Size matters when it comes to Exact Software resellers. It’s a point the vendor made clear about five years ago when it started charging more than $10,000 to be part of its channel, a move encouraging consolidation and dropouts so only the biggest VARs with the most resources remained.
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Exact still prefers keeping the largest fish in its reselling pool, but is starting to hunt for some of the smaller, independent consultants that swam out on their own instead of acquiescing to Exact’s M&A requests and giving some of the middle of the pack additional resources and help from the direct sales force.
The number of U.S. resellers has continued to drop—from more than 200 in 2002 to 75 in 2004 to 40 today. But total revenue remains about 50-50 direct and indirect, according to Frank Grogan, director of channel sales for Exact North America.
“I’ve witnessed a decrease in the number of resellers but significant improvement in quality, customer satisfaction and revenue,” says Grogan, who has been with the organization for approximately five years.
As the software company, which was created when its Netherlands-based parent company, Exact Holdings, acquired the Macola product line in 2001, continues to scale upmarket and offer more products, its customers have greater expectations, Grogan explains.
Classic Exact resellers have 15 to 20 employees and more than 100 customers and are looking to grow that number through their own marketing, sales and support operations with enough overhead to be full-service VARs, he says.
Under a three-tiered program created last summer, these resellers are Platinum Partners. They pay $25,000 a year, which includes invitations to executive business planning meetings, quarterly marketing and sales planning sessions, unlimited training, unlimited support, marketing assistance, free certification tests and two free registrations to Exact’s user conference, Engage.
Currently, six resellers fall into this category and they say they don’t mind the cost because Exact waives half of the fee if they sell $250,000 in licenses and five new sites and the entire pot if they sell $350,000 in licenses and seven new sites.
These VARs also say it raises the bar so that those not as well versed in the products won’t simply sign on to the program and taint the applications’ reputation.
Len Rio, general manager of The Attivo Group, is one of the advocates. The 10-person Irvine, Calif.-based organization has been an Exact reseller since 1993 and now offers Macola along with several of Exact’s other products including Exact Globe Enterprise (for international companies), the Exact Progression Series (for inventory control and order processing) and other applications on the Web-based Exact eSynergy platform.
Rio became an affiliate of another partner from 2004 to 2007, but went back into business for himself early last year.
“It was really like being an orphan working under another reseller. We decided it wasn’t good enough so we decided to pony up the money to be a Platinum Partner,” Rio says. “There should be a fee to keep the bandits out that destroy the credibility of any reseller program and don’t know what they’re doing and leave a train wreck behind them. You need to learn the software inside and out.”
The Attivo Group is on target for seven new sites by year’s end. Rio says the chance to have his fee waived and receive the best margin is, “a pretty good carrot” and the unlimited training at no cost pays off in the long run as opposed to shelling out hundreds of dollars per class.
By charging his clients 6 percent of the software costs, they also receive a full year of unlimited online training—and he can dictate what they should be learning.
“We outline the courses we want them to take, give them a syllabus, tell them who should take it and give them a sign-in sheet so that for the fifth year in a row we don’t have to teach A/P setup (to new employees),” he says.
Exact demands a lot from its Platinum Partners, but gives a lot back in return.
Presales assistance serves as a major benefit to Rio, who used to stay up until 2 or 3 in the morning preparing demos for prospects—a responsibility now handled primarily by the vendor.
Gold Partners need a bit more help selling because they lack the resources the Platinum Partners have, with typically 10 to 12 employees, according to Grogan.
In those cases, the business can work in conjunction with Exact’s direct sales force. Often these resellers bring opportunities to the table then the vendor works to increase the close ratio and arms them with competitive information. Then, the Gold Partner manages the relationship going forward.
Gold Partners pay $12,500 a year and receive similar benefits to Platinum Partners but Exact does not waive their fee.
No resellers occupied the third tier—Service Partner—as of March, but the ones who would fit this category are those independent fish Grogan is casting his net to find.
They are either one-person shops or part of a smaller organization that didn't want to consolidate with other VARs. Now Grogan wants to ensure these people are properly certified and fall under the Exact umbrella.
In order to help them transition back to working with Exact, Service Partners will enjoy some relief on program fees ($3,500 annually) and minimum requirements ($10,000 in annual net license revenue as compared to $40,000 for Gold Partners and $100,000 for Platinum Partners) and additional help with implementation, sales and marketing.
Online portals allow channel members of all levels access to product information including release schedules, marketing collateral, sales tools including pricing, order forms and current promotions, technical support and training and certification testing, which has moved more online and away from the classroom over the past 18 months.
Grogan compared this three-tiered approach to the overall corporate philosophy: Protect-Grow-Acquire. Gold Partners are the ones to protect, Platinum to grow and Service to acquire, though he hesitated to use that word given Exact’s reputation for buying its resellers in the past, with the most recent being Illinois-based Alpha Sigma Consulting last April.
Exact is not actively trying to acquire resellers like in the past when the company said it was part of its corporate strategy, according to Grogan, but is targeting technology companies and service organizations to add more offerings to its product set.
He would like to add some “fresh blood” to the member roster and says the most appropriate ones would be seasoned midmarket resellers who carry products from Exact’s competitors.
During the second half of 2008, he would like to focus more on organizations that could sell eSynergy products—ones who possess skills in workflow, document management, e-commerce, business enablement and CRM.
As far as the product set is concerned, Grogan emphasized a continued commitment to providing the latest technology and concentration on Synergy, which essentially ties the front-office sales, marketing and support applications to core data in the back-office accounting system. Down the line, Exact will provide more in-depth sales force automation, customer relationship management, analytics and focus on the .Net platform, he says.
This type of progression is what gives Exact, which is known as a Tier 2 company, functionality that rivals Tier 1 offerings, according to Tod Replogle, COO of Business Computer Technologies, which started as a Macola reseller in 1984, and today is one of Exact’s largest channel partners in North America with $5.1 million in revenue and seven affiliates reporting to BCT, which equates to 30 consultants in the United States.
“When you tie Exact ES together with Exact’s (Vanguard) Business Analytics, Event Manager and Synergy, you’ve got the front and back office covered. Mix all these things and you come out with a Picasso,” Replogle says. “Synergy stands on its own merits, but it’s not known because Exact needs to learn how to market.”
Another area where Rio says the vendor is “missing the boat” is tapping into talented consultants in an organized way. The Attivo Group calls Exact for implementation assistance, but Rio says many customers who initiate their relationship directly with Exact hunt him down on the Web as opposed to receiving a formal introduction.
Alexandra DeFelice is Associate Editor of Accounting Technology and can be reached at email@example.com.
Company HQ (U.S.): Andover, Mass.
2007 Revenue: $373 million
Resellers: 40 (U.S.); 2,000 (worldwide)
Key Products: eSynergy; Macola ES; Macola Progression; Globe Enterprise