by John M. Covaleski
A year after Best Software chief executive Ron Verni said that the battle for the small and midsized business software market is down to his company, Microsoft and Intuit, Accpac International is making a case that it’s the dark horse in what’s actually a larger race.
Pleasanton, Calif.-based Accpac, which competes with the other three companies for SMB customers and for resellers, was clearly jockeying for the inside track during its Partnership 2003 reseller conference, held in Quebec City, in August.
Strategies and programs unveiled at the conference included:
● An alliance with IBM, in which IBM Solution Provider partners market Accpac products and IBM pays rebates to Accpac for selling Accpac products running on IBM’s DB2 database and on Linux.
● Plans for a first-of-its kind “Web and Wireless” platform that will make data output from any software application readable by all wireless devices, such as personal digital assistants and cell phones.
● A major emphasis on customer relationship management software, which includes the launch of an Internet-hosted solution to complement Accpac’s desktop CRM tool, and plans to have a large portion of accounting resellers also handle CRM.
Accpac also unveiled enhanced versions of its two core accounting software products, Advantage and Pro Series, and an enhanced “Hands-Free” marketing program, which provides resellers a full range of support materials.
More significantly, Accpac chief executive David Hood announced that the company “achieved double digit [percentage] growth over the past year, and we’re on track to do that again.”
Accpac did not provide recent numbers, but according to a filing with the Securities and Exchange Commission, its gross profits for the nine months ended Dec. 31, 2002, were $44 million, up 18 percent from the same period a year earlier, on revenues of $62.37 million - a 14 percent rise.
Hood said that growth in a weak economy confirms that the SMB market is buying into Accpac’s strategy of offering “end-to-end” solution sets that meet all of the SMBs’ operational, information and access needs. Accpac, a subsidiary of high-end business applications developer Computer Associates, has, for the past two years, steadily expanded from its roots in accounting software to a broad suite of applications.
That expansion began when Hood, a former reseller whom CA recruited for its internal operations, became Accpac chief executive in 1999. Before shepherding the end-to-end strategy, Hood, 38, oversaw Accpac’s first big acquisition - the former SBT Accounting Systems, whose flagship product is now Accpac’s Pro Series.
Pro and Advantage Series target SMB market segments that are also targeted by Best’s MAS line and Microsoft Business Solutions’ Navision and Great Plains. Accpac’s Simply Accounting is an entry-level product that competes with Intuit’s QuickBooks and Best’s Peachtree line.
“Our core end-to-end strategy has not wavered and, as a result, we are doing well when others are not doing as well,” Hood told the conference’s approximately 700 attendees.
End-to-end applications added during Hood’s reign provide the following functions: customer relationship management, electronic commerce and electronic data interchange, warehouse management, manufacturing, human resources, budgeting and reporting, and point-of-sale management. All the applications fully integrate with Advantage Series, which has some 40,000 registered users, and Pro Series, with about 30,000 users.
Most of the applications have been developed by third-party original equipment manufacturer specialists, which agree to let Accpac integrate them with Advantage and Pro and to private-label them as Accpac’s own. In some cases Accpac has built the specialty applications itself, or acquired the OEM and made its operations part of Accpac.
Accpac’s other marketing claim to fame is its support of multiple platforms - which it boasts gives customers freedom of choice “and averts ‘vendor lock-in.’” In operating systems, it supports both the industry standard, Windows, and Linux, the only viable alternative.
Its products also can run from any of the following databases: Microsoft SQL, Oracle, Pervasive SQL and IBM’s DB2.
It’s difficult to quantify how much marketing advantage either strategy provides. However, technology industry analysts Aberdeen Group, which also monitors Best and Microsoft, roundly hails both strategies.
Accpac is “unsurpassed in the breadth of infrastructure supported - providing its customers with the maximum choice,” Aberdeen stated in a recent report. On the vendor’s end-to-end solution approach, it said, “Aberdeen firmly believes that Accpac knows the small business and middle markets” and “has successfully addressed the requirements of customers” in this space.
