Accounting software giant QSP went into receivership during a marketing push at Softworld 2001. Some blamed its move into the ASP market, but the company's problems really started back in the 1980s and 1990s after it decided it had to diversify aways from corporate financial software
The deserted QSP stand cast long shadows across Hall 20 at the NEC Softworld 2001 event as the Newcastle-based company slid into receivership in the middle of the show. The fall-out is likely to affect QSP’s former rivals.
Three weeks after its shares were suspended from the stock exchange, the troubled financial software company went into administrative receivership last Wednesday.
News of the failure spread quickly around the exhibition. For some it came as a blow. QSP rivals busy attempting to reassure users that web-hosting by application service providers is a viable option – an area QSP was particularly confident about – were the most jittery.
Others looked to take advantage of QSP’s demise by soaking up its blue-chip client base and skilled staff. And some were sizing up their options, wondering what they could learn from QSP.
It is often said that a company which fails, fails from day one. In this case there are not one, but three main reasons why the company no longer exists. These are: a lack of resources; the problems of entering an already mature market; and the generally poor state of the global economy.
The bottom line for QSP was that it ran out of money. But who do you blame, the management, the banks or market conditions? It would be harsh to blame the banks, despite them seeming hasty in their orders to administrators at Smith & Williamson to close down the operation. So some responsibility must lie with decisions made by management.
Much debate has centred on the viability and profitability of companies that have entered the ASP market, and whether or not clients wish to use ASPs.
There is likely to be much speculation that the fall of QSP was connected to its ASP ambitions – but that would be unfair, as some 30% of its customer base had moved towards ASP hosting.
In reality the company’s problems stem from the day towards the end of the 1980s when the company boldly identified a need to change towards becoming a broader-based solutions provider. It moved towards taking the technology heart out of its products, rewriting them so that they would be capable of running on multiple platforms such as Unix.
At the time, QSP was a long-established player in the UK market for corporate financial software. When its revenues and market share began to slip in the mid-1990s, it attempted to move away from pure software development and made a bid to expand its services business.
It opened a separate NetConsulting wing, acquired a business intelligence software developer, and formed an alliance with expenses management specialist Extensity. It also floated in a bid to widen its capital base and give it an opportunity to extend overseas. However the 1995 acquisition of its US operation proved a massive drain on resources.
Management changes followed in 1996 and 1997 and the web enablement and ASP issue raised its head. But QSP had already taken too many financial hits. It couldn’t afford to pump sufficient funds into this new area – and when it finally entered the market, it was too late.
A former spokesman for the company says: ‘The company had been dogged by bad luck since our formation 20 years ago. There were attempts to reinvent the business using limited funds. Also, the company was not getting the contracts signed – and unfortunately we were a niche company in a field where other companies had the advantage of having been around longer.’
Market insiders believe the company had been touted around in search of buyer for a couple of years. More likely, it was only searching for a matter of months or weeks.
But QSP’s intellectual property is definitely available now and the field is wide open. Meanwhile, QSP customers such as the Bank of England, British Airways and Sony have some decisions of their own to make.
Software houses endure downturn www.accountancyage.com/IT/1126074
Mixed predictions for ASPs
Business and accounting solutions provider Accpac said 30% of its sales leads in September were for ASP solutions, particularly in companies with networks of one to 10 users.
Keith Fenner, Accpac’s assistant vice-president of internet business said most of Accpac’s products were now offered as ASP solutions.
‘It is a low cost option that it is scalable from anything like a chip store right up to a global company,’ Fenner told AccountancyAge at the Softworld show in Birmingham. ‘Our clients that use DOS are transferring across to an ASP platform and we are also running on Linux.’ Accpac claims savings of up to 20% can be made by using an ASP solution as opposed to buying the software and running it on a network – which is a strong proposition at a time when IT budgets are being cut, but companies are expected to keep up with technology.
Fenner said accountants were very keen on the idea. Among Accpac clients using the ASP option is PricewaterhouseCoopers in South Africa. The company also claims to be talking to a number of mid-tier firms.
Hosted financial applications company Impaq said ASPs were being strongly promoted by accountants in the UK. A spokesman for the company said: ‘ASPs replace the bureau-type service that accountants used to offer their clients.
A 10-man business can now use a product that would normally only be affordable by a much larger company.’
However, enterprise software provider Coda was more cautious about the market for hosted solutions – particularly outside the US. The company said the US was currently a strong market for ASPs, but argued that the UK was still at the ’embryonic stage’.
E-business solution provider Agresso Unit 4 is also turning its interest elsewhere. Managing director John Crooks said the company did not see a demand for ASP services in the UK and saw the future in mobile services and resource management.