Market Analysis: NT’s Impact on Enterprise Accounting Software

How enterprise accounting vendors are positioning their products

Windows NT has become a robust platform for deploying client/server enterprise accounting solutions. NT's rise has been primarily at the expense of Novell and Btrieve Technologies. Novell's NetWare OS and Btrieve's file manager were the most popular network and database platform for low-cost, PC LAN-based workgroup accounting. Now, the vendors that focused on NetWare and Btrieve are switching their research and development funding to new NT-based client/server suites.

The workgroup accounting vendors are not the only ones being seduced by the promise of NT and its supporting cast, BackOffice. The accounting vendors you see in graph 1 are also quietly cozying up to Microsoft. Table 1 summarizes their positioning on NT. I've wondered whether Microsoft would deliver its own enterprise accounting suite. But Microsoft is already the most influential partner of most of the world's accounting vendors, and its influence will grow as more vendors leverage the steady stream of BackOffice-compatible product introductions in 1996 and 1997.

View from the Top
Nobody is paying more attention to NT as an accounting platform than the world's leading accounting software supplier, SAP AG. SAP's partner manager in the US, Jean McGrath, quotes some statistics that emphasize the importance SAP places on NT accounting.

  • Among channel partners and customers, SAP has more than 1000 installations running on NT Server. This number represents about 17% of SAP's world-wide user base.
  • Today, NT Server (database and application servers) is the choice for 25% of all new customers of SAP's R/3 client/server accounting product.
  • SAP and Microsoft have been working on R/3 for NT Server for more than three years, and R/3 has supported the SQL Server 6.0 relational database management system (RDBMS) since mid-1995.

SAP is also working with Microsoft on other NT- and BackOffice-related initiatives, including the Business API (BAPI) and ActiveX. These tools let you build Internet-enabled application business objects and integrate Microsoft Exchange Server with R/3 for email and workflow routing. The R/3 internal application mail system already supports the Microsoft Messaging API (MAPI) for routing messages to and from Microsoft Mail.

Dun & Bradstreet Software (DBS) is also a big fan of NT accounting, according to Eric Austvold, product director for SmartStream. In fact, Austvold claims that Microsoft BackOffice is the number one focus for Dun & Bradstreet Software in 1996. An internal DBS group, BackOffice SmartStream (BOSS), backs Austvold's claim. SmartStream has been available on NT for more than a year, and DBS has slated support for the Microsoft SQL Server 6.5 RDBMS for August 1996. Austvold says that 10% to 15% of the SmartStream installed base is on NT, and DBS expects this percentage to increase as the company launches new software to leverage other BackOffice components. This launch will include delivering SmartStream's functional activities as Web-enabled applets that you load through Microsoft's Internet Information Server (IIS), and managing SmartStream installs, uninstalls, and upgrades through the Microsoft Systems Management Server (SMS).

Systems Software Associates (SSA), JD Edwards (JDE), and JBA Holdings are vendors that traditionally focus on the IBM AS/400 platform. Although they have announced or shipped client/server accounting products for AS/400- or UNIX-based servers, these vendors do not appear to view NT accounting as positively as higher- or lower-end vendors. All three have announced NT versions for delivery sometime in 1996, but none currently support the Microsoft SQL Server 6.0 RDBMS. Consequently, it will be some time until these players have much significance in the NT accounting market. This situation is puzzling because NT with BackOffice, which is often positioned as a UNIX or NetWare killer platform, resembles IBM's OS/400 in its scope, design, and strategic positioning as an application platform.

Having no legacy baggage to bother with, client/server accounting-only vendors such as Hyperion Software and PeopleSoft seem to be likely candidates to enthusiastically support NT accounting. In fact, neither has yet joined the BackOffice forces. By the time you read this, both vendors should have announced support for the SQL Server RDBMS and other BackOffice components. But currently, PeopleSoft and Hyperion are keeping low profiles and claim that less than 10% of their user base is on NT platforms. Ross Systems, Lawson Software, and Walker Interactive Systems share the same attitude. Ross and Lawson are still ramping up their client/server UNIX accounting suites, and Walker is trying to engineer a renaissance for its mainframe-based Tamaris accounting applications.

All Agree on Something
The top 10 representatives I spoke to were unanimous on several points. They will not deliver reduced-functionality versions of their systems for the NT platform. They see no rationale for lower pricing of NT versions than for other versions of their products. They do not anticipate that NT will dramatically change their primarily direct-sales model. They expect NT and BackOffice to play an increasingly important role in their future strategies for their client/server accounting suites.