Perhaps remembering Verni’s comments from a year ago, Hood used his conference presentation to bash the competition. He criticized Microsoft for “breaking promises to its partners like it’s going out of style,” and said, “Best has kept most of its promises, but historically has not been making many.”
Hood only mentioned his competitors briefly, and focused most of his presentation on Accpac’s future. In an interview after the conference, he said, “I did not mean to be demeaning to Ron [Verni]. Best serves its shareholders well, but his statement was not accurate. This is not just a three-horse race.”
Verni did not single out Accpac for criticism in his comments last year. He said that being competitive requires the resources of a publicly traded company, and the only SMB vendors with that distinction are Intuit and Microsoft on their own, and Best, as part of Europe-based Sage.
“No disrespect to the others, but unless you are already large, playing in both horizontal and vertical markets is very difficult,” Verni said in a speech that was reported in the Oct. 21-Nov. 4, 2002, edition of Accounting Today.
Accpac plans to become publicly owned. Last December, it filed an initial public offering registration with the Securities and Exchange Commission, but there has been no further activity with it.
SEC rules prohibit Accpac personnel from discussing the IPO, but Hood conceded that his company would have to resubmit its S-1 because the original filing has become stale. In 1998, before Hood joined, Accpac filed a registration that it later withdrew.
Accpac’s current registration said that proposed uses for IPO proceeds include acquiring technologies and businesses. Hood couldn’t comment because of the SEC rules, but it appears that extra capital for acquisitions would align with the company’s current strategy.
Its most recent acquisition was eWare, the Dublin, Ireland-based OEM of Accpac’s CRM software. After acquiring eWare, it significantly enhanced the product that it had been private labeling as “ECRM,” and it began planning its major expansion into CRM.
That CRM expansion was the most publicized issue at the reseller’s conference. As reported in the Sept. 22-Oct. 5, 2003, edition of Accounting Today, Accpac identified CRM as the crown jewel in its end-to-end strategy, and Hood’s bullish marketing plans include encouraging accounting resellers - possibly all of them - to also handle CRM.
“CRM outshines every other end-to-end product we have,” he said in his keynote address. In addition to launching www.accpaccrm.com, Accpac announced that more than 30 independent software vendors have joined a program to develop add-on applications that integrate with Accpac’s CRM.
That could set the stage for CRM to be a hub of end-to-end applications similar to the way accounting software hubs its current end-to-end strategy. CRM will also likely be a key element in the upcoming Web-Wireless platform.
A less publicized, but critical, issue was the resellers’ attitudes. Accpac’s relationship with its channel has been strained since it significantly revised reseller contracts and how margins are determined a year after acquiring SBT.
Hood said that the revisions were needed to move the channel to his end-to-end strategy from their customary work with only accounting software. “Five years ago, we were a one-trick pony, and now our strategy has expanded to many other applications, and that meant changes along the way,” he said.
However, the contract revisions particularly impacted resellers that came over from SBT. Some disgruntled ones sponsored a “Separation 2001” conference for Accpac resellers to meet with other vendors, and several ultimately left Accpac.
One of those former resellers, who asked to not be identified, noted that Accpac at that time had also given out a message that “Accpac owned the resellers’ customers and the resellers just serviced them. It was really unfair.”
The tone of resellers at Accpac’s Partnership 2003 was entirely different and optimistic about Accpac and its chief executive. “That was an issue back then, but that’s all in the past,” said Dave Kerr of Woodlands, Texas-based Kerr Consulting.
“David Hood showed that he is extremely dynamic and bright,” added Jan Goodman, a partner in the Chicago office of Forepoint. “Now he knows us resellers and we know him.”
“Accpac is finally showing they can compete from a marketing standpoint,” said Alex Solomon, co-founder of New York-based Net@Work, which also resells for Best Software. “A few years ago Best never mentioned Accpac as competition, and now they are.”
