downside, as usual, is the painstaking integration effort yet to be devised
for a number of remaining products in the Sage/Best family
and to be subsequently exerted, as there is always a large time bracket from
concept to actual materialization. The number of distinct code bases is still
sizable, making the task of providing clear migration paths between these quite
arduous, as it can be witnessed by this analyst who had a time of making sense
thorough the maze of above-mentioned product announcements. The mitigating factor
for impending integration is the fact that Best CRM Solutions' progenitor, the
former Interact Commerce, had long formed product alliances,
some of which had been with its future accounting siblings like the MAS product
lines, so the intra-Best Software integration task did not start from scratch.
this might not be the case for the rest of the product portfolio, and as integration
is never a simple feat anyway despite SalesLogix' proverbial
Open CRM' initiative and a number of mid-market ERP product alliances and subsequent
product integration experiences (deals with Exact Macola, Intuitive
Manufacturing Systems, Made2Manage, and Expandable
Software being some, as a matter of interest). A quite similar situation
exists with the Abra HR/Payroll product that, like SalesLogix
in the CRM market, has a prominence in the SME HR market, and has been used
via many OEM or any other arrangements by a slew of vendors.
despite the seemingly well crafted marketing campaign, the Best Software
brand is still much less-known than those of its individual products, e.g.,
ACT!, SalesLogix, or Peachtree.
The company will, for some time to come, still likely suffer from either the
"Best who?" syndrome and/or will be confused with the former Abra, Carpe
Diem or FAS provider only. Additionally, the wealth
of corporate names and a likely unwieldy slew of products within each of Sage's
divisions and groups, presents sales and marketing confusion for the company,
both internally and externally across the globe. Sage is not exactly uniformly
a global company, as its product offerings differ for different markets, particularly
on both sides of the Atlantic. For instance, while the unified Best brand will
be increasingly applicable for the North American market, Sage offers for the
other international markets a disparate line of products for small business
comparable to the above-mentioned Best's line (e.g., Instant Accounting
for a single user, Line 50 (for up to 5 users), Line
200 (5-25 users) and Line 500 (up to 1,000 users).
Best Software's (formerly also known as Sage Software in the
US) MAS 500 manufacturing modules come from last year's purchase
of ERP vendor Haitek Solutions, Line 500 comes from the Sage
Group's 1999 acquisition of Tetra, a UK-based mid-market ERP
vendor. These deals have consequently resulted in different ERP products offered
by different units of the Sage Group. After the Tetra acquisition, The Sage
Group formed Sage Enterprise Solutions, based in the UK, which
offered an ERP suite initially called Sage Enterprise (renamed recently into
Line 500). Therefore, the one face to customers' motto might only be applicable
within certain markets per se, e.g., North America, the UK, or France, and very
unlikely across the globe.
Epicor and/or ACCPAC, on the other hand, have developed
their respective iScala 2.1, Vantage and Advantage
Series from the ground up as international products. To that end, a
company in the UK can for instance have a subsidiary in the US, South Africa
or Canada running on the same software due to a large number of currencies including
the Euro, currency gains/losses, GL transactions, check writing and support
of a Goods and Services Tax (GST) and Value Added Tax (VAT) available features.
The users can also leverage Clientele or ACCPAC
eCRM and other non-core accounting business applications. Still,
a mitigating factor for Sage/Best Software in this regard would be that most
of its peers, such as Softline, Intuit, NetLedger,
Exact Software and Microsoft Business Solutions (MBS)
do not espouse a single product line that operates on an international basis,
but mostly have multiple product lines through acquisitions, that they have
attempted to paste together around the world but are still largely unable to
work with one another.
Thus, while Sage has a myriad of products in its portfolio that could benefit from integration with ACT!, Abra, MIP, FAS and/or SalesLogix, the company must clearly send the message that most of these already integrate with MAS 90, MAS 200 and MAS 500 (the only major exception being ACT! and MAS 500 within Best's offering), and articulate its plans and the timeline for any still outstanding integration between its products. Otherwise, it may face confusion and/or anxiety amongst both its current and potential customers as well as within its VARs. While the idea to enable the R&D team to gain economies of scale by leveraging the same technology foundation to build common application components as commodities that can be deployed within the entire product portfolio is tempting and promising in the very long run, it will only happen in a few years time in the best case scenario, and most likely only for Best Software's offerings in North America. The mitigating factor is the fact that, before that long-term evolution takes place, data and personalization setups will be transferable all the way up from entry-level products to enterprise-class systems, making migrations smoother.
is Part Five of a five-part note.
One and Two summarized recent events.
Three and Four analyzed the Market Impact.
