Software companies emerge from Y2K turmoil

There are numerous factors for this – not least the hangover from Y2K, which cannot be underestimated. Many companies, relieved the new year came and went without any ordeal, seem reluctant to embark on further IT projects.

Amid the slowdown in sales 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 Freecom.net’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.

Freecom.net has also acquired Systems Union in a £32m deal and subsequently changed its name to SU. Many people in the market, however, 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 move 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.’

A signal that orders have remained flat has been confirmed following the surprise profits-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.

Amid all these upheavals in the market, there appears to be light at the end of the tunnel, with some analysts predicting sales are now likely to creep up. And 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 Y2K.

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.

There seems to be no general consensus on which way the software market will turn next, but for some of the established companies, things can only get better.

Links

Pegasus: Customers will benefit

Sage to discontinue eight products

The Fall of Baan

Double resignation blow for Freecom

Freecom.net takes Systems Union name

Jobs go at Systems.