This time last year, Accountancy Age‘s IT review raked through theer reviews the vendors. industry’s entrails to establish whether Microsoft Windows NT was likely to be accepted as a viable operating system for accountancy software.
Why did we bother?
Business and enterprise resource planning software are lucrative sectors for the US giant, with close to half of new licence sales riding out with NT. The OS has also come close to bursting through the 30% market share barrier, at which point the company’s marketing machinery ceases to try, as the product’s momentum will carry it towards a near monopoly.
A new user survey from Tate Bramald Consultancy has shown Windows NT to be gaining ground fast on Unix as the preferred OS for accounting systems.
In a survey of 262 finance directors and decision makers in companies with a turnover of over #100m, 21% said that they had NT as an OS, compared to 40.8% for Unix and 19.5% for Novell.
Microsoft’s SQL Server database has been one of the limiting factors on scaling Windows NT installations up beyond 300 users because, until this month, SQL Server could not run on multiprocessor systems. The new SQL Server release, available any minute now, will kill off that argument.
With a database and OS that can cope with up to 1,000 users of ERP software such as SAP’s R/3 or PeopleSoft, but also available in a small business bundle for up to ten users (and with single-user desktop licences available), it could be argued that the NT/SQL Server package is doing away with previous market divisions.
Even before the general release of SQL Server 7 in mid-December, the list of Microsoft’s SQL partners – SAP, Comshare and Systems Union – reads like a ‘Who’s Who’ in business software.
By giving away its OLAP relational database free in the OLAP services module, Microsoft transformed the analytical applications market, taking business tools, as Holly Henson, group manager of Microsoft’s ERP/application developers unit said, ‘to the common man’.
Comshare was one of the more vocal SQL 7 groupies in the analytical applications market. Nigel Youell, UK marketing director for Comshare, argues that the significance of SQL Server 7 was its relatively cheap price tag, which would spell bad news for business tools vendors like Cognos. ‘There is only going to be one really cheap tool – Excel 2000, which will come with Office 2000.’ Comshare, incidentally, now defines itself as a applications vendor, keen to target the ubiquitous mid-range market.
Two of Comshare’s rivals in the financial applications world – Hyperion and Arbor Software – merged in August.
Hyperion comes from a business software background – as the acknowledged market leader in the planning and budgeting applications sector – while Arbor is best known for its innovative Essbase multidimensional database.
Their combined market capitalisation of $1.3bn and over 4,000 clients worldwide will make them a formidable rival to Comshare, but a lot will hinge on how closely their sales and operations integrate.
Tony Speakman, UK marketing director of Hyperion Solutions, said: ‘The challenge for executives is to make sense of data coming from their ERP systems.’
Sage was one of the small group of vendors who adopted a wait-and-see approach to SQL Server 7. A hectic year for the UK’s own PC accounting software giant saw Sage make three acquisitions, including the $283m purchase of US developer State of the Art.
At its annual conference in Birmingham in November, the rapidly expanding company finally launched a Windows version of Line 100 – after a four-year wait. Intended as a more high-powered offering than its mainstream product Line 50, it met with a subdued reaction from resellers, one of whom – under the condition of anonymity – remarked that it did not look like a true Windows product.
Another, potentially more serious, concern among delegates at the conference focused on the ability of Sage to maintain its development efforts with such a large international presence. Food for thought, perhaps, for Newcastle United fan Graham Wylie, Sage’s managing director, who boasted that Sage was bigger than Manchester United.
Pegasus, Sage’s arch-rival, had an uncomfortably quiet year, which finally kicked into gear in December with the release of the 32-bit Mpower accounting package. Integrating MPower with SQL Server 7 proved to be a frustrating experience for Pegasus: last-minute changes to the server also affected Mpower’s launch timetable.
Pegasus’ specialist taxation and practice management subsidiary CSM, which it acquired in 1997, also released a rash of 32-bit packages in October. After tangling with introduction of self-assessment last year, Auditman and Minuteman were given the Windows treatment. Both integrate into a Windows-driven front end called Accountant’s Desktop, a single database system which emulates the organisation of papers on an accountant’s desk.
Not to be left out, Transaction Technology also completed a three-year transition of its Iris practice DOS system from MS-DOS to Windows.
But buyer fatigue appeared to set in, in 1998. In October, Accountancy Age’s joint research project with Softworld, MarTrak, revealed a looming trough in the accountancy software market. The survey of 396 companies found that the number planning to change their software within the next 12 months had dropped by almost 20% since last year. Where 52% of respondents were shopping for new software in September 1997, only 43% were doing so in 1998.
Many vendors are hoping for a so-called ‘Twin Peaks’ effect: once budget holders get over problems associated with the euro and the year-2000 problem, they will begin to look at new innovations such as e-commerce and balanced scorecard software. Or so the vendors hope.
ERP market suffers criticism
ERP giants felt the brunt of the downturn over the last year as they struggled to combat criticism that their software takes too long to implement.
A lot of accountancy software vendors are targeting the ‘JBOPS’ giants of ERP – JD Edwards, Baan, Oracle, PeopleSoft and SAP, thanks to the instant compatibility promised by Microsoft-driven applications.
Numerous strategic alliances and niche acquisitions have brought together retail, manufacturing, distribution and logistics products to offer the promise of ‘instant ERP’.
But as usual in the software world, the devil is in the definition. Few of the major companies can agree on a standard definition of the mid-market – by employee or turnover. And the JBOPS are fighting back.
Siemens, for example, announced a fixed price (#500,000), three-month SAP R/3 implementation service for the SME market, where it will go head to head with JD Edwards and JBA.
Criticism of its epic implementation times appeared to erode SAP’s lead in high-end ERP. A report in October from research group Ovum acknowledged SAP continued to lead Oracle and PeopleSoft, but also revealed a relative drop from 43% to 40% of SAP’s share of total user expenditure.
The year 1998 will be seen as the end of the golden age of ERP, as all the JBOPS took a hammering on world stock markets. SAP’s share price fell 25% between June and December. But the biggest casualty of the ERP premier league was Baan, which announced a 20% cut in its workforce in October.
While total revenues for the third quarter increased by 13%, the Dutch company suffered a net loss of $31.7m. Ovum voiced concerns over Baan’s strategy of expansion through acquisition – including UK accounting software house Coda – which swelled its global workforce by 69% over the past year.
According to JD Edwards marketing director Trevor Salomon, most of the big multinational organisations have committed themselves to one of the ERP gang.
Long implementation times and the downturn in new licence sales have encouraged the big ERP vendors to offer rapid installation schemes and application outsourcing and rental deals.
JD Edwards’ Salomon argued that return of 1970s-style timesharing and bureau services was not directly correlated to the economic scenario.
‘Paying so much per user, per month makes it easy for budgeting and allows clients to get up and running quickly with a solution that will carry them beyond the year 2000,’ he said.
The UK’s QSP has also gone down the outsourcing route. According to public-sector marketing manager Ken Cole: ‘Clients are looking at spending money more intelligently – what are the paybacks and how can they finance it?
‘People in the public and private sectors want to avoid capital expenditure, and outsourcing allows them to transfer a lot of the risks and liabilities such as software obsolescence and the cost of database administration.’
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