Software will still have to address other challenges in order to continue to
thrive in this ruthless competitive environment. The competition is flying from
many directions since the company competes in many diverse markets. To that
end, in the traditional back-office market, the threat comes from the likes
of Intuit, NetLedger and Softline (with its
BusinessVision and AccountMate products) in
the small business accounting market, via its peers (e.g., MBS, ACCPAC, Exact
Software, Epicor, and Scala to name only some), to the Tier 1 vendors storming
down the market. In the pure HR/Payroll mid-market, its archrivals have long
been ADP, Employease, Ultimate Software,
Unit 4 Agresso, IBM, Cezanne, and Lawson,
while in the pure-CRM mid-market, that would be the likes of Onyx,
Pivotal, Kana, E.Piphany,
Salesforce.com, UpShot and FrontRange.
Not to mention that SAP, Oracle, PeopleSoft
and J.D. Edwards will likely be faced in all the above markets
as well. Even in the non-profit market, which is currently out of reach of all
the above foes, there is still a stiff competition from Blackbaud
that boasts a broad and integrated product line beyond mere fund accounting
and fundraising functionality.
Consequently, room for functional enhancements remains too, despite some of the products' leading positions. To that end, Best will likely have to eventually build or acquire additional CRM functional enhancements (e.g., database-based marketing management, data mining/analytics, and support for field service) to round out a complete CRM suite. Not to mention the need to bolster MAS 500's external/field service and multilingual capabilities, well beyond only English and Spanish. The vendor has also been working on extending its web integration side as to bolster its collaborative role-based portal solutions strategy and delivery.
company has also only recently extended its reach in the professional service
automation (PSA) area, with the recent project management enhancements to MAS
500 that might make it competitive with the above-mentioned peers, although
Solomon IV maintains the edge due to being continually enhanced
within MBS (i.e., its recently released 5.5 version features integration with
Microsoft Project and many well-attuned features for project-based
professional service businesses). MBS also has the edge in financial consolidation,
budgeting and reporting with its FRx products too, which, interestingly are
often bundled within many Best's products, in an OEM fashion. Given Best has
hinted acquisitions aimed at penetrating several more vertical industries in
the future, it will be interesting to see whether PSA will be one of these.
on July 16, Best Software announced a definitive agreement between its parent
company, The Sage Group plc, and Timberline Software Corporation
(NASDAQ: TMBS), under which Best Software would acquire Timberline, an ISV of
integrated financial and operations software and services for small to mid-sized
businesses in the construction and real estate industries. The merger, which
is subject to approval by Timberline shareholders as well as customary approvals
under antitrust laws and other customary closing conditions, is expected to
be completed by the end of calendar Q3 or early Q4 of 2003.
completion of the merger, Timberline will become a wholly-owned subsidiary of
Best Software. The vendor has more than 20,000 active customers, predominantly
in the US, and a blended distribution channel consisting primarily of independent
solution providers, complemented by a direct sales operation. Following the
merger, Timberline is seen to complement and extend some of Best Software's
existing construction-oriented solutions such as MAS, Peachtree, FAS
Construction-in-Progress Accounting, and Platinum for Windows (PfW).
Consequently, partner education about the still huge and expanding product portfolio cross-selling opportunities and new partner qualification remain daunting tasks too despite Best's notable forays in that regard. Just the number of 6,600 VARs in North America will often inevitably lead to some partners competing for the same regional opportunity and underbidding each other. The situation may additionally get aggravated by the fact that Best Software still has a cumbersome organization despite its recent restructuring. One still has to deal with several primary offices stemming from former HQs of acquired companies, such as Pensacola, FL (CPASoftware, now part of Specialized Business Solutions), Scottsdale, AZ (formerly Interact Commerce, now CRM and Contact Management Solutions), Irvine, CA (Corporate HQ and Mid-Market Accounting Solutions), Austin, TX (Nonprofit Solutions), Norcross, GA (Small Business Accounting Solutions) and Herndon, VA (Specialized Business Solutions, original Best Software).
is likely that these local "centers of power" and mindsets will take some time
to blend into a unified thinking and message that is beneficial to VARs and
customers. Thus, one should be aware of SAP's threat of wooing VARs into its
fledgling but possibly attractive SAP Business One program,
particularly given the fact that SAP's emphasis on the quality and not on a
mere number of partners. Some disgruntled MBS and/or Best VARs that have been
tired of internal cutthroat competition, will have meanwhile seized SAP's first-mover
value proposition, and will be sorely missed by their former partners. The forthcoming
few years will be marked by wars for a limited number of VARs, and only the
best-structured program for resellers will win.
