by Seth Fineberg


Minneapolis — In the ever-changing accounting software world, one would be hard-pressed to find a company that has grown organically, survived several down economies, transitioned from a private business to a large public corporation and back to the private sector again, while maintaining reseller and customer relationships that span four decades.

Open Systems is just such a company.

Founded in 1976 with seed money from famed venture capitalist Ann Winblad — of Hummer Winblad Venture Partners — the company continues today where it began, with open architecture accounting software for small and midsized businesses known simply as Open Systems Accounting Software. The product and company have evolved, even after changing hands over the years from tech giant Unisys to entrepreneur and former reseller Michael Bertini, who purchased the company in 1990 and remains chief executive.

Today, Open Systems has two core products — OSAS and Traverse Accounting Software — each with nearly 30 key accounting, enterprise resource planning and customer relationship modules. OSAS was also one of the first accounting systems to run on three major platforms — Linux, Unix and Windows. In fact, 60 percent of OSAS users are Linux-based.

Despite the technical flexibility of Open System’s products, and its hundreds of thousands of worldwide users, those who work for the company and those who follow it closely in the market believe that the key to this “below-the-radar” company’s longevity has been its commitment to both its product and its channel.

Val Steed, research analyst with K2 Enterprises, believes that since Bertini came on board, he has carried on that commitment and has been integral to the company’s sustained growth.

“When he first came in, he was a bit new to the accounting software market, but he looks after his channel, he gets out with the resellers and identifies with their issues and they have become loyal,” Steed said. “He’s not the biggest fish in the pond, but they would have a hard time taking his resellers away. They are doing well and the software is doing well.”

Steed also noted that from a product standpoint, despite not being the most popular accounting solution on the block, Open Systems has an edge over its primary competitors due to its open platform and a proprietary rapid-development tool, which allows them “to add features faster than anyone and be very responsive.”

One of the main reasons that the company has remained relatively unknown, admittedly, has been due to limited marketing. This is getting ready to change, as evidenced by recent hires designed to increase the company’s overall profile.

In December, the company brought in accounting software veteran and former NetSuite business development and regional sales manager Rita Strauss to head up Open Systems’ own business development strategy. Additional help came when two more accounting software professionals — Troy Kemmerer and Kathy O’Connor — joined Strauss’ team.

“Plain and simple, we’ve got to get the name out there more, and this spring we will be doing a lot of marketing, from ads to direct marketing, and getting to some more trade shows,” said vice president of sales Paul Lundquist.

But all marketing and business development plans aside, it is Bertini’s view that the company’s current customer and channel relations are what will be key to its future.

“Everyone talks about how they have great products and their employees are motivated, but no one says enough about client and reseller relationships,” Bertini said. “Our mission statement says it all, that tells you simply we want to make money and want our partners to make money as well. It’s attractive for resellers to work with us because we tend to play a different game.”

New Open Systems resellers receive a 45 percent sales margin in their first year. After that, it varies from 30 percent to 50 percent, depending on sales. This may increase in the future.

Resellers also get the opportunity to sell and receive a customer enhancement subscription, which is essentially an inclusive customer service agreement complete with phone and technical support. If a reseller sells this service to clients, they can receive “a significant margin,” depending on what level they’re at.

Not only have a good portion of Open Systems’ resellers been working with the company for over 20 years, but the software has been the only accounting systems they sell — and they remain loyal and profitable.

Martha Millican, business development manager at Atlanta-based Applied Technical Services, has sold OSAS since 1983 and Traverse since it was introduced in 1994. Like most Open Systems resellers, Millican enjoys the product’s flexibility and functionality, and the fact that new releases and additions come regularly.

But that’s not why she has remained with the products and the company for so long.

“Working with Open Systems is very straightforward. You want the VP, you call him. The open communication is extremely important, because you get questions answered and when you want to make a deal you make a deal,” Millican said. “They have always been very hands-on and they often get on the road and go city to city with key personnel. They’re not just sitting up there in Minneapolis.”

Millican, a former CPA-turned-technologist, also stressed that her 10-person division of a much larger engineering company does its own marketing, but when she needs assistance, Open Systems has helped design campaigns, mailings and other promotions.

“And when we have any technical issues — and they do come up — their support is organized in a way to deal with the issue,” she said. “We know who the query goes to and we also know if they don’t have an answer they will get someone who can handle it in short order. I don’t think I’d get that at a larger organization.”


Open Systems Inc.
Minneapolis
www.osas.com
(800) 328-2276
Year founded: 1976
Employees: 150-200
Senior executives: Michael Bertini — CEO; Paul Lundquist — vice president, sales; Carla Alarcon — director of marketing; Rita Strauss — director of business development.

Main products:

  • Open Systems Accounting Software. Original release — 1976. Estimated 400,000 current users. Version 6.5 released. Pricing starts at $1,300 per module.
  • Traverse Accounting Software. Original release — 1994. Estimated 40,000 users. Version 10.1 released December 2003. Price — $1,725 per module (up to 12 users); under $1,500 for one to five users; $3,000 for enterprise edition.

As for revenue, although he declined to reveal actual numbers, Bertini claimed that the company has not been unprofitable since he came on board. He said that, this year, Open Systems is on track for 45 percent year-over-year growth, compared to 10 percent growth last year.Bertini and Lundquist also said that they are dealing well with the competition  these days, winning deals against Microsoft Business Solutions, Best/Sage Group, and even SAP and JD Edwards. “We’ve noticed an interesting shift in SMBs who want a customizable application and a partner they can really talk to. These are the ones switching from the likes of SAP and JD Edwards,” Lundquist said. “A lot of our business is also coming from existing customers who are part of or a subsidiary of a larger company, or some who have only been using part of our solution and want more.”

Open Systems’ typical customers are businesses with between $5 million and $100 million in annual revenue, mostly in service-based industries, distribution, manufacturing, construction and retail. Of course, this may put it in direct line with the likes of Best and Microsoft, but Bertini isn’t so concerned.

“If you want to have three or four different companies to deal with, go with Best or Microsoft and pick a product, there’s a lot to choose from. But by process of elimination, we seem to be considered a lot more than ever,” Bertini said. “Bottom line is, we enjoy what we do. We spend a tremendous amount of time in front of clients, as well. And that is what works for us.”

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