The Battle for Europe

Combat in European is underway. American vendors and resellers are claiming their beachheads and it's likely that the competition will only get more intense in the next year.

Epicor Software acquired Scala Business Solutions this year, as well as picking up the Quantum Group of companies, including Platsoft, which had been one of Epicor's top VARs in England and Europe.

For a while, the tide had been running the other way. Sage, based in the United Kingdom, purchase State of the Art and later Best Software in the United States, while Exact Software picked up Macola, and both Damgaard and Navision were coming in from Europe. The tide turned when Microsoft acquired Navision, which had previously merged with Damgaard.

This year, most of the flow is eastward. Reseller Tectura leaped into Europe this summer through its purchase of Cosmo Consult, which gave it a strong German presence, and Aston Business Solutions, a Danish reseller that also had offices in the United States. Rival ePartners is believed to be talking to Watermark, an MBS reseller based in the Netherlands that has 540 employees in 30 European countries. EPartners may also be talking to Columbus IT, another reseller based in Denmark that has been on the block for a while. Columbus IT, with about $93 million in revenue for 2003 (at current exchange rates) would more than double ePartners' size. Privately held Watermark would appear to be a little smaller.

The interest of both Tectura and ePartners is linked to the future of the Microsoft Business Solutions Navision and Axapta product lines. It's hard to view Microsoft's future as lying in anything but Navision and Axapta. Solomon will remain strong in the project management area. But Great Plains is probably going to be the weak link. GP is the strongest product in the United States, but has little presence abroad and there's no evidence of a GP push in Europe. It's far more likely that Navision and Axapta will continue to gain ground in the U.S.

But MBS is not the whole story. With the American accounting software market saturated, vendors and VARs are looking for growth elsewhere. Epicor is going to continue to develop Platsoft's customer base, along with having gained a significant boost in bulk from absorbing Scala.

Meanwhile, Charleston, S.C.-based Blackbaud, a major player in fundraising and not-for-profit accounting software, also sees opportunities in international markets, which it sees as being underserved. The company's European revenue is still small, but grew from $4.9 million in fiscal 2002 to $9.4 million in 2003, jumping from 4.7 percent of revenue to 8 percent of total income.

We could indulge in a lot of fancy analysis. But the fact that the move across the water is occurring signals a belief that there is opportunity in Europe, for whatever reasons.