Reselling: CPAs Check Out

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Plante+Moran spent a very brief time in the ranks of Accounting Technology's VAR 100-One year to be exact. The firm was a bit rare in entering the reselling business a couple of years ago, but was more in line with other accounting firms that have been getting out. About the same time, UHY Advisors also sold off its mid-market accounting software efforts.

Accounting firms were once a dominant force in reselling and they are still important. Still Sage Software, whose original U.S. arm State of the Art, made its name by getting accounting firms to resell software, steered the accountants to recommender and consulting roles a few years ago.

CPA resellers weren't popular with traditional VARs because they often sold software at cost. The image hasn't improved. When a room of AccountMate resellers was told about the CPAs' exit from the business, there was spontaneous applause.

Partner Insights

The top 20 out of the VAR 100 still has more than its share of accounting firms-seven firms, including affiliates and non-traditional practices like RSM McGladrey and Cbiz Technologies and that hasn't changed from the list a year ago.

Still, the departure of large firms has been noticeable over the last five years and includes Moss Adams and Grant Thornton. Virchow Krause, which didn't have a large business, sold the VAR operations to its manager, Steve Krueger, last year. Put on top of that the departure of CEO Scotte Hudsmith from the accounting firm affiliate LBMC Technologies, and it looks like the reselling tide is receding.

The topic has been batted about for a long time. But some of the basic issues haven't changed. One of these is that accounting and reselling firms don't speak the same language, even though there are many CPAs involved in reselling. After last year's VAR 100 appeared, a staff member from one reselling operation called to ask "Where did you get those numbers?" "Your firm's public relations person," was my response. The problem was that the CPAs netted out the margin on software sales which left this business looking millions of dollars a year smaller than it would be if compared to VARs that include the software margin.

And then there's the fact that many CPA partners haven't been terribly comfortable with technology and can't figure out how to measure productivity in that business.

But two trends, not terribly new, are adding to the mix. The first is that it's harder to sell software since most mid-market companies have accounting software. That means profits and revenue increasingly come from services. The other trend is that the products are more complex. Together, these require greater investment to play the game.

A more recent trend converges with these two and that is the fact that regulation is hot business and on the technology side, IT audit and risk assessment, are growing much fast than the software side. And these services look a lot more like the things CPAs are comfortable with.

Recently, a person who works at one of the CPA firms represented on the 2007 VAR 100 called to obtain names of other firms of a similar size that are engaged in reselling.

That has the ring of someone trying to fight partners who are questioning their involvement in the tech business.

**Need Insights?**

Editor Robert Scott also writes "Consulting Insights," a free, twice-monthly electronic newsletter that addresses issues concerning the consulting and reselling market. It's insight with an attitude. If you want to subscribe, put the following in your browser address line: subscribe.webcpa.com. You can also visit us at www.accountingtechnology.com

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