As Softline prepares for a BusinessVision reseller conference in Toronto, it looks something like a farewell tour as the company prepares for its takeover by Sage. Another one bites the dust.
This is not to say that the packages, AccountMate, BusinessVision, or Datafaction, that are sold by Softline North America will disappear from the market. Under its U.S. arm, Best Software, Sage typically keeps packages alive after it buys products or companies if it can make a satisfactory profit. While there are some rumblings that Best does not have much interest in the AccountMate line, no one knows much about Best’s plans, other than that Sage bid for Softline primarily to get into the South African market.
But the real lesson is that we are in the Coke and Pepsi part of consolidation in accounting software and there is not much room for the R. C. Colas or lesser brands. The dynamics simply work against it.
Softline has done respectably well, coming into the North American market three years ago and buying two products--AccountMate and BusinessVision--which had not done as well as they could. (As a specialty product for the entertainment industry, Datafaction is in another category.) This year, the North American operations broke even, which is a pretty good trick for a company building channel and retooling products in a soft market.
Overall, Softline’s revenue for the year ended March 31 was $86.1 million, up from $65.9 million a year ago. While earnings dropped to $1.2 million in fiscal 2003 from $5 million a year ago, a lot of that change is because Softline was pumping money into R&D and marketing.
Before closing the fiscal year, Softline’s management decided that the company was worth more than the stock market valued it and planned to take it private. Whether management meant to put the company in play may never be known, but Sage’s aggressive bid proved them right.
And that’s what happens in this stage of market maturation, especially one in which new business is hard to come by. The big players have the resources to buy market share, whether simply to grow revenue, or to break into new niches and geographical markets.
There are other players breaking in. Icode, a domestic ERP player, is suddenly aggressive in promoting its line and recruiting resellers, as is AccTrak21, an offshore player that has had a bumpy ride in its short career in the United States. There are specialty players, like Deltek, which sells PSA in the U.S., and a French company, Adonix, which is trying to break in with its process manufacturing software.
It’s tough to build a product line and channel when you are unknown. But even if any of these players succeed, at some point somebody like Sage or Microsoft is going to offer them more money than they’ve ever seen. It just works that way.
