Accounting software resellers cannot stay as accounting software only VARs and survive. The market is changing and technologies are converging while the market favors the emergence of larger organizations.

That may sound like a radical formula. It may fly in the face of the fact that national reselling organizations have largely failed in the effort to dominate the software reseller market. It may sound like just another “the small VAR is dead” prediction. And maybe it is. However, there are trends that appear likely to drive the market in new directions.

One of these is the saturation of the accounting software market. Most companies have some kind of accounting software. They do not have CRM packages. VARs with a desire to serve more than an installed base or replacement market will increasingly turn to CRM and other business applications, such as document management systems, for the growth and consulting services that only new installations can yield.

Moreover, SAP’s recent launch of Business One, which combines accounting, CRM, and analytic features in one package may signal another fundamental shift. SAP may not be the company that rides to success on this concept (if SAP succeeds at all). It’s hard to believe that Microsoft and Best are not exploring this idea for their own future lines.

Couple this with the increasing complexity of all technology and vendor requirements and the pressure on the smaller VAR occurs. Actually, it’s already taken a toll. Over the last two years, there has been significant consolidation.

Will smaller organizations survive? Yes, but most will not survive as full-service general ledger VARs. They will partner with larger organizations, specializing in a part of the process. It’s sort of like the small remoras that make a living on the much larger sharks. They will take an increasingly vertical focus, in line with the vertical efforts being pushed hard by the major software vendors. Or most will not be in business. Whether the national resellers survive is a separate issue, but it may also be linked to their ability to move into a broader range of business applications.

Right now, the future appears to belong to those regional organizations that can support a broad range of accounting software and apply business consulting services. The regional CPA firms and strong regional VARs fit this description. They will have the broad product lines needed to serve the customers for the emerging CRM market, and continue to mine the accounting installed base, while lacking the overhead issues that hamper the national firms.

But whatever they are, they won’t be just accounting software VARs anymore.

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

Don't have an account? Register for Free Unlimited Access