by John M. Covaleski
Austin, Texas - As they approach their first anniversary as Best Software family members, top executives at nonprofit industry software developer Micro Information Products believe that they have good reason to celebrate.
After exclusively handling accounting software throughout its 21 years in business, MIP has added another key nonprofit industry technology to its mix - fundraising management. The addition comes via a deal that MIP president Kent Hollrah says could not have occurred without being part of Best.
Best, the United States arm of international business software company Sage Group PLC, acquired fundraising management solutions developer JSI Fundraising Systems in late June. It has placed JSI in the same unit that houses MIP - a combination that sets the stage for the two companies to co-market to a bigger chunk of the nonprofit market.
"We had been evaluating the fundraising market for several years, but without Best making this acquisition, we could never have done anything," Hollrah said. "There’s a lot of other opportunities we hope to also take advantage of as part of Best."
MIP users with fundraising management needs have had to, on their own or with services from resellers, integrate other vendors’ fundraising tools into their MIP systems. JSI’s products, which are among several fundraising tools typically integrated with MIP solutions, will now become the preferred add-on, although MIP will not prohibit integration with rival fundraising tools.
Under the same roof, the two companies will be able to more tightly integrate their technologies and develop marketing strategies that leverage their same-company status.
JSI has a base of about 2,000 nonprofit industry customers, while MIP has about 5,500.
"This obviously makes our competitive position stronger since two-thirds of our customer base have fundraising needs," said MIP marketing vice president Dawn Westerberg. "Our customers have been asking about having a fundraising package, but it was a question of whether we build or buy."
The exact financial terms were not divulged. But MIP likely could not have afforded the deal on its own, while its publicly traded Sage PLC parent easily could with its market cap of roughly $4.6 billion.
U.K.-based Sage entered the nonprofit market last September when it acquired MIP and added it to a group of other U.S. holdings that all develop software for the general commercial market. They include what are now known as Best’s Mid-Market Group, which develops middle-market accounting products that include MAS 90 and BusinessWorks; low-end accounting software developer Peachtree; and Best Specialty Products, the developer of FAS fixed-asset software, Abra payroll and human resource management products.
MIP’s key products have been NonProfit Series Pro for nonprofits with budgets of about $1 million to $10 million, and Advantage NonProfit Series, for entities with budgets of more than $10 million. Last year, it also launched an "Intro" product for very small nonprofits of under $1 million.
The JSI deal is the latest of several marketing advantages that MIP has realized from affiliating with Best and its other units. MIP has been tapping into Peachtree for marketing; recruiting resellers from Best’s Mid-Market group and co-marketing new technologies with Best Specialty Products group.
Peachtree has been particularly effective. From 10 to 15 percent of MIP’s new license sales in the past year have been to Peachtree users, according to Hollrah, and, Westerberg said that accessing Peachtree’s user list has increased the MIP’s direct marketing prospect list from 67,000 to more than 100,000.
MIP has also effectively reached out to Best’s Mid-Market group resellers. Hollrah said that his company has recently recruited several high-profile resellers of MAS 90 and Best’s Enterprise Suite to its channel, and many more are likely to join by year-end.
MIP has been reaching those resellers by exhibiting at Best’s Visions reseller conference. The combination has been so effective that MIP, in 2003, will cease holding its own reseller conference and, instead, combine that event with Best’s Visions event, according to Westerberg.
MIP is tying into Best’s Specialty Products group in a new release of its Advantage and Pro lines. While those two products have each been available in one edition that could be reconfigured for use by either of the nonprofit industry’s two main subsets - 501(c)(3) public charities and governmental groups - MIP is launching government-specific editions of each product.
The government series will offer segment-specific features such as compliance with Government Accounting Standards Board rules (charitable organizations’ tools that comply with the Financial Accounting Standards Board), capital and infrastructure reporting capabilities required of governments and a "FAS Gov" fixed-asset suite for governments that is being developed by Specialty Products.
"About 20 percent of our business comes from governments, but our products’ names include "nonprofit," which is an impediment," Westerberg said. "We have decided to re-brand and optimize them for use by government."
The government edition of FAS is also a new product. Westerberg said that Best will soon issue an announcement for both products. However, MIP’s Web site, www.mip.com , features information about the Government Series products.
Any benefits realized from the Best ownership may be occurring at a critical time, as both of MIP’s main competitors in the small-to-midsized nonprofit end user market have also gotten stronger. For example, Denver-based American Fundware was acquired by Intuit, which also gives it access to the vast financial resources of a public entity.
Meanwhile, Charleston, S.C.-based Blackbaud, MIP’s only direct competitor to already combine accounting with fundraising tools, plans to soon make its fundraising tool, Raiser’s Edge, available for sale by its resellers. That may undercut MIP somewhat, since its game plan includes moving JSI’s products to its resellers.
Those resellers seem to like MIP’s latest move. "This was an acquisition that they had to address - to make themselves more competitive with Blackbaud, if for no other reason," said Jon Freund, software products manager for Williams Young LLC, a Madison, Wis., CPA firm that has been reselling MIP products since 1997.
Freund said that fundraising is not done by his firm’s primary client base - entities funded by the federal and state governments - but he said that he will consider adding fundraising nonprofit clients, since MIP is adding that technology.
Art Nathan of Solution Strategists, a Cranford, N.J., reseller of Best mid-market products, which recently added MIP as an offering, said, "I’m new to this area, but I compliment Best - the addition of a fundraising tool adds to our ability to sell MIP."
MIP helping itself in market outreachIn addition to accepting help from its parent Best Software, Micro Information Products has some market outreach efforts of its own underway.
The most prominent is a "Nonprofits Excellence" conference for nonprofit industry organization leaders that the software vendor plans to hold in Washington from Oct. 31 to Nov 1. "This is not intended to be promotional, but rather educational," said marketing vice president Dawn Westerberg, who conceived and is organizing the meeting. "We want a forum for presentations and to get people in the industry to interact with each other."
Westerberg is modeling the conference after meetings of the Information Technology Alliance, a consortium of technology consultants and resellers and software vendors, of which MIP and Best are members. "We want to bring together the best and the brightest. And even though their organizations may compete for the same donation dollars, they will be able to share ideas," Westerberg said.
The event, which she hopes will attract from 250 to 300 attendees, is open to MIP customers and to users of other vendors’ software. It sounds similar in several ways to meetings that have already been held by MIP’s nonprofit software rival, Blackbaud.
Speakers at MIP’s event will likely include its resellers. Most of its resellers are accountants or are affiliated with accounting firms. Westerberg plans to post further information on the meeting on MIP’s Web site, www.mip.com .
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