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BSI 2017 VAR Starscontinued from page 2of Dynamics NAV resellers,Microsoft representativesbaffled the crowd with theway they talked about Dynamics 365, especially whenone said Microsoft would notallow them to sell the SMBproducts—Dynamics GP/NAV/SL—under the Microsoftname, but would requireGeoff Ashley,them to white label the apAcumaticaplications.“It’s not only confused, but unapologeticallyconfused,” says Geoff Ashley, the recently hiredVP of partner strategy for Acumatica. “WhatMicrosoft has said is just bizarre, letting peoplewho don’t have facts make announcements,”Ashley says.It is not just competitors pointing to confusion. Ems, agrees the confusion is a problem forRSM, a major Microsoft reseller, which handlesthe four on-premise products, Dynamics AX/GP/NAV/SL and the 365 cloud line.“I think it’s a problem,” says Ems. “The marketwants to have some clarity from a branding perspective, when we are marketing our perspective, we can’t keep changing the names of theproduct.” The confusion over Dynamics affectsnot only customers, but also members of thefirm. “It is confusing to us internally. What wehave done is come up with our own definitions”he says.So with the biggest player in a state of fluxand the ownership of software vendors changing like fall fashions, the one constant in themarket in this year has been the success ofcloud products.In the Deltek world, Kennedy Vomberg of Toronto, Ont., claims it, “leads all Deltek partnerswith the highest percentage of their client basenow deploying their applications in the cloud,”according to principal Don Kennedy.Kennedy attributes his firm’s high rate ofcloud adoption to some factors specific to theCanadian market. One of those is the concentration of clients around the greater Toronto andMontreal areas; “as compared to many of ourU.S. counterparts who have clients scatteredgeographically across multiple states.”Also working in favor of cloud sales, Kennedysays is Canadian demographics with most clients in the ‘sweet spot’ range of 30 to 70 employees, which he says makes cloud deploymentsboth affordable and appealing.Then, there is simply luck when downsizingorganizations seek to get away from licensingfees. “Just this past month, we had the 20-person Canadian operations of a U.S.-based engineering firm, which has more than 100 peopleusing an on-premise version of Vision, receivepermission to break-away from the U.S. deployment and set up their own instance of Visionrunning in the cloud,” he says.With the question of the cloud largelysettled, a greater deal of uncertainty stems fromchanges in ownership and leadership of software vendors—changes that leave at least mildunease over the direction of companies.This started in a big way in October 2016when Oracle completed itsacquisition of cloud vendorNetSuite to boost Oracle’sown wobbly cloud effort. Thatsame month, Epicor Softwarewas sold by Apax Partners toKKR—from one private equityfirm to another. In April, Community Brands was formed byputting together a companyLinda Bryan, Tamlinfrom a number of businesses, Software DevelopersSelecting the 2017 VAR StarsThe selection of mid-market accountingsoftware resellers for Bob Scott’s VAR Stars reston one basic principal: quality, not revenue, asthe deciding factor in picking the 100 businessesthat are selected for this honor. VARs from verysmall shops to the largest participants in thebusiness have been selected in past years’ and inthis year’s rendition.A variety of criteria go into the definition ofquality including awards resellers have receivedfrom vendors, such as the Microsoft DynamicsPresident’s Club and Inner Circle, and the President’s Circle, Million Dollar Club and Chairman’sClub of Sage North America. Growth, leadershipin the industry and development and acceptanceof important software products by the resellersare all factors in the selection. There is also an10 www.bobscottsinsights.comeffort to represent as many software publishersas possible. There is no ranking within these 100firms.Firms were asked to provide the number ofemployees and revenue. In cases in which businesses did not provide revenue, it was estimatedbased on the number of employees, also takinginto account the general price range of the ERPapplications that these firms handle.In virtually every case, resellers derive revenuefrom sources other than the sale of mid-marketfinancial applications. These include infrastructure and networking services and a variety ofother software products. However, all VARsconsidered feature accounting applications as thecore around which their businesses are built.including nonprofit vendor, Abila. Sage acquiredIntacct in July, leaving Acumatica the only freestanding mid-market financial cloud softwarecompany of note. Also in July, two constructioncompanies came together in August when Viewpoint acquired Dexter Chaney.In August, Apax, which owns The Netherlands-based Exact, announced plans to transfer itsthree American manufacturing packages—JobBoss,Macola and Max—to ECI Solutions, which was purchasedby Apax as the unit to handlethose software applications.There were also importantleadership changes with newScott Ehman,CEOs at FinancialForce inJanuary, Exact in September Sageand Epicor in October.So combined with the entity changes, thepersonnel moves meant a substantial amount ofthe industry came under new leadership duringthe course of 2017.Channel Friendly?The year 2017 has seen several vendorsreiterating their support for channel sales. Notall of that has resulted in renewed vigor in somecompanies.The theme of “We Love the Channel” camethrough loud and clear at SAP’s Partner Summitin May. It was announced both at keynotes andthrough interviews during that conference andits major event Sapphire, which was held thefollowing days.