Xenakis on Technology

Softline Has Big Plans for AccountMate

Written by John J. Xenakis for CFO.com, Feb 07, 2001.

Is a little-known South African company ready to join the accounting software big leagues?

(Editor's Note: This is the first in a series of monthly columns on the strategies of accounting software vendors.) The growing demands of technology and globalization have made it almost impossible for midrange accounting software vendors to remain independent and viable. A large number of them have gone on the auction block, but in the process new firms have entered the sector.

For example, even industry leader Great Plains Software announced last December that it is being sold to Microsoft Corp.

In other instances, foreign firms have used the turmoil to enter the U.S. market. London-based Sage Group PLC was almost unknown in the U.S. until 1998, when it acquired State of the Art. Then last year, Sage acquired Peachtree Software, and the company now markets low-end to mid- range software programs. It has more than 1 million installations worldwide.

Recently, South African-based Softline Ltd. (http://www.softline.co.za) has made it clear that it hopes to follow in Sage's footsteps. The company is as unknown in the U.S. as Sage was four years ago. But Softline's December acquisition of AccountMate Software Corp. of Novato, Calif. has given it 400,000 installations worldwide.

The company's other recent acquisitions include Pastel Software (http://www.pastel.com), a vendor of a small business accounting package with more than 130,000 customers in 37 countries, and of BusinessVision Management Systems Inc. (http://www.businessvision.com), the second largest accounting software vendor in Canada (behind Accpac International Inc.) It also owns Datafaction Inc. (http://www.df.com), a niche software vendor that handles accounting software for entertainment firms.

"AccountMate has good products and a good reseller channel," says Ivan Epstein, founder and CEO of the Johannesburg firm. "The acquisition enhances our international position, expands our user base, adds to our product range, and provides a solid footprint in the USA. We are now clearly a leading vendor in South Africa, Australia, Canada, and the USA."

AccountMate has sold some 120,000 installations since it was founded in 1984. But, like the rest of the accounting software industry, it's stalled in recent years. Its current product, Visual AccountMate, has only 15,000 registered installations.

The lackluster sales forced the firm to change its business strategy a year ago, according to AccountMate CEO Ben Tse. "We can no longer be just an accounting software company," he says. "That's why our business model has changed to work closely with third-party developers."

As part of the strategy, AccountMate formed marketing and product development alliances with Prism Visual Software (http://www.prismvs.com), a developer of fleet route management software and TIW Technology Inc. (http://www.tiwcorp.com), which develops factory management systems and process control software.

"We're taking a very proactive approach in working with these third- party developers," says Tse. "We've devoted considerable resources to them for system integration and design review. Our goal is to bring new versions of the third-party developer's products to market at the same time that we release our products."

AccountMate's third-party strategy is evident at Kinetico Inc., a manufacturer and retailer of water-treatment systems for home and industrial use. The firm uses J. D. Edwards accounting software in its headquarters, and Visual AccountMate and Prism's Visual in its retail stores.

"We sell water softening systems," says Kinetico IS Manager Ned Sherry. "We install them, and we do service calls. We deliver salts, and one store delivers water. We needed a package that could handle the service call scheduling, generate an invoice, and track the history. We also need to track the customer financially -- what equipment they have, the serial numbers, how many times we went out there, and so forth. So we wanted a package that did accounting and also handled the service aspect."

This list of requirements led Sherry to the partnership between AccountMate and Prism. "The interface between the two packages is seamless, and you don't even know that you're using two different packages."

Tse hopes that the Kinetico installation proves to be a model for many others. "We're going to go after generic accounting software resellers, and advise them on how to go after these specific niche markets," he says.

Within the next few weeks, Softline will be launching itself in North America. The new division is tentatively being called Softline / Pastel, and it will be headed by Steven Rostovsky, CEO of the firm's North America subsidiary.

"BusinessVision is at the lower end of the market, and AccountMate is at the upper end," says Rostovsky. "In the generic accounting space, we'll be covering everything from the small business into the middle market."

Rostovsky plans to expand Tse's strategy of affiliating with third- party software developers.

"Here in the US, it's hard to differentiate yourself when you're a generic product," he says. "The end users want something unique. So we're focusing on verticalization, and committing ourselves to our channel partners. We think we'll see greater success that way."

However, while Rostovsky and Epstein are adopting AccountMate's verticalization strategy, they do have some changes planned for the company. "I'm very passionate about customer service," says Epstein.

So while AccountMate has excellent products, it bothers Epstein that "two thirds of the head count in that company are developing technology. We need to change that to get superior customer service."

Does that mean that AccountMate's programmers are going to be replaced by marketing people? "It's not a requirement to change personnel," says Epstein. "It's changing the corporate culture to develop a sense of urgency to meet a customer need. For example, technology people relate more to computers and to code and to the excitement of new technology than to fixing an accounts receivable or accounts payable bug," he says. "What we'll be changing is the sense of urgency to do what the customers are asking us to do."

Tse agrees with this approach. "We are going to reorient our priorities to a more customer service-driven focus, with special attention given to the improvement in our responsiveness and quality of support to our customers," he says. "This does not require any change of personnel; rather it just requires that we shift our focus to a more customer service-driven approach."

 

Integrated Manufacturing
Discrete Manufacturing	YES
Logistics and Distribution	YES
MRP/ERP	YES
Process Manufacturing	YES
Work Orders	YES

Integrated Internet Functions
Data Entry / Query	NO
Report Distribution	NO
Business to Business e- commerce	YES
Business to Consumer e- commerce	YES
Employee Self Service	NO
Customer Self Service	NO
Vendor Self Service	YES

Platform
Servers:	NT, Novell, AS/400
Databases:	SQL Server, DB2, Visual FoxPro
Source language:	Visual FoxPro 6.0 (source code available)

Comparison with other midrange vendors
	AccountMate Visual AccountMate	Great Plains Dynamics	Sage MAS-90
Price
Low	$4,000	$50,000	$6,000
Average	$12,000	$90,000	$20,000
High	$150,000	$225,000	$50,000
Per module	$995	$7,500-20,000	$1,300
Target Customer Size ($Sales)
Low	$5 million	$10 million	$2 million
High	$500 million	$250 million	$100 million
Principal Target Markets
	Manufacturing, Distribution	Service orgs,  e- commerce, wholesale/distribution	Distributors

Source: All specifications were provided by the vendors themselves.