Best Software Delivers More Insights To Its Partners (As Well As To The Market) Part Four: Market Impact Continued

Specialty Products Make Their Contribution

Despite most vendors' incessant attempts (and hype), enterprise applications functionality has not yet reached maturity in terms of the value it can provide to organizations. Often simply because it is human nature to disregard and put into oblivion all but a few mundane, repetitive practices, many enterprise systems gradually lose' their natively provided functionality, as users revert to previous manual workaround and sub optimal practices. For more information on this phenomenon, often referred to as application erosion', see Application Erosion: Eating Away at Your Hard Earned Value and Application Erosion: More Causes and Cures.

That has particularly been proven time and again with the fixed asset modules that many ERP vendors attempt to deliver as an intrinsic part-and-parcel' of their suites. However, the customers often quickly realize that these modules have merely a basic functionality, thus they leave the module to languish unused throughout multiple product upgrades. However, when an acute need for fixed asset accounting and reporting across multiple sites nationwide strikes, these enterprises then have to helter-skelter resort to a best-of-breed add-on like Best's FAS product, that features all intricacies of different depreciation laws in all 50 US states. In other words, new add-on applications and software enhancements should continue to surface for the foreseeable future, and to provide compelling enough payback to justify purchases, even in this tough selling environment. The same would also hold for Best's stalwart core HR/payroll product, Abra Suite for smaller organizations, that has a large user base of approximately 15,000 customers in different vertical markets. The system supports more than 4,000 tax jurisdictions and all standard government reports that can be filed electronically, while industry-specific reports are also available.

Sage Group's decision to finally group its plethora of SME applications in North America under the Best Software brand in 2002 emanated from the company's ability to deliver highly integrated components, and to weave a unified story around this concoction of products, many of them with best-of-breed traits. Individually, both the former Interact Commerce and the old-new Best Software had long respectively been delivering attractive front-office/back-office solutions for small and mid-sized organizations. Offering all of these products now under the Best Software master brand provides customers with the integrated business management solutions they need to compete in today's ever-changing and evermore competitive environment. The recent reorganization should further enhance the company's ability to leverage its internal resources and also to make the process of doing business with Best easier for its partners.

This is Part Four of a five-part note.

Parts One and Two summarize the event.

Part Three began the Market Impact.

Part Five will cover Challenges and make User Recommendations.

From SOHO to an Enterprise-level Range of Products

Another trump for Best Software is the fact that it could spar with Microsoft Business Systems (MBS) on many levels and even in the areas one would expect Microsoft to be superior. For one, as mentioned many times earlier and likewise its revered foe, Best offers multiple flavors of SME systems to accommodate varying needs across the range of company sizes and industries, albeit with much clearer delineation and less internal competition between the products.

These start with low-cost desktop' solutions like Peachtree and ACT!, both sold primarily through retailers as well, like MS Office. While nobody will dispute Microsoft's brand equity, Best could find its consumer product equivalent in ACT! that has long been beloved by the salespeople who use it. Furthermore, Best, ACCPAC and Intuit, owing to their respective Peachtree, Simply Accounting and QuickBooks entry-level accounting products, benefit from huge migration feeder bases, and are thus able to cut the air supply' for MBS. However, of these three, Best has achieved the largest success at the upper level of the market, where Intuit, although with over 80% market share in retail SOHO accounting products has only been making nascent strides in the enterprise space and in the equivalent channel ramp-up.

Best's MAS 90 is targeted at mid-sized companies with 10 to 500 employees, and features more than 25 accounting, light manufacturing, distribution, and e-commerce modules. MAS 200, the client/server version of MAS 90, handles higher transaction volumes, and supports multiple databases, including Microsoft SQL Server. Smaller companies with up to 50 employees are covered by BusinessWorks Gold, which, with 11 integrated modules and strong reporting tools, was devised to bridge the gap between entry-level products and MAS 90.