“We believe have to do a lot more to drive thedemand,” Sean Thompson said during a Sapphire interview. Thompson, head of businessdevelopment and partner ecosystem SMB Team,outlined the channel structure, along withthe treatment of the long-suffering BusinessByDesign, which will be given “a lot of love. Webelieve in this product.”No matter how they love the product, SAPhas not made much news with its SMB applications since that conference. SAP products arecarried by only three of the 100 VAR Stars andBusinessByDesign is carried by only one of the100.Epicor also swore allegiance to a channelstrategy following its 2016 purchase by investment firm KKR. It simplified reseller pricingand launched a new support program with thecompany said that boosting channel investment was one of the strategies under the newowners.“You don’t expand globally as a softwarecompany without very strong partners,” formerCEO Joe Cowan said at the time.The company was planning to announcecontinued on page 11

2017 VAR Stars BSIcontinued from page 10a new channel program, Epicor officials saidat the company’s Insights conference in May.However, Sally Craig, who had led the channelprogram, left the company in May and it’s notknown where Epicor was in terms of developingthe program at that point.During its earnings webcast this year, Blackbaud executives also talked about their renewedchannel effort. The company disbanded its priorchannel in 2007, but has been rebuilding overthe last few years.The growth has been slow and ChristopherClinton, VP of global channels and ecosystems,left the company in January after four years ninemonths with Blackbaud. In May, Blackbaud’sweb site showed six VARs with a seventh testingthe program. By November, the total had risento eight.Going VerticalAlmost all publishers are talking about encouraging their resellers to pursue vertical markets and cloud accounting unit, Sage Intacct, isone of those.“We are seeing multiple partners continuingto have vertical and microvertical specializationand create products that go the last mile,” saysIntacct’s Macdonald. He continues that firmswhich specialize will perform better than thosethat do not.“We firmly believe partners should specialize,” he says.While Intacct has established a reputation in thenonprofit accounting market,Macdonald notes, “NFP is nota vertical market.” Increasingly, the talk about vertical involves discussion inspecific industries such asfuneral homes, microbreweries or rental software.Software vendors haveSteve Ems,encouraged specializationRSMand also established microvertical programs that help resellers move intovery narrow parts of markets. Infor and NetSuitehave such programs and Sage is starting toput together one. However, putting together amicrovertical program does not happen quickly.NetSuite has been working on its effort for twoyears and it is just now starting to pick up steam.“We are engaged in dramatically more conversation than we have ever had with partnersabout verticals,” says Craig West, NetSuite’s VPof channel sales.Preparing for a market means taking thesteps necessary to show prospects that a reselleris serious about the market. NetSuite works withthe partner to “check all the boxes” and providessales and marketing materials.Acumatica has the same view.“Every partner has to haveIP,” says Acumatica’s Ashley.“With our tool set and ourprogram and margins, theyhave the ability to create IPand managed services,” hesays. “You have the ability tocreate those things so there isno competition between youand the vendor.”Grant Fraser,Ashley agrees resellersNavigator Businessneed help in developingSolutionsverticals. “All of the publishers say you have to go to the cloud and you haveto go vertical, but nobody says how to do it,”he continues. His view is vendors must enableVARs to move from very expensive professionalservices and change culture.Acumatica is creating an owner-specific trackto have an “adult conversation about how do youmaximize the deferred revenue module. How doyou make the change from standard on-premiseprofessional services?” Ashley says.Obviously, verticals can have their risks,such as when an industry segment tanks.Tamlin Software Developers had ridden marketdemands for product traceability for severalyears. However, the Dallas, Texas-based reselleralso had a significant amount of its portfolio inthe oil and gas business. The downturn in thatbusiness pushed Tamlin to the first loss in itshistory in 2016, says owner Linda Bryan.