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Accounting Software: It's a Buyer's Market

The Internet is changing what software can do, and how it's acquired.
Theresa W. Carey, CFO Magazine
February 1, 2001

Survivor. That was the watchword for most of the high-end accounting software vendors during the year 2000. No, they weren't glued to their television sets all summer long watching people shamelessly pursue a million-dollar payday. They were coping with the post-Y2K industry slowdown, repositioning their products, and fine-tuning their offerings. They were trying to understand the changes that E-business might bring. And, as the holidays approached, they were digesting the implications of Microsoft's plans to acquire Great Plains Software.

Vendors of enterprise resource planning (ERP) software suites, having enjoyed enormous limelight throughout much of the 1980s and '90s, have seen a boom in E-commerce devolve into a certain "E-hesitation" on the part of many customers. Organizations are trying to invest in E-commerce capability, but often find themselves paralyzed when trying to decide whether to put a new technical infrastructure in place first and position new Web-enabled applications on top of it, or choose the applications now, in the interest of speed, and retool around them. Adding to that is confusion over which products have been totally redesigned to work on the Web versus those that have simply been tweaked to work with a browser but lack underlying features (such as tight integration with other applications) that are likely to become critical down the road.

ERP players have had to redesign their software, involving a significant investment not only for them, but also for their customers. Timothy Tow, a senior analyst with Gartner, notes, "The well-publicized ERP failures and high cost of implementation have caused problems for all the software vendors in this space. When they were addressing Y2K, they didn't do a clear ROI analysis on their new projects, which resulted in cost overruns during installation. Many client firms didn't understand the expense of reconfiguring an entire business around a single package." Tow says this confusion resulted in a backlash against ERP implementation, and now other vendors may be poised to displace the ERP vendors as E-business gains momentum.

But the resilience, and the resources, of the vendors in this space can't be underestimated. With large customer bases and armies of developers, they can take several missteps and still, ultimately, get it right. While their attentions risk being diverted by the huge demand for customer relationship management (CRM) and other "customer-facing" applications, accounting functionality remains a core requirement of what they do. For other vendors, it's all they do. Picking an accounting application has never been easy, but at least the constant activity in this market guarantees innovation and competition. As the new millennium began (for those of you who like to be accurate about these sorts of things), CFO spoke with senior executives of many of the major players in high-end accounting systems. Their analyses follow. The charts provide a wide range of information for comparison on these and other vendors.

Business Is Clicking: AXS-One Inc.
All of the vendors in this space are moving very aggressively to enable E-business, and AXS-One is a perfect example. Formerly Computron, the company renamed itself last October, and put all of its marketing muscle behind e-Cellerator, an integrated suite of E-business applications. Like other major ERP vendors, AXS-One is pitching its ability to enable E-business while also protecting clients' investments in legacy systems. David Yockelson, a senior vice president at consulting firm Meta Group, in Stamford, Connecticut, points to AXS-One's new focus on collaborative commerce as indicative of where many major vendors are heading. While the company continues to address back-office needs, it is devoting most of its attention to the information-sharing needs of clients and their partners and customers. That means a strong focus on Web-enabled, networked applications that can filter and disseminate financial and other information to all those who need it. With e-Cellerator accounting for 90 percent of license revenue in the third quarter, it's clear that Computron's transformation into AXS-One is not just a branding makeover, but a sign of where accounting and ERP software is going.

Second Shift: FlexiInternational Software Inc.
Founded in 1991, when the client/server paradigm shift was under way, the company suffered through a major slowdown in 1998 and '99, according to CEO Stefan Bothe. "Despite that downturn, we kept investing in our product. We came out of it with a good strategy and a good product," he reports. "We looked at the market again from a fresh point of view, and saw a new paradigm shift, this time toward outsourcing." Flexi is now positioning itself as a virtual accounting department for its customers, and Bothe is optimistic that the technology will take off during 2001­02, as the public learns more about the ways in which the company is working to differentiate itself. "We're looking at business process outsourcing, similar to payroll outsourcing," says Bothe. The company will go to market with the message that customers can achieve substantial savings by getting rid of their back-office accounting group. Version 4.4 will be released later this year, and will offer additional Internet access as well as make certain processes, such as remote invoice and expense approval, available over the Internet.


