Clifton Gunderson, the multiregional accounting firm, has long been one of the largest accounting software resellers in the country—it was the 14th largest VAR in the 2008 VAR 100 selection. The Peoria, Ill.-based organization has been retooling its business.
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Over the last few months, it acquired UHY Advisor’s Washington D.C. business and started reselling Deltek’s software for projected-oriented companies. It sold a Wisconsin practice that handled Sage Software’s MAS 90/200 applications. And it has just become authorized for Intuit’s QuickBooks Enterprise Solutions.
All of these changes are good proxies for the direction of mid-market financial applications.
Intuit’s QBES is putting a lot of pressure on the MAS 90/200 market, and probably on the market for Microsoft’s Dynamics GP. You may remember that MAS 90 was once sold by thousands of CPA firms. Many have exited that business.
On the other hand, Deltek is a specialized product that has fewer applications competing with it and fewer resellers competing with each other. Deltek has 18 accounting firms in its CPA Network; all but one resell the software.
The market is splitting. Many successful traditional VARs are moving upstream with Sage’s MAS 500 or Microsoft’s Dynamics AX. Intuit is actively enlisting resellers, including accounting firms, to handle QBES, whose total costs are much lower than those of traditional mid-market products.
The other element of this shift is the growth of channels that will not have the thousands of VARs that sold the Sage and Microsoft products. Deltek has declared its authorization of new dealers will be much more limited. Intuit hasn’t been as clear, but it seems unlikely the company would emulate the old MAS 90 model. And Epicor, which plans to re-enter the market with its Epicor 9, has also set its site on limited coverage that will concentrate on enlisting VARs for specific geographies and vertical markets.
The benefits of specialization and smaller channels are clear. One Sage dealer, who signed on with Deltek during the spring, expressed pleasant surprise at the number of new sales he was able to close quickly. The other side came a couple of years ago from a Dynamics Inner Circle member who complained that he was often competing with six other Inner Circle members in deals.
And the CPA side, that kind of over distribution was one factor that drove firms from the market.
There is still room for CPA firms in reselling—just not so many of them.
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