How enterprise accounting vendors are positioning their products
Windows NT has become a robust platform for deploying client/server
enterprise accounting solutions. NT's rise has been primarily at the expense of
Novell and Btrieve Technologies. Novell's NetWare OS and Btrieve's file manager
were the most popular network and database platform for low-cost, PC LAN-based
workgroup accounting. Now, the vendors that focused on NetWare and Btrieve are
switching their research and development funding to new NT-based client/server
suites.
The workgroup accounting vendors are not the only ones being seduced by the
promise of NT and its supporting cast, BackOffice. The accounting vendors you
see in graph 1 are also quietly cozying up to Microsoft. Table 1 summarizes
their positioning on NT. I've wondered whether Microsoft would deliver its own
enterprise accounting suite. But Microsoft is already the most influential
partner of most of the world's accounting vendors, and its influence will grow
as more vendors leverage the steady stream of BackOffice-compatible product
introductions in 1996 and 1997.
View from the Top
Nobody is paying more attention to NT as an accounting platform than the
world's leading accounting software supplier, SAP AG. SAP's partner manager in
the US, Jean McGrath, quotes some statistics that emphasize the importance SAP
places on NT accounting.
- Among channel partners and customers, SAP has more than 1000 installations
running on NT Server. This number represents about 17% of SAP's world-wide user
base.
- Today, NT Server (database and application servers) is the choice for 25%
of all new customers of SAP's R/3 client/server accounting product.
- SAP and Microsoft have been working on R/3 for NT Server for more than
three years, and R/3 has supported the SQL Server 6.0 relational database
management system (RDBMS) since mid-1995.
SAP is also working with Microsoft on other NT- and BackOffice-related
initiatives, including the Business API (BAPI) and ActiveX. These tools let you
build Internet-enabled application business objects and integrate Microsoft
Exchange Server with R/3 for email and workflow routing. The R/3 internal
application mail system already supports the Microsoft Messaging API (MAPI) for
routing messages to and from Microsoft Mail.
Dun & Bradstreet Software (DBS) is also a big fan of NT accounting,
according to Eric Austvold, product director for SmartStream. In fact, Austvold
claims that Microsoft BackOffice is the number one focus for Dun &
Bradstreet Software in 1996. An internal DBS group, BackOffice SmartStream
(BOSS), backs Austvold's claim. SmartStream has been available on NT for more
than a year, and DBS has slated support for the Microsoft SQL Server 6.5 RDBMS
for August 1996. Austvold says that 10% to 15% of the SmartStream installed base
is on NT, and DBS expects this percentage to increase as the company launches
new software to leverage other BackOffice components. This launch will include
delivering SmartStream's functional activities as Web-enabled applets that you
load through Microsoft's Internet Information Server (IIS), and managing
SmartStream installs, uninstalls, and upgrades through the Microsoft Systems
Management Server (SMS).
Systems Software Associates (SSA), JD Edwards (JDE), and JBA Holdings are
vendors that traditionally focus on the IBM AS/400 platform. Although they have
announced or shipped client/server accounting products for AS/400- or
UNIX-based servers, these vendors do not appear to view NT accounting as
positively as higher- or lower-end vendors. All three have announced NT versions
for delivery sometime in 1996, but none currently support the Microsoft SQL
Server 6.0 RDBMS. Consequently, it will be some time until these players have
much significance in the NT accounting market. This situation is puzzling
because NT with BackOffice, which is often positioned as a UNIX or NetWare
killer platform, resembles IBM's OS/400 in its scope, design, and strategic
positioning as an application platform.
Having no legacy baggage to bother with, client/server accounting-only
vendors such as Hyperion Software and PeopleSoft seem to be likely candidates to
enthusiastically support NT accounting. In fact, neither has yet joined the
BackOffice forces. By the time you read this, both vendors should have announced
support for the SQL Server RDBMS and other BackOffice components. But currently,
PeopleSoft and Hyperion are keeping low profiles and claim that less than 10% of
their user base is on NT platforms. Ross Systems, Lawson Software, and Walker
Interactive Systems share the same attitude. Ross and Lawson are still ramping
up their client/server UNIX accounting suites, and Walker is trying to engineer
a renaissance for its mainframe-based Tamaris accounting applications.