“We scrambled and got more going into thefood industry,” she says. “We closed some reallygood new accounts and we have some more toclose for the rest of the fourth quarter.”Demand from that sector is being spurredby the Food Safety Modernization Act. Signedinto law on Jan. 4, 2011 by President Obama, themeasure represents the largest revision to foodsafety laws since 1935. Provisions requiring thecompliance of businesses with fewer than 500employees went into effect on September 1.In order to comply, businesses, “can do itmanually, if they want to,” says Bryan. “We dotraceability but the thing that is really differentabout us is we support all the global food safetyinitiatives.”CPA Firms ReturnFor the last few years, one of the major trendsin reselling has been the re-entrance of CPAfirms into the market. That has continued during the last year.NetSuite appeared to have the best year insigning up multi-office firms. In April, it addedWithumSmith Brown of Red Bank, N.J.; in July,Cherry Bekaert; and in October, Moss Adams.Intacct picked up Cohn Reznick early this yearand Acumatica signed the DWD TechnologyGroup.The CPA organizations have done well in thecloud world—Armanino was chosen Intacct’stop VAR and Eide Bailly Technology Consultingwas NetSuite’s Americas Solution Provider Partner of the Year for 2017. Wipfli Consulting, anarm of Wisconsin-based accounting firm Wipfliwas the only CPA firm picked to the President’sClub of nonprofit vendor, Abila.Among the advantages of accounting firms isthat many are accustomed to organizing practices around industries. And with operations thatare more diverse than those of many VARs, andmore mature in structure, a major advantage is“their ability to scale almost endlessly,” Intacct’sMacdonald says.Another factor often cited by Macdonald asdrawing the CPA firms in is that as the cloudmarket has developed there is less need forhighly technologically sophisticated—andexpensive—staff. The on-premise VAR businessbecame more and more complicated and to stayin the game participants needed specialists inSQL, infrastructure, the financial software andaccounting.Craig West, NetSuite’s SVP of channel sales,agrees with that assessment and says the business discipline of accounting firms makes themideal participants in his company’s channelprogram, along with their ability to developleads from their other practices areas.“The rigor of those firms aligns with ourproduct offerings,” says West. He adds accounting firms have the resources to support cloudproducts, especially as vendors emphasizespecialization. That business arena requiresfunctional consultants, West says, and theaccounting firms’ functional consultants are agreat fit. Plus, NetSuite’s go-to-market strategy“enables them to get into theiraudit and tax base,” says West.When firms have meetings todiscuss leads, “The partnerscan start raising their handsand say I have a client that hasa need.”NetSuite has also expandedits channel through itsNetSuite Alliance Partner Program, which was launchedTaylor Macdonald,this year for organizationsIntacctthat “were more suited to themodel of consulting without the reselling,” Westsays.The alliance program enlists global andregional systems integrators, financial and business advisory and technology consulting firms.Not limited to the ERP business, it also enlistsfirms addressing HCM, CRM and omnichannelecommerce needs. Previous efforts concentrated on the global systems integrators such asAccenture and Capgemini. The alliance programexpanded the model to the midmarket. “Enablecontinued on page 12www.bobscottsinsights.com 11

BSI 2017 VAR Starscontinued from page 11ment is limited to the product side,” West notes.Sage Seeks RedemptionSage faces a particularly important decision.Intacct has kept its channel fairly small. ButSage, which has its own channel, sees Intacctas its growth engine for the mid market. So,the question is how big does the Intacct channel become and how willSage balance recruiting newIntacct dealers or authorizingSage VARs to carry the cloudapplication?“The Intact acquisition isstill running independently,”notes Scott Ehmen, VP ofNorth American partner salesand strategy. But he agrees,Hector Negron,“Longer term we are going toOptimum Businesshave to rationalize the partTransformationner programs.”A lot of rationalization hasbeen going on in Sage operations. Where beforeCEO Steve Kelley arrived three years ago, manyacquired operations kept their pre-acquisitionways of business, under the new leader, Sage hasbeen reducing the number of software systems,contracts, price lists and the number of Sagepersonnel that VARs have to deal with.Sage is also pushing a message that it hasturned away from past policies that were viewedas anti-channel. Ehmen says his company hasbeen correcting those problems that in the past,“drove partners away from engaging and support-ing Sage. We had a situation where those behaviorsresulted in less contribution from the channel.”Consistent with Kelly’s overall strategy, Sageis working to simplify the channel program.That includes eliminating the practice of having accountant managers