Net at Work named “Technology Pacesetter” by Accounting Today magazine for the sixth consecutive year
New York, NY (Dec 16, 2004) – Accounting Today — The good thing about 2004 for many resellers is that it wasn’t 2003. This was the year in which much of the reselling market recovered from the dire days of 2001, 2002, and the first half of last year.
This is the market in which the Pacesetters operated and overcame harriers and obstacles – and in which thousands of other resellers operated with the same difficulties and the same opportunities, and fared less well. It was a market in which sales improved, although they weren’t as easy to come by as in the I990s. It is a market in which the gap between the largest and the smallest resellers widened significantly when Tectura leapt from $30 million in revenue for 2003 to a more than $160 million dollar run rate for this year, gobbling up companies such as Aston Business Solutions and the Morrison Group that have previously made the Pacesetter list.
All resellers can’t be the multi-million dollar players. But many see the need to bulk up. Art Nathan, whose company Solutions Strategists, closed a long courtship with Eagle Consulting, pursued that deal because he believes that VARs need to reach the $3 million revenue figure in order to survive. A significant number of the companies selected for this years Pacesetter list acquired or merged with other resellers, and a noticeable number say they are on the lookout for acquisition and merger candidates. Many Software resellers have merged or entered joint buying arrangements under the company’s urging.
It is a market in which vendor consolidation is largely complete. Best took over Accpac this year and had purchased Softlinc at the end of 2003. Resellers that had competed for years suddenly found themselves members of a vastly expanded Best family. Epicor, having returned to profitability, built sales and profits through its acquisition of Scala Business Solutions. Such acquisitions also put a wider gap between the top revenue-producing Vendors and the rest.
It is also a market in which two opposing forces continued to be at work: the desire of vendors to have loyalty from their reselling base and the belief from some VARs that they need to carry diverse products lines in order to lessen dependence on one supplier. Best, in particular, took action to produce loyalty by providing incentives to resellers who enrolled in its Best Select program and dropped other lines. In fact, many Best Resellers who returned surveys listed their status as Best Select participants.
Meanwhile, Microsoft Business Solutions spent its time urging resellers to sell the stack – the full package of Microsoft networking, database, business applications, and other packages.
The Vendor that seemed to gain the most from VARs afraid of putting all their eggs in one basket was SAP, which managed to sign quality resellers of all stripes for its Business One software. Some of its converts carry Great Plains, others, Solomon, MAS 90, Epicor NaVision in fact, all the major lines. On the product side, a great deal of relationship management applications for the simple reason that most companies whose accounting packages, that have yet to purchase CRM applications.
And there was even evidence that Internet-based accounting systems are gaining greater acceptance. The main contender, NetSuite, still is not a large company at an estimated $50 million run rate for the year. But its ability to snag Clifton Gunderson Technology Solutions as a reseller in the fall indicates that it has gained credibility in the channel.
There is also a trend towards specialization, fueled by the need of vendors and resellers to differentiate themselves. CPAs are strongly represented here. Forty-one Pacesetters were either owned by CPA firms (including Canadian designations) or had at least one CPA among their officers or owners. Other owners have let their CPA certificates lapse. Several resellers grew out of CPA firms, and most organizations have CPAs on staff to help deliver software services.
How have the Pacesetters succeeded in this market? They have taken advantage of the trends, recognizing the importance of CRM, and the need to service their existing customers in the face of low growth in new installations of accounting software. They provided service to orphaned customers and moved into new markets, either geographically or by expanding into profitable niches.