CRM Rises to the Top: Infinium Software Inc.
As with Flexi, Infinium also made a major shift in its business model during 2000, moving firmly into the ASP (application service provider) camp. CEO Bob Pemberton says, "We chose to make a number of changes in one year. It was a tough year, and we felt a great sense of satisfaction when it was over." When it was over, Web versions of Infinium's applications were released, an effort that involved the carving out of new technology directions and the development of a new generation of tool sets. The company also opened a 68,000-square-foot computer hosting center near Boston. Notes Pemberton, "We now differentiate ourselves in two ways: We're the only major software vendor with its own hosted ASP center, and we have an integrated CRM offering along with our other applications. Some think CRM is nonfinancial, but we don't."

ASP You Like It: InterBiz
For InterBiz, the E-business applications division of Computer Associates International Inc., the emphasis has been on integration and intelligence. Last year, the company began shipping BizWorks, its integrated suite of Web-based software and the product that is clearly intended to be the company's flagship. InterBiz is pitching BizWorks as a real-time, portal-based system that incorporates business-intelligence capabilities so that managers can not only see information, but act on it as well. The system, analysts say, can spot key patterns and even suggest corrective action.

As with most other large players, InterBiz also tackled the ASP market, with a more-is-better approach. Its newly formed Online Group offers three options: iBizDirect, in which the company hosts the application for its clients; iBizPartner, in which InterBiz handles back-end hosting while the client manages contact with end users; and interBureau, which works with other ASPs that want to host InterBiz applications on behalf of their clients.

One World, Many Options: J.D. Edwards & Co.
In a year in which protests and rallies seemed to make a strong comeback, J.D. Edwards made its own contribution. In October, it held a "Freedom to Choose" celebration in Manhattan, with satellite links to dozens of cities worldwide, to publicize its OneWorld Xe technology. OneWorld is billed as "collaborative commerce," and addresses not only accounting functions, but also all aspects of supply-chain integration. J.D. Edwards maintains that while other companies' integrated suites present customers with a take-it-(all)-or-leave-it decision, its platform offers far greater flexibility to work with legacy systems and other products. Last year was mixed for the company. In May, it announced a restructuring that included 800 layoffs, yet it reached the $1 billion level in revenue for its most recently completed fiscal year, and ended the year solidly in the black, versus an $8 million loss in fiscal 1999. The company claims its cost-cutting has paid off, while the newest version of its technology (Web-based, of course) has gained greater market penetration than any of its competitors.

Vertical Horizons: Lawson Software
The company has been busy on many fronts. It rolled out version 8.0 of its flagship Lawson.insight product, which involves a change in technology to a Web-addressable, browser-based application, and it also introduced LawsonTone, its new ASP/BSP (business services provider) program. Eric Lopez, the company's vice president for financial and analytic solutions, claims, "We're poised for dominating the ASP/BSP space by being architected in such a way that we can provide a level of E-service that none of our competitors can." The company has built industry-specific functionality into its products (for health care, professional services, and other verticals), and also added significant XML (extensible mark-up language) standardization to facilitate integration with legacy systems and other applications. "Going forward," says Lopez, "we will continue to develop additional verticalized product offerings on the LawsonTone platform. Integration areas by industry will be added at an aggressive pace."

As with other companies adding an ASP option to their licensing mix, Lawson hopes to be able to extend its products down to start-ups and smaller companies that might find a conventional purchase cost-prohibitive. According to Lopez, smaller companies view hosting as a viable alternative to buying and implementing a large, multimodule application, and if needs dictate, the client can bring the application in-house as it grows. "Rather than moving from Quicken to Great Plains to Lawson, you can stay with Lawson all the way through," notes Lopez.

Things Great and Small: Oracle Corp.
Having won a major contract to provide its E-business suite to Covisint, the high-profile automotive-industry exchange, Oracle keeps rolling along. These are boom times for the software giant, with the recent slowdown in economic growth seeming to have little impact on the company's financial results. In 2000, Oracle debuted version 11i of its E-business suite, touting the by-now-predictable benefit of Web-enablement. The company also announced version 9i, which is the latest version of the Oracle database. That sort of validation of the hosted model could benefit the smaller companies that have been repositioning themselves as ASPs, BSPs, and outsourcing providers, although competing with Oracle is no one's idea of a day at the beach. The company also made several smaller but noteworthy moves, such as the newly released Oracle Exchange, which powers multicurrency auctions, thus allowing the seller to view bids in a preferred currency, while buyers can place bids in their preferred currency. Oracle's entire suite now includes access to Dun & Bradstreet's database on business information and risk management, facilitating the trend toward business intelligence.