for several differentproducts calling on individual resellers. Now,“We have one partner accountant manager todeal with all product lines. We have eliminatedmultiple touch points,” Ehmen says.Ehmen says Sage must support resellersin dealing with the changing structure andmethodology of cloud sales in the channel. “Athird of partners won’t get it and won’t make thetransition,” he notes.A big change is the knowledge buyers havewhen they contact a reseller. Ehmen says research shows 65 percent of B-to-B buyers “knowwhat they want to buy before the contact salesperson. A prospective customer will be doingresearch on the web.”Marketing support is a major area in whichSage is investing. “We are referring them tothird-party to help build up their assets,” Ehmensays. “We are getting them to coalesce on rebranding themselves.”Sage is also planning to expand its channelfor X-3, its high-end manufacturing product.“We are increasingly seeing Sage X-3 go upagainst Oracle and SAP,” Ehmen says.To meet that need, Sage will court organizations such as Big Four firms. Ehmen reportsSage is looking at its whole approach to recruiting because of “that need for different partners that come into play” and also talks aboutmoving into the enterprise area with selectedGuide to Software Products ListedHere are the products listed in this chart by vendor. When abbreviated, the abbreviations are listed firstand the fuller name is in parenthesis. In many cases, the name of the company is also shown as the nameof the product. Companies which have a product with the same name as the company and no variantsThe major change to this year’s chart is the variety of Dynamics 365 products. This report hasfollowed the information submitted by resellers. If they listed specific editions of Dynamics 365, thatinformation was reported. If they did not, the charts say only, Dynamics 365.Some firms continue to report carrying two discontinued Sage products, which they continue to support—Sage Pro and BusinessWorks.Abila: Abila MIPAccountMateAcumaticaDeltek: GCS, Premier, Vision, Deltek forProfessional Services.EpicorGreentreeInfor: Infor Distribution SX.e Infor CloudSuite IndustrialIntuit: QuickBooks, QBES (QuickBooks 0Enterprise Solutions)JamisJobOpsMicrosoft: Dynamics AX, Dynamics GP, DynamicsNAV, Dynamics SL, Dynamics 365NetSuiteOracle JD EdwardsQADSAP: B1 (Business One), ByD (Business ByDesign)Financials OnDemand.Sage North America: Intacct, Live, Sage 50, Sage100, Sage 300, Sage 500, Sage 100 Contractor,Sage 300 CRE (Construction & Real Estate); X3,Sage Pro, BusinessWorksSysproThinSoftUnanetverticals.Ehmen says Sage hashad some experience withorganizations at that levelof the market. “We have hadsome good success with Deloitte and PWC in the UnitedKingdom,” he says. But in thiscountry, he continues “We arein early stages of building outstrategic alliances.”Craig West,The Microsoft FactorNetSuiteMicrosoft is the biggest mid-market playerwith its Dynamic operations and its shift topushing the cloud-based Dynamics 365 line hasa major impact on its resellers. It has also led totalk of confusion and problems with the namesof various elements of the software line.One well-known reseller, who did not wishto be quoted by name, spelled out his view ofthe situation. Dynamics 365 for Operations andFinance is the old Dynamics AX; Dynamics forSales and Field Service is CRM; Dynamics forTalent is a hybrid which “will be the directionfor the future featuring PowerApps, AX andCRM.”“Every single Microsoft seller worldwide hasa Dynamics 365 quota,” he says. That applies tothose three products. As a reseller, which hasbuilt its business on those applications, “we arevery happy with the direction,” he says.The direction for those products is clear, hesays. What is not clear is the direction for threeother products which is where the “noise andconfusion are coming from partners and customers” because Microsoft “has not been clearin articulating their future.”Those products include the Business Edition–Dynamics NAV—which will no longer be soldby the direct sales force but which “will stillhave legs as a cloud solution through Tenerife[a product code name] through partners. Thismeans MSFT is still moving NAV to Azure as aplatform for partners.” The other two, DynamicsGP and SL will not move to the cloud, but therewill continue to receive research and development investment as on-premise products.Microsoft seems highly unlikely to abandonon-premise GP anytime soon. The question ofDynamics SL, the former Solomon, might bedifferent. Solomon Cloud Solutions, based inFindlay, Ohio, the same town in which Solomonwas based, calls itself “the original architectof Solomon Software” and provides softwareand support in the SL market. Somehow, it hasalways seen possible Dynamics SL could end upback there.However, GP

BCS/ProSoft San Antonio, Texas Sage 100, Deltek Vision, Deltek for Professional Services, 40 7.8 NetSuite . JMT Consulting Group Patterson, N.Y. Abila MIP, Intacct 30 6.8 Kennedy Vomberg Toronto, Ont. Deltek Vision, Deltek for Professional Services 3 1.4C LBMC Technologies Nashville, Tenn. Dynamics GP/SL/365, Intacct 56 14.2 .