All Agree on Something
The top 10 representatives I spoke to were unanimous on several points. They
will not deliver reduced-functionality versions of their systems for the NT
platform. They see no rationale for lower pricing of NT versions than for other
versions of their products. They do not anticipate that NT will dramatically
change their primarily direct-sales model. They expect NT and BackOffice to play
an increasingly important role in their future strategies for their
client/server accounting suites.
The question is whether such consensus will hold up as the top 10 come
under increasing pressure from middle-market converts to NT accounting, such as
Great Plains Software, Platinum Software, and Solomon Software. These vendors
sell client/server accounting packages that run on NT and SQL Server at
significantly lower prices than those of products mentioned so far in this
article. NT and SQL Server are just two more components that level the playing
field for accounting applications.
Level Playing Field
Most client/server accounting vendors now offer the same GUI (Windows), the
same server OS (NT Server), and the same RDBMS (SQL Server). The differences are
in the breadth and depth of functionality that various vendor suites offer; the
integration of added-value enabling technologies such as workflow and email; the
software acquisition, implementation, and ongoing maintenance costs; and the
sales and support networks that the vendors offer worldwide. Given this
scenario, businesses that have less than $250 million in annual revenues, that
need basic financial and distribution software modules, and that do not have
large transaction volumes or user connections will be hard pressed to justify
paying the top-dollar prices that the top 10 accounting suites command.
The top 10 argue that their software's value is no less on NT, so they have
no reason to charge less. They also argue that the relatively low cost of NT as
a computing infrastructure means that the customer will benefit from being able
to deploy high-value software on low-cost platforms. This argument assumes, of
course, that the customer really needs the functionality that the top 10
providers deliver. If not, the argument collapses, and customers are better
served buying from the middle-market vendors that deliver less expensive
accounting solutions that use the same GUI, server OS, and databases as the top
10.
Something's Gonna Change
Expect the top 10 to maintain their premium pricing for a while and the
middle market players to gradually increase theirs. Then, the first of the top
10 to break ranks will set off a price reduction across the board. You will
certainly see stratified product lines from the top 10 and the emergence of
indirect channels that sell NT systems primarily through value added resellers
(VARs), rather than directly.
However, the VAR channel has invested more than 10 years building skills
for implementing NetWare and Btrieve accounting. According to David Shirk, vice
president of sales at Macola Software, this channel is not going to switch to NT
overnight. For the VARs, NT is both an opportunity and a threat. Shirk says the
time necessary to convert the VAR channel is the biggest obstacle Microsoft
faces in keeping the NT accounting juggernaut on target. Naturally, Macola, like
its competition in the middle market, is hedging its bets. Like Platinum
Software, Macola has dropped active development of its UNIX versions and
redirected resources to NT accounting. Macola already claims that 11% to 12% of
its user base is on NT now, and the company expects this base to grow to as much
as 20% by the end of 1996.
SBT, another middle market player, is also rapidly reorganizing around the
NT and BackOffice platform, embracing IIS especially. Today, with products such
as WebTrader and WebAlert, SBT is probably the vendor most advanced in
exploiting IIS capabilities. WebTrader links Internet browser order forms with
the vendor's order entry accounting module to automate capturing and accounting
for sales orders across the Internet. WebAlert provides an accounting-oriented
database notification engine that can deliver alerts by email across the
Internet. Dun & Bradstreet Software, Lawson Software, SAP, and SBT's recent
flurry of announcements relating to Internet-enabled accounting suggest that IIS
will become another vital component of the BackOffice suite, and vendors will be
eager to leverage it.
NT accounting is here to stay, and it's set to shake up the client/server
accounting market from top to bottom. Whatever happens, NT accounting appears to
be a good deal for users, a tough act for vendors to manage, and another coup
for Microsoft, which has just taken another strategic role in another
multibillion-dollar software market, right under everyone's nose.
End of Article
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