The reseller channel is undergoing fundamental changes producing larger VAR organizations.
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Who are the biggest resellers of accounting software in the United States? Accounting Technology answers that question with Bob Scott's VAR 100, the first-ever ranking of accounting VARs.
Not surprisingly, the No. 1 organization in terms of revenue is ePartners, the Irving, Texas-based company that had come close to a $100 million run rate a few years ago. But even at a reduced $63 million, and suspicions (which the company denies) that it's even smaller, ePartners clearly achieves the top ranking.
But ePartners is unlikely to go unchallenged over the next two years. The size of VARs is increasing and the emergence of more VARs with a national scope is occurring and the pace is likely to accelerate. Indeed, a fundamental transformation of the reseller base, echoing the consolidation of the vendors, is under way.
Since research for this list began, Tectura, already at $37.5 million in revenue for 2003, purchased Sensible Systems, which had $3.5 million in sales for the year. EYT, which acquired Information Resource Associates in its own metropolitan Washington, D.C., area last year, merged with Seattle-based In2Gr8, which had planned to be in an acquisition mode. Add in its overseas consortium development members and Interdyn is well poised to take over the No. 1 ranking, especially as it looks for new members in additional markets in the United States and plans a European expansion. The U.S. reselling members had sales of about $40.1 million last year.
Cedar Knolls, N.J.-based Altara, which just acquired the McKena Group, is also continuing to grow, and had reached $12 million in sales before this latest purchase.
Moreover, consortia of firms formed or strengthened their identities as a single company. Some Interdyn members, a company owned by some of the Great Plains powerhouse resellers, continued to move towards a single identity with some members beginning to use the Interdyn home page instead of their own local pages.
Another group, JourneyTeam, was formed in 2000 by RealWorld resellers just after that company was purchased by Great Plains. Today, there are 17 members and more are being added. This much smaller organization probably has sales of around $9 million, including software, hardware, and services. But it is also moving towards a stronger corporate identity. President Sanford Commeaux noted that in the past members put their local name first followed by the JourneyTeam name. That is now being reversed, with the JourneyTeam corporation becoming more prominent.
Exact Software has been urging its resellers to merge or cooperate, and imposed a $10,000 annual fee designed to accomplish that. Many small VARs have merged, while a group of Midwestern Exact Macola resellers formed the Esta Group, to split the fee and to gain the buying power of a single organization.
Also of note is how well accounting firms performed on this list. They comprise eight out of the top 15 firms, including Century Business Services and American Express Tax and Business Services, which was built through the acquisition of CPA firms. Some of these results are affected by the sale of other services--for example, the Crowe Systems Group's sale of Baan.
About this survey
This survey relied on information provided by the firms. All firms were contacted and asked to provide revenue and staff numbers for 2003.
Almost all firms provided staff numbers. For those who declined to provide sales, estimates were based on industry average sales per employee, using $150,000 as a base. Adjustments were based on the size of the market in which the firm operates (rural versus large city) and the firm's reputation as demonstrated by awards from vendors, such as being named to a President's Club or other such designation. The difference in sales price of accounting software lines was also factored into estimates. When the company provided a range of sales, the lower end of the range was used. Where possible, sales outside the United States were not included. Many revenue figures include sources of income other than accounting software sales and associated services.
In some cases, firms sell their own software lines or third-party lines for accounting software vendors. The decision to consider a firm a reseller, rather than primarily a software vendor, was largely based on whether the firm considers itself primarily an accounting software VAR.
When reseller organizations had equal revenue, the firm with the smaller staff was ranked higher, since that indicates greater sales per employee.
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Bob Scott is Editor of Accounting Technology and can be reached at email@example.com