From the August 2007 Issue
Okay, so I’m no economist, but in my view, the evidence is overwhelming
that we must be in the midst of a boom (hopefully not a short-lived bubble)
in the SME (small to medium enterprise) accounting software marketplace. While
the strength of the boom may not be obvious by analyzing public company quarterly
reports, I believe most of the growth and demand is in the private sector. I
see it coming from small, private companies with $5 million to $20 million in
sales — companies that are dramatically increasing spending on services
from other small, private companies such as tax and accounting firms, IT consulting
firms, and Value Added Resellers (VARs) who combine off-the-shelf software and
hardware with customized software, installation and training.
What’s driving this boom? Several factors are contributing, including
a relatively strong economy. However, I see a very specific set of “drivers”
for this new boom:
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 until recently, I encountered stone-faced, heals-dug-in-the-ground
responses, mostly related to information security and availability of high-speed
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, we have seen 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 Software 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
spectrum 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. The list
includes companies like Business Objects (Crystal Reports), MISys (SBM), Alterity
(Acctivate), Exact Software (Job Boss), Salesforce.com, eBay, Yahoo!, Google,
Sage Software (ACT! and Timeslips) 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, just simply the
existence of a QuickBooks link in Crystal Reports gives rise to a whole submarket
of opportunities for end-user customers, consultants, custom developers, and
even other commercial software companies.
Consultants, specifically QuickBooks consultants and tax and accounting
firms that either employ consultants or refer clients to such consultants, have
started to fully embrace the idea of recommending and installing add-ons to
solve many of the previously unsolvable client problems. Many have
begun specializing in add-on integrations such as QuickBooks Point of Sale,
BillQuick, Fishbowl, Legrand CRM, PDG Software’s Ecommerce Storefront,
Cabinet NG’s CNG Books, Personable’s SourceLink, Alterity’s
Acctivate, MISys, and Truecommerce EDI. In addition to these, there are many
more REAL applications that solve real customer problems and yet still allow
the client to keep their QuickBooks installation in place. This is a compelling
story for the consultant because it allows them to expand on existing skills
while maintaining an advantage over other consultants, for whom QuickBooks expertise
is lacking. Of course, it takes a QuickBooks expert to know one, so this advantage
does not necessarily translate into competitive success because the client usually
doesn’t have a clue about why your expertise is so valuable until they
try the other guy and experience failure. However, QuickBooks expertise is a
huge advantage and a barrier to entry for those new to the game.
Re-engagement with the existing client base. With more integration
options from which to choose, many consultants are going back through their
client base and initiating new projects to tackle problems around advanced inventory
management, CRM, POS, mobile solutions, or advanced construction management.
Additionally, these new technology options allow consultants to engage new,
larger clients with a broader set of needs than that of the typical QuickBooks
client a few years ago.
So with all these factors driving the current boom, what are the challenges
of these new realities?
The challenge is that these new demands are stretching not only our capacity
to provide timely, high-quality service, but also our capability to provide
the RIGHT services for these new demands. Many consultants who have been on
autopilot, providing software installation, setup and training in the QuickBooks
marketplace, may suddenly find themselves overwhelmed by new technologies (Vista,
web-based applications, customized add-ons, etc.) and by their need for increased
staffing to handle the increased client demand.
Ah-ha! I smell opportunity! Doesn’t this condition sound similar to
the booms of past? Think about when Windows was released, or when XP finally
got things stabilized in the PC world. Remember when we finally all began trusting
Windows and began wholeheartedly recommending upgrades for our client base?
It was because we finally saw a critical mass of solutions that were reliable
and that presented real value to the clients. It’s essentially the same
type of thing going on here in the new “open” accounting software
As this boom develops, the typical QuickBooks consultant is finding a whole
new type of client — one that doesn’t flinch at spending thousands
of dollars for their accounting system, and one that has no problem assigning
in-house technical experts to assist the outside consultant with the planning,
design, implementation and even support of the system after it’s installed.
These clients also usually understand much more about their needs than the consultant
does. This is a completely new phenomenon for the typical QuickBooks consultant,
but the wise consultant will quickly get used to it and realize the potential.
Compared to the typical QuickBooks clients most of us are used to serving,
these clients usually have much more demanding requirements.
For example, they have the following:
- Substantially larger data sets. If they already use QuickBooks,
they often come to us with multi-gigabyte QuickBooks files (which makes this
QuickBooks expert very nervous, but more on that topic in another column),
- Multiple departments (sales, marketing, shipping, warehouse,
admin., etc.), most of whom need access to at least part of the accounting
- Multiple locations (either in terms of physical offices
or multiple online “locations”),
- Much more complicated business processes. For example,
they need to track purchase requests routed through several levels of approvals
before issuing purchase orders, and they need multiple sources for purchasing
items. They also have to track the production side of the business with raw
materials, tracked by serial number through to in-process inventory, all the
way through finished goods stored in warehouse X, in section A, shelf 10.
They also need integrated shipping and fulfillment software to feed data back
into the accounting system so that shipping costs and tracking information
are accounted for in the main accounting system.
In short, incredible new opportunities await the enterprising consultant (pun
intended) as well as the consultant who has the breadth of skills to serve these
new markets. The question is whether this new world is right for your firm.
To help you answer this question, consider that there are essentially two types
of consultants in the QuickBooks consulting community.
Some are focused techies/accountants who love working directly with clients
to install/setup/troubleshoot/etc. the QuickBooks and add-on solutions. They
continually school themselves on new techniques, technologies, software solutions,
customized solutions and business process design. These are the top technicians
when it comes to designing and installing the most streamlined business processes.
I estimate that about 70 percent of The Sleeter Group’s Consultant Network
members would fit this general description, and our network of 520 members represents
a good cross-section of the most serious QuickBooks consultants in the United
States and Canada.
The other 30 percent are focused more on attracting new clients, selling complete
systems, and bringing teams together to solve a broad range of business process
issues in the mid-range market. They are generally less technically focused,
but often have teams of IT professionals, accounting/tax experts and other software
experts with specific skills in QuickBooks, add-ons, industry-specific solutions,
and custom software development. These people are exactly the ones who can take full advantage of these new opportunities.
If you are part of this group, consider becoming a VAR for a few best-of-breed
add-on solutions, and foster close relationships with vendors who can feed leads
to you and help you qualify, sell, install and support their solutions.
However, before you jump into the VAR world, put some deep consideration into
what type of firm you are or what type of firm you want to build. If you want
to build the “best QuickBooks techies” firm, then becoming a VAR
might not work well for you. This is because vendors want their VARs to SELL
their software, and you’re not likely to have the best sales skills if
you focus your business totally on the technical side. However, if you want
to build sales, marketing and departmentalized technical skills in QuickBooks,
add-ons, custom development, business process design, business consulting, etc.,
then finding a good VAR relationship may be a great decision for you.
No matter what type of firm you are building, you should always consider that
the BEST consultants always recommend the BEST solution for the particular client
situation, regardless of vendor. Your clients will become especially suspicious
of your “recommendations” if you only represent one vendor and one
product and you’re getting paid to sell it.