Supply and demand

The recent rash of specialist software acquisitions has left accountants apprehensive, but do they really have cause for concern and, if so, why? Lesley Meall reports

Business is all about making money. Whether you are the chief financial officer of a multinational conglomerate or a sole practitioner on the local high street, you want to grow your business and make it as profitable as possible. So do the organisations that provide accountants with software, and over the past few months this has resulted in a certain amount of consolidation among suppliers.

Wolters Kluwer Law & Business has acquired the accountants division of the tax and practice software developer MYOB (in the UK and Ireland); Thomson International Legal & Regulatory has bought the practice software house Digita; Unit 4 Agresso has bought Coda, the financial management and accounting software supplier; and Access Technology Group, the owner of Access Accounting, has bought Armstrong Consultants, one of its resellers and third-party developers.

It is all about increasing market share, exploiting economies of scale, minimising overheads, encouraging accountants to spend more money on more software, and providing shareholders with ever-increasing profits. But according to the companies involved, end-users have nothing to worry about and everything to look forward to.

'Being part of a much larger software organisation gives us the platform for growth in the future,' says chief executive, Jeremy Roche, 'and I believe our customers and staff have much to look forward to.' In a letter to Digita customers, Jeremy Rihll, co-founder and managing director, wrote: 'We believe this union will reward you not only with long-term security and stability, but also with the technical innovation that brought you to Digita in the first place.' While an equally upbeat MYOB has said: 'It is very much business as usual here', and advised clients to expect 'ongoing support and product updates', delivered by the team they know.

They would say that, wouldn't they? But you are accountants, so you know that customer satisfaction is rarely number one on a post-acquisition 'to do' list. Not that this makes you any happier when your personal takeover experiences are less than positive.

'I had a few problems when Iris took over Freeway,' recalls Clive Johnson, who runs KC & Co, a medium-sized practice in Coventry. 'I'd been using Freeway Cashbook,' he recalls, but after the acquisition Iris stopped supporting it. Johnson was forced to find a replacement and opted for something from Sage, but, as he comments: 'The process was disruptive and very expensive', so he wasn't impressed.

Losing sleep

When a software supplier changes hands, this sort of scenario can give accountants nightmares, but there is not a lot that you can do about it because nobody wants to change their supplier or even their software applications, unless it is absolutely unavoidable (or unquestionably well worth the effort). So, it is fortunate that not all mergers and acquisitions are as bad as you expect them to be.

'When TAS Books was acquired by Sage I was worried,' says Nick Rawlins, the finance director of Lincs FM. 'I thought TAS would get squeezed out, and support would disappear,' he says, 'but so far I've been pleasantly surprised.'

Mandy Gray, the finance director at Refina Ltd, also had a few sleepless nights when her accountancy software supplier changed hands in 2005. The company had been happily using Exchequer Enterprise for years, and had chosen it over Sage and Pegasus because of its strong stock control features, ease of use and the supplier's location. 'It was the best product and it was local,' she says, so when Iris bought Exchequer, Gray had a sense of foreboding.

'Having a local company was important for staff training, and the support from Exchequer had been fantastic,' says Gray, who didn't want anything to rock the boat. 'When you are perfectly happy with the service you are getting you fear big changes like this,' she explains, 'and there were some issues when the software changed hands.' But these were soon resolved, and Gray is as happy with Exchequer Enterprise today as she was when she bought it 10 years ago.

The issue of who owns a software supplier can also be a moot point for accountants who have no direct contact with their software developer. 'When I joined the charity in 2006 I had to find a new financial system,' recalls Liz Ambekar, finance director of the Prostate Cancer Charity, 'and I invited a number of suppliers to tender.' None of them were software developers, however, and the demos for her shortlist of Access Dimensions, SunSystems and Pegasus Opera were all done by resellers.

Owning up

'Today, we use Access,' says Ambekar, but the software was installed and is supported by the reseller Asyst. 'This is our most important relationship,' she explains, adding: 'It is absolutely fundamental.' The Access Technology Group owns Access Accounting and its reseller Asyst, as Ambekar is aware, and although there is a clear division between the developer and the reseller, the relationship between the two is not traditional. Even so, Ambekar's allegiance to Asyst speaks volumes on the roles such resellers play in the supply chain.

The reseller model has many advantages for software developers, not least of which is the buffer it creates between them and the organisations that buy their software. With resellers at the sharp end, developers can manage changes of ownership more easily than they could if end-users were exposed to the consequent turmoil on a day-to-day basis. Which helps to explain why some accountants don't have a clue about the ownership of the organisations that develop the software they use to run their business.

While most practitioners know the names of the software applications they use, unless the developer is one of the major suppliers, naming them can be more of a challenge. The situation isn't much different when it comes to enterprise financial software. Ask a collection of SunSystems users who own their software developer and you can expect a variety of answers. These range from Systems Union (the previous owner) to Infor (the current owner) via Sapphire Systems and Eclipse, both resellers.

You have to look long and hard for a user who can come up with the magic words Golden Gate Capital, but this private equity company owns over 70% of Infor. This gives the private equity company a major stake in Infor's future, and more influence over its growing software portfolio than any of their end-users.

For the past few years, consolidation has been rife among suppliers of software for accountants in business and practice, with Infor, Iris, Oracle, Sage and Microsoft all using acquisition to expand their share of the marketplace; and the next few years promise more of the same. The organisation that owns your software supplier today may not be the one that owns it tomorrow. Small suppliers are increasingly marginalised, while the differences between the big suppliers are gradually disappearing, and all the most of you can do is hope that your experience of the mergers and acquisitions process is more positive than negative.

Lesley Meall is a writer on business and technology issues.