensitive to move to Dynamics. Hype aside, those two companies have a lot of room in the middle before they need to compete head on. We’re going to see these two companies try to saturate their installed bases and pick off the weaker players before they really mix it up.