Pure Positioning: PeopleSoft Inc.
Like Oracle, PeopleSoft unveiled a major Web-enhanced version of its flagship product. PeopleSoft 8 was billed by the company as the "first pure Internet software," corporatespeak for "redesigned from the ground up, not just tweaked for the Web." Along with this massive development effort, the company also made a strong move into portals, software that provides a centralized "entry point" to a range of functionality. Supply chain and CRM were two other areas in which the company expanded its offerings. In its financial suite, the company formed an alliance with Visa International that will allow it to pull transaction data from Visa directly into its travel-and-expense management software, thus automating a major portion of the reporting and reimbursement processes. PeopleSoft is also aggressively pursuing an ASP channel partner program.

Accentuate the Positive: QSP Inc.
Change is also the order of the day at QSP, which plans to shift its focus slightly, concentrating on receivables management. President Bill Schneider, who moved into the top spot over the summer, spells out the new strategy by saying, "Our accounts- receivable system, over time, has evolved into a total receivables management solution. We'll be concentrating on performance management and control, with our Web-based Financial Collaborator." QSP has isolated its invoice-matching technology, and sells it as an add-on to other systems. Schneider notes, "We're still in the business of providing an entire financial suite, but looking at our internal strength and where the market is going, we'll focus on our strongest assets."

QSP upgraded its entire financial suite and added an inventory module to version 4.6.1. Financial Collaborator 2.2.6 was released at the end of 2000, and later this year version 3.0 will come out. The firm's newest product, Netcontrol 1.0, is an Internet business application system aimed at smaller companies.

Module Behavior: SAP America
The Internet, and more specifically the company's mySAP.com, was at the heart of SAP's efforts in 2000, and that's unlikely to change anytime soon. The company continues to add modules to its successful E-business platform, and prides itself on being able to work with just about any hardware and database vendor. The E-business solution package includes financials along with supply-chain management, CRM, product life-cycle management, and business intelligence. Recent announcements include extensions to mySAP Financials to support financial operations such as tax or commission calculations, payments, settlements, and financing. The company continues to expand the integration capabilities of mySAP.com so that it can pull and push data to and from a wide range of internal applications. A new series of "mini-apps" provides templates so that customers can quickly develop a large array of Microsoft-based applications. To do that, SAP partnered with TopTier, a move that highlights its recent penchant for partnering with other firms rather than trying to provide everything a customer may want itself. Similar moves enabled the company to boost its CRM and ASP offerings in 2000.

The Sun Never Sets: Systems Union Inc.
Rather than adopt its own ASP model, Systems Union became part of someone else's. In May, it was acquired by U.K.-based Freecom.net, an E-business firm anxious to leverage Systems Union's 18,000 customers and its suite of financial applications. The move hasn't seemed to disrupt System Union's development efforts; at the end of 2000, it had begun to roll out SunSystems 5, which expands its core financials and includes order-fulfillment functions (sales, purchasing, and inventory management). Following the acquisition, the new parent company changed its name to Systems Union, a reassuring move for the company's customer base. The company continues to serve two distinct markets: multinationals and defined vertical markets within North America.

Systems Union continues to form alliances with businesses that serve vertical markets, such as nonprofit, high-tech, financial, and natural-resources firms. At the same time, it will expand its already considerable global reach.

Door-to-Door: Tecsys Inc.
Tecsys added an Oracle version of its product line in 2000, and, by acquiring Disticom, expanded into the area of shipping and receiving automation. "Our software gets the goods all the way to the customer's door now," reports president and CEO Peter Brereton. Tecsys focuses on all phases of supply-chain integration, from order-entry to fulfillment, including all accounting functions. The Quebec-based firm announced partnerships with IBM and BroadVision last year, which were designed to drive its E-business ambitions, and is in the process of setting up a reseller channel.

Brereton says the company has two major goals in 2001, the first of which is to complete the migration of its software to an entirely browser-based interface, which should be done by April. Tecsys is also proceeding with the unbundling of its product line. "We're finding that some of our customers want to start with one area, such as front-end Web-based order management or the back-end transportation piece," says Brereton. "Each component will be available separately so that customers can implement the product on their own schedules."


Theresa W. Carey is a freelance writer based in Palo Alto, California.

A Note on Listings: All products have GL, AP/AR, and fixed-assets functionality. Functions and platforms listed apply to products commercially available as of February 1, 2001. Some functions may be in development; contact vendors for information.




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