As the top of the range, MAS 500 (formerly marketed as Best Enterprise Suite and before that Acuity Financials) from Best's Mid-Market Division, is an integrated, SME-focused from ground up, international ERP package with multi-currency capabilities, targeted at companies above $25 million to $250 million in annual revenue and with over 200 to 2,500 employees. It is web-enabled, with browser access to the entire functionality, via Terminal Services, business alerts, and workflow management. The package combines accounting, budgeting, distribution, manufacturing, project accounting, human resources, payroll, enterprise reporting and electronic commerce functions, and integrates with SalesLogix CRM. It features strong financials and project accounting functionality, and solid manufacturing (including a product configurator, engineering change management (ECM), materials requirement planning (MRP), and advanced planning & scheduling (APS)). Particularly strong is distribution functionality, with robust inventory replenishment and supply chain visibility capabilities, which has prompted MBS' recent acquisition of Trinity Myridas and its partnership with Preactor to close this functional inferiority.

Best has recently bolstered the manufacturing capabilities of the solution as well. Among the recent enhancements is a visual, rule-based drag and drop' scheduling board that electronically simulates the magnetic white board (Gannt Chart) found in many production scheduling offices. Another is an alert system that tracks key activities and measurements, and notifies the responsible individuals via e-mail or pager when something needs their attention.

The above-announced and previewed new capabilities (e.g., Business Insights Analyzer) will be provided as a part of the standard system and will not require customers to acquire an additional module in order to receive the benefits of this new powerful query tool. The upcoming product release promises migration tools that facilitate moving data from the legacy system in place, and in particular tools to move data from MAS 90 and MAS 200. Moreover, the product blends its financial and accounting modules with Abra HR/Payroll, FAS Fixed Asset Management and analytics offerings from Best's Specialized Business Solutions unit.. Also, project accounting, a number of pre-built integration hooks to popular third-party applications, extensive drill down' and drill around' navigational capabilities, and authentic customization tools (particularly the intuitive screen customization tool, used by ordinary' less IT-oriented users, and with the ability to track/preserve changes for seamless future product upgrades), represent another set of attractive features. Supported platforms are Windows NT/2000/XP and Microsoft SQL Server databases.

The product is fairly new though, with slightly over 1,000 installations, but it has been developed from the ground up for Microsoft SQL Server, and is also developed in Visual Basic, making the transition to Microsoft .NET straightforward.

Like many of its counterparts, Best Software is also envisioning Microsoft .NET technology as a means of achieving "connected business events across companies", whereby a number of embedded Web services are already available to that end. Therefore, given their access to the same technologies, it is no wonder that many other peers have delivered their products leveraging .NET and other Microsoft technologies much sooner than MBS, which, ironically still has to grapple with their disparate proprietary technologies and large user bases that are still using these (e.g., Great Plains' original Dexterity environment and support for Pervasive database, Navision's proprietary integrated development environment C/SIDE, which includes a proprietary Navision Server database and a proprietary 4GL programming language; Navision strong analytical features using Sum Indexed Flow Technology (SIFT); and the proprietary MorphX graphical development suite for Axapta). Best Software further even publishes database schemas and provides complete documentation and source code to third-party software developers/Independent Software Vendors (ISVs).

In February 2002, Best Software also added process manufacturing to its offerings with the acquisition of BatchMasterPFW, a solution for the production of formulated products, including paint and coatings, food, consumer packaged goods (CPG), chemicals and pharmaceuticals, among others, while recently in October, Best Software announced the availability of Platinum for Windows by Best Version 5.1 (PFW), which was acquired last year from Epicor Software, and which includes new feature and functionality enhancements designed to meet the specific business management and accounting solution needs of small to mid-sized enterprises with 20 to 500 employees, particularly those that need to integrate data from work sites in multiple countries. Due to its ability to recognize and integrate currencies and local accounting rules and practices, PFW is particularly well suited for companies that operate with warehouses and work sites in multiple countries, as Version 5.1 now also offers a new "Country" table, which enables users to more easily maintain country-specific information.

Vertical Industry Focus

Best Software has also long opened its software to third-party developers to spur broader industry-oriented capabilities, and it has also been integrating its desktop software and Web services (e.g., by offering e-mail invoicing and electronic bill payment). There are indications that 70% of small businesses and even 95% of mid-market businesses have already acquired accounting software, and, as they grow, they tend to add functionality specific to their industry, which creates an estimated additional market of ~$4 billion (on top of the previously estimated $14 billion).

