The Case for Becoming a VAR

From the June 2009 Issue

For small and medium-sized businesses, it’s one thing to have a well functioning GL system, but it’s a huge jump beyond that to have a complete business management system that tracks and manages all of the key business processes in the business. For example, even if your clients have a smooth-running accounting system for AP, AR and Payroll, when you really think about the requirements for efficiently tracking and managing purchasing, inventory, forecasting, CRM, time and project management, document management, and web store, you quickly realize that without customized, integrated solutions in these areas, the overall efficiency of the operation still has BIG needs.

Fortunately, there are companies out there to help you as you try to create the most efficient business processes for your clients. Over the years, these vertical solution companies have morphed from “all-in-one” system providers to what I call “add-on” developers. By add-on, I don’t mean to imply that these applications are “small,” but rather that vertical solution developers are focusing more on integrating with products like QuickBooks to share data instead of building GL capabilities into their products.

I first wrote about this opportunity two years ago, but recent developments in the market give us more solutions, better integration and broader consulting opportunities. This is great news for those of us who focus on helping small business clients with their accounting systems because it gives us tons of opportunities to expand the practice from accounting software into other value-added services.

Before discussing how you can exploit the new opportunities to become a Value Added Reseller (VAR), let’s first look at the technology and market developments that have given rise to these new opportunities.

The Internet has now reached critical mass. For years, I’ve been talking to accountants and their clients about moving many business-critical systems to the Internet, but recently the logjam seems to have broken. With near-ubiquitous availability of the Internet, we can pretty much assume that everyone has fast, always-available Internet access.

Accounting software is now “open” to third-party developers. Since 2002, when Intuit opened up QuickBooks with its SDK (Software Developer’s Kit) which allows third-party developers to read and write data to the QuickBooks database, there has been a steady flow of new solutions that are now reaching maturity. And since QuickBooks has become a “platform” for other applications, many other vendors are following suit. For example, both Sage and Microsoft have open platforms with Peachtree and Office Accounting. So while the mid-range software market has always been more open as far as add-on integration is concerned, this new development in the low-end is finally beginning to pay dividends in the broad low-to-middle market.

Several mature, vertically focused software companies have begun targeting the small business world, specifically the QuickBooks market. This includes companies like Business Objects (Crystal Reports), MISys (SBM), Alterity (Acctivate), Salesforce.com, eBay, Yahoo!, Google, Sage (ACT! and Timeslips), Bill.com, PayCycle, SmartVault, BQE Software, and several others. What’s interesting here is that since these companies have developed links to QuickBooks, the whole ecosystem of QuickBooks add-ons has benefited. For example, the very existence of a QuickBooks link in Crystal Reports gives rise to a whole submarket for end-user customers, consultants, custom developers and even other commercial software companies.