Exact Retools Its Channel

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by Carly Lombardo

Exact Software says it has plenty of reselling candidates knocking on its doors. But right now, it’s trying to see what part of its existing base is serious about selling the company’s accounting, manufacturing, and CRM systems.

The imposition of a $12,500-per-year fee this year is doing that, causing some waves among the reseller base. “This price point has been met with mixed reactions on the part of our partner channel,” says David Krapff, director of channel sales. The larger partners say the fee offers great value and could be priced higher “based upon the value that it delivers. The smaller partners feel it is too high and are faced with making a decision to invest in the future with Exact.”

Partner Insights

As a result, Exact has witnessed several mergers and acquisitions in the channel. “Our partners are attaining the critical mass required to be profitable as full-service VARs. At the end of the day, we will have fewer partners. The partners that invest with Exact for the future will be better trained, better educated, and provide the highest levels of customer satisfaction,” adds Krapff.

That’s been the goal for much of the year. Exact had more than 250 resellers in the United States two years ago, perhaps 185 at the beginning of this year. But Jim Kent, the former VAR who is vice president of sales and marketing, set out to cut that amount in half. The move has succeeded as the total has dropped to about 100.

It’s been a busy year for Exact Software, whose operations in this country are built on the base of the former Macola Software, which it purchased in 2001 and whose name and product line live on in the Progression and Macola ES lines. But in the last year, partners have seen the launch of the e-Synergy product lines, a Web-based customer resource application package, and the hiring of Krapff as new director of sales and a new marketing director, Joseph Burke, along with what the executives say is the first uniform channel program to be offered to the Macola channel.

The last, called the Total Partner Support Plan, was introduced in July. The plan provides partners with complete product accreditation and support, as well as access to corporate lead generation and marketing programs. These are part of the services resellers are paying for through their annual fees.

“The program gives our partners even more access and support to help mid-market organizations improve workflow throughout their organizations,” says Krapff.

Exact Snapshot

HQ: Andover, Mass.
Phone: (800) 468-0834
Web: www.exactsoftware.com
Founded: 1984
Employees: 475
Annual Sales: $57.8 million (North America)
Products: Macola ES, Progression, and e-Synergy

Exact Software, a division of Exact Holding N.V., also purchased Kewill, which makes the Max and Job Boss lines. But so far, only the Progression, Macola, and e-Synergy products are being offered through resellers. The rest are handled by direct sales forces. In fact, Exact’s hybrid model involved the purchase of several accounting software resellers. That move made some VARs wary. But when it comes to sales, the company says that whoever registers the lead with corporate gets to work the prospect, and there has been very little channel conflict.

The back-office software packages are sold primarily through the channel, while e-Synergy is sold through both direct sales and the VARs. Although Exact is looking to the day when Macola ES converges with e-Synergy, right now the ES system costs $1,250 per user and includes financial accounting, distribution, manufacturing, and applications for supply chain integration. e-Synergy is priced at $1,000 per user.

The company is concentrating on training resellers to sell e-Synergy, with 25 having completed the process. Even though the CRM package has not been rolled out to the entire U.S. channel, it is having an impact. When Exact reported financial results for the first half of 2003, it said that CRM sales helped make up for weak demand for back-office products as it turned in first-half revenue of $102.8 million. North American revenue ran at $57.8 million for the last year.

A Total Plan

Perhaps it’s a good thing some VARs are combining. The capabilities of the new line call for partners with more resources. “Products have increased in complexity and the expertise is beyond general accounting functions—we need a broader-experienced VAR,” says Krapff.

Exact is looking for VARs who provide the total offering—sales, consulting, and support. “In most cases, our VARs sell multiple product lines, networking services, and application consulting. Also, they need to have a minimum of four people per organization dedicated to offering Exact’s products,” adds Krapff.

The Total Partner Support Plan replaced a traditional VAR program that had been in place for two years. The new plan combines Macola ES and e-Synergy under one margin plan, replacing two earlier ones. The ES schedule escalated from 30 percent up to 50 percent. The e-Synergy margin was a flat 30 percent. “The total dollars of product sales were separate. In the new program, we have combined both products to calculate the margins and we use one table. These two changes allow the partners to get into higher margins more rapidly,” says Krapff.

These factors, combined with Exact’s upgraded training programs, are helping to weed out the partners. Many of the more committed partners are happy with that.

Long-time partner Hugh Riddle has been working with Exact for 15 years, the last six with Triangle Partners located in Glendora, Calif., and he feels “the channel keeps getting better and better.” Triangle Partners has 134 customers using Exact, located in 17 states. He says, “Before the Total Partners Support Plan, if you could fog a mirror you could be a reseller. Now, resellers need to be professional, which is a giant step forward at making sure the channel is representing the customers’ interests.”

Under the new program, partners also have the option of providing their clients with support. Customers that license Exact software pay 10 percent to Exact for annual software maintenance. This maintenance entitles the customer to all patches, fixes, and new releases. Customers can choose to let the resellers or the company provide support.

Krapff feels education and beefed up certification also help eliminate partners not willing to make a strong commitment to Exact. ES resellers must attend a 10-day classroom course covering accounting, production, and manufacturing. E-Synergy resellers must attend 12 days of training and pass a test in three major areas—knowledge, implementation, and support.

Riddle is a staunch supporter of the additional training and required certifications. “A big problem we ran into in the past was we found that other resellers could sell the product but couldn’t implement it. We were spending a lot of time picking up customers who didn’t have the product implemented correctly. With the new training, this won’t happen,” he says.

The availability of more classes on the West Coast has also meant that the firm was able to send six staffers to a Macola ES class for a lower cost than under previous programs with fewer sessions.

The Total Support Program also provides access to corporate marketing materials, pre-sales consultancy support, free access to conversion technology to upgrade customer data to new solutions, and product user licenses for internal use.

Gary Chervitz, president of St. Louis, Mo.-based Progressive Business Solutions, a reseller since 1991, has seen “great improvements since the acquisition of Macola.” That includes the ability of both customers and resellers to communicate through portals provided through e-Synergy.

Carly Lombardo is Associate Editor of Accounting Technology and can be reached at:
carly.lombardo@amgpubs.com.

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