Best Software's aiming at four key vertical industries -- distribution, manufacturing, non-profit and accounting -- with each segment soon to have its own entry-level version of Peachtree, is logical. The Peachtree Manufacturing and Peachtree Distribution kits, which were released in early 2003, will complement MAS 90 and MAS 200, and MAS 500 products (and BatchMasterPfW in process industries), which have more advanced levels of manufacturing automation and distribution capabilities, and will be a transitional upgrade option for customers using Peachtree Complete Accounting.

With over 150,000 "life-to-date" manufacturing and over 145,000 "life-to-date" distribution customers, approximately 33% of which are estimated targets for migration respectively, Best does have a notable SME manufacturing and distribution customer base, particularly at the lower end of the spectrum. Accountants and non-profits are to follow the similar Peachtree route i.e., these pending offerings will complement respective higher-end CPASoftware Visual Accounting, CPASoftware Visual Practice Management, MIP Nonprofit Series Pro, and MIP Advantage Nonprofit Series products. Thus, rounding out Best Software's offering should allow the vendor to solidify its position in its target market. Given MBS' ability to emphasize the technological foundation of its products, Best Software had no choice but to emphasize selling solutions rather than the technology mantra, in addition to the other tenets of its success. Whereas other vendors such as Epicor and Microsoft have been trying to move up-market, Best Software seems (not-surprisingly) content to maintain its focus on the lower-end of the mid-market.

Additionally, the company sells almost entirely through VARs, resembling MBS' business model (or vice versa). The company has particularly found an army of certified public accountants (CPAs) to be very effective in marketing its bottom-of-the-range of accounting products. The 2002 acquisition of CPASoftware and introduction of the Best Software Accountants Network (BSAN) have further nurtured its relationship with the over 40,000 accounting and bookkeeping firms that use or recommend its products.

At the enterprise level, niche markets and vertical applications are developed by more than 100 of licensed MAS Master Developers. Best's VARs have a reputation for relatively low cost implementations often with equal service and software license costs (due to the implementation methodology and business templates) and with a go-live within 60 days period, although in part this reflects the smaller scope of implementations too. Best has been praised for a good partner program, replete with seminars, training and boot camps, which focus on business management, sales & demonstration skills, lead generation, marketing, customer relationship management, and implementation aspects.

The recent enhancements to the "Partner Advantage" program should further provide partners with common processes and programs, consistent marketing tools and support, and with consistency when working across Best's wide range of products. Particularly enticing should be the partner referral program that encourages resellers to partner (rather than to compete) with others who sell Best's products that they do not. The additional 2% margin granted by Best to every partner on all new customer sales should be tempting too. One must wait and see how generously rewarded' by Best will be the VARs that switch to exclusively selling Best's portfolio.

The culture of fostering cross-selling Best solutions between its VARs has likely been a much better setup partly owing to clearer demarcation lines between products than it would be in the case of MBS' VARs, which are dealing with overlapping and competitive product lines of disparate origins, and are consequently looking suspiciously at each other. One has also to remember the parent Sage's widespread global coverage as to discern the company's true position within the global SME market. Thus, Best has lately been instilling FUD (fear, uncertainty and doubt) within MBS' VARs and installed base given MBS' intentions to bolster its VAR number to 10,000 (from current 4,500) which could likely be achieved only at the expense of VARs' increased conflict/competition, reduced profit margins, and/or incompetence due to possible inadequate fast-tracked certification.

Also, for the rookie' Microsoft CRM product, MBS has very little users' feedback so far, whereas its VARs that will implement it, although being numerous, do not have many CRM experts and much CRM implementation experience, which is quite the opposite in SalesLogix' case of over 500 seasoned resellers. As a matter of fact, Best is hoping to vicariously benefit from increased CRM awareness that its foe Microsoft has recently been generating for its up and coming Microsoft CRM product.

This concludes Part Four of a five-part note.

Parts One and Two summarized the event.

Part Three began the Market Impact.

Part Five will cover Challenges and make User Recommendations.

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