Sales slump starts to byte.

What with mergers, takeovers, job losses and now profit warnings, the Year 2000 has proved to be something a tumultuous time for the accountancy software market.

There are many reasons for this, not least the hangover from Y2K. Many companies, relieved the much-feared millennium bug came and went without catastrophic breakdowns, seem, nevertheless, to be reluctant to embark on further IT projects.

As the slowdown of sales has started to bite, a number of software providers have undertaken drastic and radical action to realign their business.

Only last month Pegasus reviewed and ‘cleaned up’ its product range.

The company announced plans to discontinue two offerings from its software range, a move managing director Paul White viewed as necessary ‘in a bid to concentrate on our most important products’.

Alterations to its range followed’s acquisition of the company earlier this year and a subsequent focus on the business. It is widely believed however that the consolidation process in the arena has really yet to begin.

‘The review of our products was no great surprise, but the results will enable us to take the business forward. As a result of the review we will be withdrawing support for the Senior and Paypoint packages from next year,’ said White. has also acquired Systems Union in a #32m deal and subsequently changed its name to SU. However, many people in the market are anxious to discover what strategies the company will deliver, while a handful of rivals are looking to take advantage of the situation.

Meanwhile, Newcastle-based giant Sage has also confirmed its announcement to discontinue or update eight products from its current range.

Its decision followed an independent review of its existing products and selected a core range of ‘best of breed’ audit, taxation and practice management software to take the business forward.

As a result of the review, all five products Sage gained following the acquisition of CSM including Taxman, Business Tax, Accountant’s Desktop, MinuteMan and AuditMan II will now be discontinued.

However, the company did announce it would offer free or low cost upgrades for users of the packages and will offer support until April next year.

Other products to be shelved are Hartley Time Management, Sage Final Accounts Production (formerly Audit 2000) and Sage taxation – Personal Tax (formerly Taxsoft).

Gavin May, Sage general manager of the professional accountants division, said in the letter: ‘As the pace of technological change increases, smaller independent software vendors are finding it increasingly difficult to make the necessary investments in R&D to develop and support up-to-date versions of their applications.’

Another signal that sales have remained flat is the surprise profit-warning given by enterprise solutions provider QSP. According to many analysts they are likely to be joined in the near future by some equally illustrious names issuing similar statements.

Also at the top end of the market, Baan, for a long time pummelled by questions about its finances and undermined by poor management, has limped along for several years. But the end of this saga came in August when Invensys bought the company for a mere $700 million, with some 1,000 employees losing their jobs in the process. Perhaps unsurprisingly it too issued a profits warning last week, as did fellow ERP vendor Progress Software.

Despite the changes in the market, there appears to be light at the end of the tunnel, with some analysts predicting sales are likely to creep up.

With the advent of e-commerce and the internet, some would say the IT industry has never been such an exciting environment as it is now.

Indeed, the latest survey of the application software industry from BASDA showed a significant return of confidence, following the slow down created by Year 2000.

The results show that 55% of companies believe that the market is growing, at present, and 77% expect it to grow further over the next few months.

Other results show that 38% of companies are experiencing significant interest in their e-commerce products and 52% expect e-commerce business to increase.

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