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Accounting Software: Microsoft Moves In

Midrange vendors have seen a lot of consolidation, but the latest deal is undoubtedly the biggest.

The announcement may be four months old, but the industry is still buzzing about Microsoft’s acquisition of Great Plains Software. While only time will tell what effect the deal will have on midrange accounting software, companies that suddenly find themselves competing with the world’s largest software maker are vowing to respond with more aggressive marketing, better technology, and savvy partnerships. All of that should be good for customers, although a certain amount of fear, uncertainty, and doubt may complicate the market for a time.

In some sense, it’s ironic that the Microsoft-Great Plains deal should cast such a pall over this technology sector, because it is an area in which acquisitions and consolidations have run rampant for the better part of two years. In 1999, Sage US bought both Peachtree Software and Best Software, and ASA International acquired Design Data Systems. Great Plains kicked off a buying spree in January 2000 by acquiring RealWorld Corp., then picked up not only archrival Solomon Software, but also businesses in England and Germany. AccPac International purchased SBT Accounting Systems, and as the year drew to a close, AccountMate Software was purchased by Softline, an accounting and payroll software supplier based in South Africa. Navision and Damgaard, both from Denmark, merged late in the year and stepped up their efforts in the U.S. market.

If the pace of mergers and acquisitions has been constant, so too is the commitment on the part of these companies to sell almost exclusively through value-added resellers, or VARs. While software makers that cater to enterprise clients usually sell direct, midrange players prefer to rely on their partnerships with VARs, because the sheer volume of potential customers in this space makes it impossible to sell direct. VARs usually concentrate on geographic regions or vertical industries, and provide installation and other support that midrange companies, which have smaller IT staffs, rely on. That makes it incumbent on buyers to evaluate not only the products, but also the quality of service from a given VAR. The health of the relationship is also worth looking into, since most of these vendors admit that, with the competitive landscape in constant flux, they may reevaluate existing VAR partnerships at any time. We recap some notable developments below.

Mating Game: AccountMate Software Corp.

President Ben Tse reports a difficult, but profitable, 2000, and believes that being acquired by Softline was a great development. The AccountMate line will become Softline’s flagship product, he says, and since Softline’s other products have little presence in the United States or in AccountMate’s other markets, cannibalization should be nonexistent.

AccountMate plans a major software release, dubbed Visual AccountMate, during the second quarter of 2001. The software will allow VARs and other resellers to easily customize the product, since the source code (in Visual FoxPro) is available. The product line will include a customization tool to allow custom code to move from one version to another. “We don’t look at ourselves as an accounting software company anymore,” says Tse. “We’re a technology company that supplies accounting software.” That distinction may be lost on customers, but as AccountMate and some of its competitors add wireless, Internet, and other capabilities to their core software, it is becoming increasingly clear that midrange clients will soon enjoy the same sophisticated product enhancements that large companies do.

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