There were not many top value-added resellers of accounting and ERP software that managed to increase their revenues over the past 12 months, but for the select few that overcame the volatile economic climate, the reasons behind it were rooted in such strategies as mergers, diversification of product lines, and expansion into new markets.
To be sure, out of Accounting Today's annual ranking of the 100 Top VARs (Aug. 16-Sept. 12, 2010, page 24) only 16 companies showed a revenue boost compared to the prior year's report. Moreover, the report noted a 23.6 percent drop in the revenue for top reseller Tectura to $229.2 million, compared to a year ago, while the bottom threshold for the VAR 100 declined by 31 percent from the prior year, to $2.5 million.
The revenue increases for the 16 VARs ranged from several hundred thousand dollars to several million.
Columbus, Ohio-based Socius, which resells Dynamics GP and Sage MAS 90/200, among others, recorded the largest year-on-year increase of the VAR 100 - a 58 percent rise in revenue for fiscal 2009 to $19 million, boosting it from No. 30 to No. 12 this year.
Socius' revenue increase, and move in the rankings, was due in large part to its acquisition of the ERP practice of cbiz Technologies, the now-former ERP practice of accounting firm consolidator cbiz. The acquisition expanded the firm's client base outside the Midwest and into California and Kansas City, Mo., and added 20 new employees.
cbiz had provided hosting services to its Microsoft ERP and service provider license agreement clients. Through the acquisition, Socius gained those service areas and is continuing to invest in building these new areas of its business, according to managing partner Jeffrey Geisler.
"[Organizations] have begun to see the value in having quick and easy visibility into all areas of their business, as well as having streamlined processes that will save them time and costs. Our vendor partners have also recognized this area of need and have responded by making the ERP and CRM solutions that we implement easier to integrate, not only with each other, but also with industry-specific solutions, proprietary systems, and other business software solutions," said Geisler. "The effect of the economy and the changes to the Microsoft partner network have given us the desire and ability to develop an industry-changing business model that will facilitate partners working together in a manner never before imagined."
M&A, AND BEYOND
Another firm that grew through acquisition was Thornhill, Ont.-based BAASS Business Solutions Inc. The firm generated $7.82 million during fiscal 2009 and a No. 40 ranking on the VAR 100, versus revenue of $5.58 million and a rank of No. 66 for the previous year.
In April, BAASS acquired Mississauga, Ont.-based Dynamics reseller ProfitPoint Inc. It had previously absorbed S.Kopstick Associates, a Dynamics NAV consultant in Toronto, and Zafi Computers Inc.
"BAASS has continued to grow both in staff size and install base," said president Joseph Arnone. "We foresee this merger and acquisition stage being ever-present in the future. We have also diversified our product line and adopted a vertical market strategy within the SMB and mid-market space." He also projected that BAASS's customer relationship management business will show significant growth this year. "The greatest impact we are seeing in the market right now is in technology to meet this communication management demand," he said. "CRM systems are [finally] gaining greater market acceptance, and their functionalities and breadth continue to spread across all functional units."
Carrollton, Texas-based Dynamics reseller Aztec Systems saw its revenue grow to $8.14 million in 2009, up from $7 million in the prior year. Much like BAASS's Arnone, Aztec chief executive Andrew Levi also noted increased CRM business, as well as interest in hosted solutions, and does not expect that to change in the future. "We are seeing a renewed interest in front- and back-office automation as a strategic component to business as our clients' businesses improve. We are also seeing a dramatic shift in interest in a cloud-delivered model for critical business systems," he said. "We are excited that managed solutions have finally come into their own."
Other firms saw revenue hikes due to a focus on their vertical offerings and expanding into areas in which they have expertise.
Washington, D.C.-based Raffa reported growth of roughly 14 percent, to $4.1 million, due primarily to the demand for its expertise in the professional services and nonprofit areas, according to technology partner Seth Zarny. "We were able to add a number of larger existing accounting system clients, and continue to do so," he said. "The projects and clients are there and we are fine-tuning our marketing and messaging to improve our revenue."
Dynamics reseller I.B.I.S. also noted that its vertical focus was a key factor in a 13 percent rise in revenue, to $14 million and a No. 20 ranking. "We're more focused on verticals now than ever," said chief executive Andy Vabulas. The vertical strategy will focus in such areas as industrial equipment manufacturing and distribution.
"We believe that ultimately we will be way more successful going vertical, and we have even added another ERP practice, bringing on Dynamics AX," said Vabulas. "I believe the ability to drive success into our chosen vertical markets will have the most impact on our business."
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access