From the year 2000 on, when the Sage Group turned the company that had been State of the Art into Sage Software and Great Plains acquired the former Solomon Software, the number of financial software vendors consolidated substantially.
Like what you see? Click here to sign up for Accounting Today's daily newsletter to get the latest news and behind the scenes commentary you won't find anywhere else.
Yet, in the last two years the hunt for good resellers by the remaining players, augmented by some new entries, has never been more competitive. And this year's class of Technology Pacesetters reflect the changing game in which vendors are recruiting among the best.
None of the new players is trying to build the kinds of channels with thousands of resellers that both Sage Software and Microsoft Business Solutions have developed. No, the vendors now recruiting have more modest goals.
Among the software publishers building its reseller base is Deltek, which has separate products for the government contracting market and for project-oriented companies. The latter focuses largely on architectural and engineering firms, although Deltek, based in Herndon, Va., has branched out with a version of its Deltek Vision software for consulting firms.
It got a lot of VARs knocking on its doors when it hired Taylor Macdonald, who had been Sage Software's channel champion, as vice president of worldwide channels and sales alliances.
Earlier this year, CEO Kevin Parker spelled out Deltek's relatively modest goals.
"We don't want 10 or 15 resellers in one market. We are trying to find two, maybe three, in a larger geography. If we have 55 to 65 well-selected partners in the U.S. and Canada we will have the market covered."
| Choosing Pacesetters|
Click here to view a chart listing the top 100 Pacesetters. How are the 100 Pacesetters selected? The goal of Pacesetters is to honor firms of quality that carry accounting software as the central part of their product line regardless of the size of the firm. Some exceptions have been made for firms of exceptional quality that carry CRM and HR software. Revenue plays no part in this selection, as it does in the annual VAR 100 list. The goal is also to reflect as wide a range of financial products as possible. Almost all resellers carry products other than accounting software, including other applications, hardware and networking and infrastructure products and services. Factors that go into our selection include the following: *Vendor awards, such as the Microsoft Inner Circle and Sage Software President's Circle. *Significant growth over the past year. *Participation in building the profession, including service by reselling executives on advisory boards and participation in speeches at panels at industry events. *General reputation among peers and vendors.
Within the United States, Deltek has gone for top performers from both the Microsoft and Sage channels. Among them are the SBS Group of New Jersey, which was the Dynamics SL Partner of the Year for Microsoft for 2007 and Synergy Business Solutions, which followed as the Dynamics SL Partner of the Year for 2008. On the Sage side, it picked up the Strategies Group, which had been named to Sage's Million Dollar Club in 2007.
"We are not looking for numbers. We are looking for high-quality firms that want to be part of an exclusive channel," Macdonald says.
Similarly, Intuit has been recruiting from the same field to build its partner program for QuickBooks Enterprise Solutions, the midmarket version of its QuickBooks accounting line.
During the summer, Intuit reported it had 207 dealers, about half of which are accounting firms who are Intuit ProAdvisors and the other half were traditional VARs that sold other midmarket software applications.
One thing that the recruiting has accomplished is to bring a number of accounting firms back into the reselling market, although some of them treat QuickBooks as part of their accounting practice, and don't run it through their technology units.
The Intuit effort also benefitted from economic uncertainty, even before the round of financial institution failures and takeovers signaled the start of a more serious business climate.
Kevin Cumley, a partner with Forepoint, a Sage reseller based in Seattle, cited his belief in a Y2K echo bust that was likely to hit the midmarket accounting software market this year in explaining his decision to add QBES to his Sage software product line.
The theory of an echo boom and bust stems from the surge in buying from 1998 through early 2000. Since replacement cycles on accounting software average about seven years, there was a boom in 2006 and 2007. Many expected that the buying slump in late 2000 to 2002 would similarly be echoed by a slump this year.
"I was a big believer in the Y2K echo boom and then we started to feel the downside, the Y2K bust," he said when he signed with Intuit earlier this year.
"It seemed risky to have all our eggs in one basket," he continued, adding, "We needed to get into something that was a lot bigger market opportunity. We were losing a fair amount of our smaller Accpac clients to QBES."
| Tough Times for Even Top Guys|
Business is getting tougher, even for the cream of the reseller crop. Consider, IBIS, a Microsoft Dynamics reseller that was Microsoft's Partner of the Year for 2007.
"We're surviving and we're profitable and maybe special in that regard, compared to some people," says Andy Vabulas, president of the Norcross, Ga.-based business.
IBIS was No. 19 on this year's VAR 100 list with $15 million in revenue for 2007. It is also held in such high regard that a few years ago, when a select group of resellers was invited to a conference in Barcelona, Spain, Vabulas was one of the few Americans invited.
One strategy that Vabulas has adopted is not surprising. With the market for ERP software fairly saturated, his company had turned to aggressively pushing Dynamics CRM along with business intelligence tools.
"People are spending for CRM and BI," he says. "We have been trying to cross-sell and upsell our customer base."
With the economic downturn, he continues, businesses need to be closer to customers and they need dashboards so that can more closely monitor business performance.
"We've been on this tack for several months," he continues. "We have a strong pipeline with CRM and over two months have had 10 engagements sold with business intelligence tools."
"We're continuing to gain momentum and have success with both Deltek and Intuit, closing several deals in the last couple months," he commented. "It's great to have choices/options for customers in these lean times."
The Intuit strategy has snared many of the same organizations that Deltek has enlisted-in fact, what has happened is that many stalwart Sage Software resellers have added both Deltek's Vision as a vertical market package and Intuit's QBES as a lower-cost product for the bottom of the mid market.
Similarly, SAP has been in the reseller pool with its SAP Business One line, although it has been relatively quiet in recent months about its ability to sign VARs. It had some luck early in signing Sage resellers, but many quickly dropped the SAP product when Sage offered better terms through the Sage Select program, which rewards loyalty.
SAP is also renewing its efforts to sign VARs for its Business One application, says Conrad Mandala, vice president of SME channels.
"We need to get in front of more people more effectively with better messaging," says Mandala, adding that Business One needs better coverage in some major metropolitan areas. He continues that his group will be offering best practices information and is forming a reseller advisory council.
Other vendors are on the prowl, but haven't had as much impact yet.
Epicor, which has been principally a manufacturing software company, has reentered the ERP market with the launch of Epicor 9.0 in October. And it plans to increase the percentage of revenue from reseller sales to 30 percent of the total.
CEO Thomas Kelly described the reason for recruiting VARs was for a "proper balance that will give us a more effective way to respond to the market."
At the same time, the company signed 10 new resellers, although the new enlistees aren't coming from the same part of the channel - some had been Oracle resellers. Epicor resellers are unlikely to compete directly with most Sage and Microsoft resellers, although they will probably run into those selling Microsoft's Dynamics AX line, which is pushing up into the Tier 1 market.