Accounting software vendors and their Windows NT Server support
Client/Server NT Server SQL Server
Vendor Product Support Support
SAP AG R/3 Yes Yes
Dun & Bradstreet Software SmartStream DE Yes 1996
System Software Associates BPICS/CS N/A N/A
JD Edwards & Co. OneWorld N/A N/A
JBA Holdings Not Released N/A N/A
PeopleSoft PeopleSoft Yes 1996
Hyperion Software Hyperion Financials Yes 1996
Ross Systems Renaissance Yes Yes
Lawson Software Open Enterprise Yes N/A
Walker Interactive Systems APTOS N/A N/A

The question is whether such consensus will hold up as the top 10 come under increasing pressure from middle-market converts to NT accounting, such as Great Plains Software, Platinum Software, and Solomon Software. These vendors sell client/server accounting packages that run on NT and SQL Server at significantly lower prices than those of products mentioned so far in this article. NT and SQL Server are just two more components that level the playing field for accounting applications.

Level Playing Field
Most client/server accounting vendors now offer the same GUI (Windows), the same server OS (NT Server), and the same RDBMS (SQL Server). The differences are in the breadth and depth of functionality that various vendor suites offer; the integration of added-value enabling technologies such as workflow and email; the software acquisition, implementation, and ongoing maintenance costs; and the sales and support networks that the vendors offer worldwide. Given this scenario, businesses that have less than $250 million in annual revenues, that need basic financial and distribution software modules, and that do not have large transaction volumes or user connections will be hard pressed to justify paying the top-dollar prices that the top 10 accounting suites command.

The top 10 argue that their software's value is no less on NT, so they have no reason to charge less. They also argue that the relatively low cost of NT as a computing infrastructure means that the customer will benefit from being able to deploy high-value software on low-cost platforms. This argument assumes, of course, that the customer really needs the functionality that the top 10 providers deliver. If not, the argument collapses, and customers are better served buying from the middle-market vendors that deliver less expensive accounting solutions that use the same GUI, server OS, and databases as the top 10.

Something's Gonna Change
Expect the top 10 to maintain their premium pricing for a while and the middle market players to gradually increase theirs. Then, the first of the top 10 to break ranks will set off a price reduction across the board. You will certainly see stratified product lines from the top 10 and the emergence of indirect channels that sell NT systems primarily through value added resellers (VARs), rather than directly.

However, the VAR channel has invested more than 10 years building skills for implementing NetWare and Btrieve accounting. According to David Shirk, vice president of sales at Macola Software, this channel is not going to switch to NT overnight. For the VARs, NT is both an opportunity and a threat. Shirk says the time necessary to convert the VAR channel is the biggest obstacle Microsoft faces in keeping the NT accounting juggernaut on target. Naturally, Macola, like its competition in the middle market, is hedging its bets. Like Platinum Software, Macola has dropped active development of its UNIX versions and redirected resources to NT accounting. Macola already claims that 11% to 12% of its user base is on NT now, and the company expects this base to grow to as much as 20% by the end of 1996.

SBT, another middle market player, is also rapidly reorganizing around the NT and BackOffice platform, embracing IIS especially. Today, with products such as WebTrader and WebAlert, SBT is probably the vendor most advanced in exploiting IIS capabilities. WebTrader links Internet browser order forms with the vendor's order entry accounting module to automate capturing and accounting for sales orders across the Internet. WebAlert provides an accounting-oriented database notification engine that can deliver alerts by email across the Internet. Dun & Bradstreet Software, Lawson Software, SAP, and SBT's recent flurry of announcements relating to Internet-enabled accounting suggest that IIS will become another vital component of the BackOffice suite, and vendors will be eager to leverage it.

NT accounting is here to stay, and it's set to shake up the client/server accounting market from top to bottom. Whatever happens, NT accounting appears to be a good deal for users, a tough act for vendors to manage, and another coup for Microsoft, which has just taken another strategic role in another multibillion-dollar software market, right under everyone's nose.

Apprise Software Somerville, NJ 908-725-6000
CODA Manchester, NH 603-647-9600
Computer Associates Islandia, NY 516-342-5224
Concepts Dynamics Schaumburg, IL 847-397-4400
Design Data Systems Largo, FL 813-539-1077
Dun & Bradstreet Software Atlanta, GA 404-239-2000
FlexiInternational Shelton, CT 203-925-3040
Geac VisionShift Tampa, FL 813-873-9990
Great Plains Software Fargo, ND 701-281-0550
Hyperion Software Stamford, CT 203-703-3000
JD Edwards Denver, CO 303-488-4000
Lawson Software Minneapolis, MN 612-379-8086
LIBRA Salt Lake City, UT 801-281-0700
MTX International Englewood, CO 303-790-1400
Navision Software US Norcross, GA 770-564-8000
PeopleSoft Pleasanton, CA 510-225-3000
Platinum Software Irvine, CA 714-453-4000
Ross Systems Redwood City, CA 415-593-2500
SAP America Wayne, PA 610-725-4500
SBT Accounting Systems San Rafael, CA 415-444-9900
Solomon Software Findlay, OH 419-423-3688
SQL Financials Atlanta, GA 770-390-3900
System Software Associates Chicago, IL 312-641-2900
Systems Union White Plains, NY 914-948-7770
Walker Interactive Systems San Francisco, CA 415-495-8811
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