VideoFor the midrange accounting systems industry, 1997 was a year when larger software com-panies made their presence acutely felt. One such giant was Microsoft Corp. (a rather benign giant, for a change). As in 1996, midrange vendors were preoccupied with developing their accounting software for a Microsoft platform--namely, Windows NT, using Microsoft SQL Server as the database. With this year's introduction of Microsoft Small Business Server, that platform became available even to very small businesses. As vendors converged on the same platform, they sought to differentiate themselves in various ways, such as adding new features or Internet functionality, or tailoring their software for vertical market niches.
One such company was the Redmond, Washington-based colossus, Microsoft Corp. As in 1996, midrange vendors were preoccupied with developing their accounting software for a Microsoft platform--namely, Windows NT, using Microsoft SQL Server as the database. With this year's introduction of Microsoft Small Business Server, that platform became available even to very small businesses. As vendors converged on the same platform, they sought to differentiate themselves in various ways, such as adding new features or Internet functionality, or tailoring their software for vertical market niches.
Shadowing all this activity was vendors' consciousness of a new and disturbing class of competitor--giants like SAP, Oracle, and PeopleSoft, which, seeing the market at the high end become saturated, began to train their sights on the middle market and below (see "Software for the Millennium," CFO, February). Experts have long predicted that the big accounting vendors will eventually crowd out the smaller ones. But if the smaller fish are nervous to find their waters invaded by larger predators, they have the advantages of agility and speed, and they know their territory better.
The biggest challenge for smaller vendors, as always, will be to keep up with changing technology as they continue to grow their customer base. It's true that the evolution of technology can quickly turn big fish into endangered species. Unfortunately, it's also true that such evolution can wipe out smaller fish, with their limited R&D resources, virtually overnight.
SQL ABCs
SQL-based products are the latest development in the history of microcomputer accounting software. The original products, developed in the early 1980s, were single-user systems that allowed one person at a time to enter data and print reports. By 1990, it was standard for midrange accounting software to be running on local area networks (LANs), which permit several users simultaneously to enter data and print reports. Data was stored on a LAN server, with each vendor storing data in its own proprietary format.
The rise of SQL databases in the 1990s is important because it provides a way to standardize accounting software data formats. This benefits users because it makes it possible for financial software products from different vendors to interoperate. Having more-standard data formats makes it possible for one vendor's financial software to work with another vendor's manufacturing software, or with another vendor's financial reporting software.
Accounting software products that use Unix-based SQL databases, such as those from Oracle, Sybase, and Informix, have formerly been the province of high-end accounting software vendors, such as SAP, Oracle, and PeopleSoft. SQL databases have always been extremely expensive to implement, often costing $100,000 or more for the database software alone. For that reason, midrange multiuser accounting systems used much lower cost solutions, such as Btrieve databases running on Novell LANs. (These are still the most widely implemented systems today.)
But in the early 1990s, led by founder Gerald Blackie, Platinum Software foresaw that SQL databases would become far cheaper and less complex. In 1992, ahead of its midrange competitors, Platinum came out with an SQL-based product based on Sybase's SQL database system. Blackie's prediction was on the mark: In 1993, Microsoft came out with SQL Server running on Windows NT. (Originally, SQL Server was based on Sybase's SQL product.)
This platform is not as powerful as the high-end SQL systems running on Unix systems, but its cost--as little as $10,000--has made Windows NT running SQL Server a common platform for all the midrange vendors.
Platinum hits
Blackie's, and Platinum's, problems began in 1994 when it was disclosed that the company had improperly recognized millions of dollars in revenue. Blackie and his management team resigned, and several years of losses ensued, through fiscal 1997.
But under the guidance of L. George Klaus, who took over as CEO in February 1996, and Klaus's management team, Platinum is returning to profitability. "We've accomplished virtually everything we set out to do when we took over," says Bill Pieser, senior vice president, marketing and business development. Thanks to its 1994 head start, the company is now the number one supplier of financial applications on Microsoft's SQL Server, with Great Plains a close second and SAP third, according to figures from market researcher International Data Corp., in Framingham, Massachusetts. (As of September 1997, Platinum has 900 installations, Great Plains has 775, and SAP has 575.)
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