San Mateo, Calif. - In a sign that the Internet-based business software industry is maturing, application service providers (ASPs) are moving toward reseller strategies typically associated with packaged software marketing.

ASP channel changes now on the drawing board include:

  • NetLedger - at its partners meeting later this month - plans to announce the creation of a reseller group within its channel now made up of non-reselling consultants.
  • QuickBooks for the Web, the ASP version of Intuit’s low-end accounting software line, wants to expand its existing use of resellers.
  • Microsoft/Great Plains plans to bundle and pre-price some ASP services on its bCentral portal in packages designed for resellers.

"Software sold on a subscription basis is the long-term direction of the industry, but it’s still in transition," said Tom Eide, MS/GP’s small business global market general manager. "So, we need to offer a transition process for our customers and for our partners."Resellers’ revenue is usually pegged to discounts that vendors provide on packages that the resellers then sell at a mark-up; the larger the sales volume, the greater the margin. ASPs, meanwhile, have mostly sold directly to prospects that visit their Web sites. Also, ASPs have relied heavily on consultants to refer clients to the sites.
Intacct Corp., a forerunner ASP, has, for several years, provided reseller margins to accountants, who deliver its hosted solutions to their clients; however, its 300 resellers are accountants mainly focused on business-related services, while NetLedger’s and MS/GP’s reseller strategies are more focused on technology services.

NetLedger’s reseller move is noteworthy to the accounting industry because the company has a channel of 800 certified consultants who are primarily accountants. "A number of things have changed in how we deliver the product and what’s required to install it, so the role of the channel is changing," NetLedger chief executive, Evan Goldberg, said in explaining the upcoming move.

He noted that recent and future technological enhancements in NetLedger’s platform make it important to access the advanced technological skills associated with resellers and often lacking in smaller consulting operations.

The company, which began business in 1998 offering financial management software targeted at businesses with 25 or fewer employees, last year expanded its program into a package of several integrated applications, Oracle Small Business Suite, and began going after end users as large as 250 employees.

QuickBooks for the Web does not have a formal consultant program, but it relies on accountants as referral resources and offers pricing discounts that accountants can pass on to clients.

Intuit’s main accounting industry pitch highlights the opportunity for practitioners who steer clients to QuickBooks for the Web, to use that Internet platform to service the client by providing them access to the client’s data; NetLedger and Intacct also enable accountants to access their clients’ hosted data.

MS/GP’s bCentral has no accounting industry program, but it is linked to the American Institute of CPAs’ CPA2Biz Web site, which could make it easy for CPAs using the site to steer their clients to the MS/GP offering. Microsoft Corp. is an investor and partner in CPA2Biz, and Rivio, the Internet platform just bought by CPA2biz, already delivers users to bCentral.

CPA2Biz, however, has had some serious business difficulties.

In a separate matter, MS/GP is developing a CPA-consultants program for Small Business Manager, its new packaged accounting software that is designed to integrate with some of bCentral’s online services. Eide plans to roll out the program at the American Institute of CPA’s Tech 2002 technology conference in Washington, D.C., to be held in early May.

The Small Business Manager CPA program will apparently train CPAs to advise their clients on the product and then refer them to the vendor or certified resellers for sale and implementation. Eide said he has already recruited more than 500 resellers for Small Business Manager, with many of them coming from the vendor’s existing channel.

Goldberg hopes to attract resellers from other accounting software vendors such as MS/GP.

Goldberg and Craig Carlson, general manager of QuickBooks for the Web, stressed that their reseller strategies do not lessen their interest in accountants. "We have recruited consultants very aggressively by going to accounting trade shows and industry publications and we will continue to do that," Goldberg said.

Going forward, accountant consultants will still be advising clients on NetLedger and be involved with setting up charts of accounts and other reports for system users, while the resellers could be called in for more sophisticated technical services. Consultants should also have the option of referring sales/service work to either NetLedger or to a reseller.

Goldberg said resellers will be particularly important in customizing NetLedger for use by specific vertical industries, one of the areas he hopes to expand into.

Jim LaBelle, Netledger’s channel manager, expects existing accountant consultants to make up half of the 200 resellers he hopes to sign up by year’s-end. Goldberg said that NetLedger accountant consultants who have already been providing customization services had requested that a reseller arm be established.

While NetLedger is creating a formal resellers group, QuickBooks for the Web plans to pay greater attention to what has been an informal reseller group. He noted that several referral sources are already getting reseller-like volume discounts because they have attracted many other users to the site.

"We have a feature in place that has been used by some resellers, but has not been publicized," Carlson said. "We are putting together a marketing plan and (volume) pricing and we plan to reach out with it."

He said the current group of resellers includes franchise operations, which have many individual franchisees that use QuickBooks for the Web. It also includes some accountants’ multiple clients using the Web product.

By formalizing the reseller system, Carlson hopes to attract other referral sources that could bring multiple users with common characteristics. That could include accountants who have many clients in the same geographic location or vertical industry.

Carlson said his group’s marketing will be targeted more at the very small businesses and sole proprietorships that use Intuit’s Quicken financial software, as opposed to the small and midsized businesses using Intuit’s desktop QuickBooks.

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