The Reselling Business Picks Up

After toiling in the accounting software waste lands for much of the last two years, accounting software consultants and VARs seem to be finding that business is on the up turn.

It’s a little tough to tell through financial results of the software vendors these days. Two major players, Microsoft Great Plains and Accpac, are not big enough to be material to the results of their respective parents Microsoft and Computer Associates. Best Software’s parent Sage won’t report the results for the half ending September 30 until December. And the numbers that are available for both Epicor (not exactly a stellar performer) and Exact Software (which owns the former Macola) show that license income dropped as a percentage of sales.

Still, the feeling among resellers seem to be that things are better, not better in the sense of the anyone-who-can-breathe-can-sell days of 1999. But things are certainly better than the I’m-living-off-my-installed-base days of the second half of 2000 and most of 2001.

I suspect there is a Darwinian scenario at work here. The weak and the sick have fallen by the wayside and the strong and the capable have taken up the space they used to occupy in the channel. Resellers who dabble or don’t have a marketing and customer service focus have disappeared in significant numbers. I also think that larger resellers, or at least those who serve larger clients, are doing better than those serving small business.

Better, tougher reseller are not the entire story. Businesses in numbers finally reached the point where they had to start buying accounting software again. You will remember that Y2K pulled demand for 2000 and 2001 into 1998 and 1999 as businesses raced to beat the Millennium clock. Then the industry fell into a pit as that demand could not be replaced in 2000 and 2001 by sales of customer relationship management systems, largely expected to compensate for accounting software sales.

But the normal buying cycle seems to be returning. However, since America is no longer in love with technology and business expects a return on investment in software and hardware, there will not likely be a sales boom. Many resellers who are having a good year report modest gains and they are deriving the benefit from the improved operations they adopted in order to survive the last two years.

In short, the accounting software business is getting back to business as usual, that is business as usual for the rest of the economy where success was never that easy.