VideoSmall Business Server arrives
In January, Microsoft released a new back-office system that bodes dramatic change in the low-end-to-midrange accounting software market. The advent of Small Business Server represents a further evolution in midrange accounting software platforms, and may cause substantial changes in the current stratification of the accounting software industry for small businesses.
Currently, the smallest businesses--those with annual revenues under $5 million or so--use low-end, single-user accounting systems, such as Intuit Corp.'s QuickBooks for Windows or Peachtree Software's Accounting for Windows. These packages are shrink-wrapped and available in retail stores. They're very easy to install on a single computer, and they perform basic accounting functions for small businesses. The disadvantage is that if a small business outgrows the software, there's no easy place to upgrade to.
In between the single-user systems and the SQL Server-based systems are the midrange LAN systems. These are the current versions of the LAN systems that were being sold prior to the development of the SQL Server systems, such as Platinum for Windows or State of the Art's MAS90, now targeted to companies with revenues from $5 million to $25 million. These are mature, powerful systems for midsized companies, and they're still the most widely installed for these companies. However, SQL has already become a requirement for companies in this range.
Microsoft's Small Business Server is a collection of Microsoft products that provide a LAN with SQL Server, along with software to set up an Internet server and to allow users to share faxes and modems. Up to 25 concurrent users can use the software. Cost: under $3,000. This makes SQL Server available to much smaller businesses. Great Plains, Solomon, and other major vendors are targeting versions and special packaging of their systems for Small Business Server; these systems are now competing head-to-head with older low-end accounting systems.
Peachtree buys Mica
A good example of how quickly things are changing comes from Peachtree Software, which has long been known for its very-low-end accounting software. In 1997, Peachtree acquired Micro Associates Inc. and its LAN-based accounting software package, Mica IV, which it now sells as Peachtree 2000. Peachtree plans to introduce a Microsoft SQL Server version next year, to run with the Small Business Server.
Mica IV has traditionally filled a niche between Peachtree's Accounting for Windows and the lower end of the major midrange packages from Great Plains, Solomon, and others. That's still true, of course, but with Great Plains and Solomon planning to sell their own software into the Small Business Server market, there is going to be a great deal of competition.
The availability of Microsoft's Small Business Server culminates a remarkable time in the history of the computer industry, according to Harry Tse, analyst at Yankee Group in Boston. "We go in cycles, and we're at a point in the technology curve where Microsoft is the dominant provider for platforms and tools," he says. Because of the common platforms, "it's becoming harder for companies like Great Plains and Platinum to differentiate their products from each other."
Infinium banks on performance
High-end vendors are also affected by widespread adoption of the Microsoft platform. Witness the change in direction of Infinium Software, which has been a leading vendor of financial software on the AS/400 computer. With financial functions--general ledger, accounts receivable, accounts payable-- becoming more and more standardized on the Windows NT/SQL Server platform, Infinium has changed its marketing strategy, as indicated by the fact that this year the company asked to be listed in CFO's midrange buyer's guide, rather than last month's high-end guide.
According to president and CEO Fred Lizza, Infinium is differentiating itself from other vendors by bringing to the new platform the same performance advantages the software has on the AS/400 platform. "There's a huge difference," asserts Lizza, "between our NT products and [other vendors' products] in two major areas--the time it takes to do a period close, and the time it takes to get decision support information out of the system." In an increasingly crowded field targeting the same market, it remains to be seen whether performance claims like these will be sufficient to make Infinium as successful on the NT as it is on the AS/400.
International presence: Accpac and Navision
Accpac had special problems differentiating itself when it was just another one of Computer Associates International Inc.'s 500-plus software products. In its earlier days, Accpac was quite popular, and in fact is still listed as having the largest number of DOS-based installations of accounting software in the world, according to figures from International Data Corp. But Accpac lost its way when Computer Associates made Accpac part of its strategy for its high-end accounting system, Masterpiece.
"It was good in concept," recalls Dave Dalton, vice president of product marketing for Accpac International, a wholly-owned subsidiary of Computer Associates. "We would have Accpac and Masterpiece share common data, and we would market Masterpiece to the home office and Accpac to the field office. The problem was that Accpac lost its own identity. There was so much focus on making it work with Masterpiece, that Accpac's own installed base, which is huge, got ignored."
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