However, the ultimate challenge will sooner or later be the final face-off with Microsoft Business Solutions. Despite Sage/Best Software's wins in many innings, one can never discount Microsoft's potential grand slam' of simply acquiring the major nemesis, if necessary to remove a major recurring headache. Despite impressive growth and cash flow, Sage has been unfortunate to see its market capitalization slide from $25 billion in 2000 to a still palatable $3 billion of late, mainly owing to a lower return on capital figure as a result of high prices paid for many recent acquisitions (e.g., for Interact Software). Thus, one could expect Microsoft to rather settle the score with the vulnerable opponent that it could not beat otherwise, possibly through a (hostile) takeover bid. Yet, that would not be that likely to happen, given it would not have much chance to pass the European Trade Commission's antitrust approval (Sage Group plc is a Newcastle, UK-based vendor), particularly with Microsoft's history with rival Intuit and others, and still ongoing antitrust scrutiny in Europe and in two remaining US states.
Thus, Microsoft might, for the time being, keep a low profile and gladly let Oracle take some much needed heat for possibly unethical practices towards acquired PeopleSoft customers, potential antitrust issues and so on (the vendor is also taking a see no evil, hear no evil' stance in the impending lawsuit between SCO and IBM and possibly all Linux users). On the other hand, even Sage's near $900 million in revenues would only be a little step in Microsoft's journey towards its "$10 billion by 2010 applications revenue" earmark. Thus, no one can dismiss Microsoft's involvement for sure, at least to stall Sage with a takeover controversy in a manner similar to the Oracle/PeopleSoft/J.D. Edwards saga.
This, in turn, could make Sage feel compelled to hit the acquisition trail itself again, given it is already involved in a three-way bid for embattled Softline that has recently been de-listed from the Johannesburg Stock Exchange (JSE). Scala Business Solutions, Exact Software and Unit 4 Agresso could be other potential targets. Yet, while these acquisitions could postpone the face-off with Microsoft for some time, they would certainly add fuel to the fire of blending new products with an already complex product portfolio, as discussed earlier.
Nevertheless, Best Software/Sage is a company that delivers products based on savvy understanding of its customers' needs, of the competitive forces in the market, and on constant adaptability. It is still standing on top of the hill in many SME markets, and it is typically a much more difficult task for anyone to capture the hill than to defend it.
The current market trend is tilting towards vendors that can provide comprehensive solutions for small and mid-sized companies with a quick payback, and Best Software seems to be on a fair way to deliver the promises. Enterprises should nevertheless monitor the consistency between the announced strategy and the Best's actions in continuing to strategically support all of its acquired products strategically. Interested companies should consider the added functionality and cross-selling opportunities from former acquisitions for an addition to their requirements list.
Best's target market, single- and multi-site and multi-national light manufacturing companies and their satellite subsidiaries with up to $250 million-a-year in revenue, should consider the company's value proposition, but avoid selecting it without looking at what other vendors have to offer. These companies generally are rapidly growing and agile but have a limited IT budget/staff, a conformist IT strategy (a staunch Microsoft shop), and solid accounting, HR, manufacturing, distribution, CRM and e-commerce collaboration requirements.
However, enterprises that have integration needs outside of the Microsoft environment, with multiple-platform and strong scalability requirements, or need complex CRM and supplier relationship management (SRM) functions such as content management, personalization and relationship optimization, product lifecycle management (PLM), and direct materials procurement might want to look at more sophisticated offerings. Looking at industry sectors, Best Software covers financial, distribution, manufacturing and service sectors. Preferred manufacturing styles are make-to-order (MTO), make-to-stock (MTS), and configured products/assemble to order (ATO) in discrete and semi-batch process manufacturing processes. Where it does target vertical sectors they include third-party add-ons and resellers' functional additions.
Certainly, for SMEs that have long been using one of Sage's/Best's products for financials, fixed assets and/or HR/Payroll, MAS 500 or BatchMasterPFW should to be seen as a logical, but not necessarily the only, ultimate solution. Existing customers should evaluate these specialty products add-on's and/or upward migration as a way to add value to their existing applications whether with an impending integration effort now or by waiting for the company to supply a generally available integrated solution.
While we believe that the above announced strategy blueprint should be beneficial in the long run, some outstanding integration issues, intra-company organizational alignment and discontinuation of redundant products are always to be expected. Consequently, users evaluating the above individual products should keep themselves informed, and consider generally available (GA) functionality only. The catch 22 will be to obtain the firm delivery schedule of migration strategy for all Best flagship back-office applications.
Potential clients should conduct preliminary research on the industry expertise and reference accounts of regional offices or affiliate service providers of major products. Existing non-Sage/Best Software back-office users of certain popular products like ACT! and SalesLogix should clarify their support status and the long-term product development and migration strategy with Best management. Existing users of Best products that possibly face stabilization and/or discontinuation may benefit from querying the company's future product migration path, service & support, and/or scalability strategy. As for the newly added and/or anticipated functionality, users are advised to ask for firm assurances on availability and future upgrade timeframes, and more detailed scope of enhanced product functionality. They should also inquire about any possible impact (or benefits) of migrating to more advanced offerings.
detailed information about Best Software's MAS 500 and Abra products is contained
in the ERP Evaluation Center at http://www.erpevaluation.com/,