The marketplace for buying and selling accounting software has changed dramatically through the years. Since the late eighties, my consulting businesses has served as a Value Added Reseller (VAR) of accounting software, principally with MAS 90 from Sage for small businesses and with Abila MIP Fund Accounting™ for nonprofits and government for the last nine years.
The traditional model is for the “local” VAR to find prospects, help them analyze their needs and hopefully, acquire them as customers. They purchase the software license from the software vendor (e.g., Abila) and resell it to the customer, along with the added-value of professional services for implementation and training. In the last few years, the role of the VAR has diminished, along with the term, as software vendors prefer euphemisms such as “Business Partner.”
So, what’s going on? Here are the main factors:
- There is a movement toward “cloud-based” business applications and away from in-house servers and IT infrastructure. This dynamic, driven by economics, is irreversible, so accept it.
- As part of the movement to the “cloud,” software is increasingly sold as a monthly subscription hosted by the vendor. As a VAR, it takes a pile of monthly subscription fee commissions to add up to what used to be earned on a traditional frontend perpetual license sale.
- Software vendors are using sophisticated marketing strategies and tools to appeal directly to prospects, allowing the vendor to “cherry pick” the best leads and close them directly. It is not unusual to discover while pursuing a local sales opportunity that you are competing against the software vendor.
- All of the marketing and sales activities often take place virtually without a face-to-face meeting between seller and buyer. This even extends to the implementation process, traditionally the domain of the VAR. More and more, when led by the vendor, the implementation is a one-size-fits-all process that may get the customer “live” on the software but left with the question, “Is that all there is?”
So, back to the main question: Is the software VAR dead? My conclusion is NO but ailing, and the patient will not survive unless we VARs change the business model. To a greater extent, NFP Partners has accomplished this by providing professional accounting services to nonprofit organizations in addition to accounting software sales and related implementation and supporting services. Some of our more successful engagements combine Abila MIP and accounting services, a great solution for smaller nonprofits with more complex reporting requirements but with limited financial resources for a full-time in-house staff.
We believe the role of the VAR as a trusted source of in-depth technical and accounting expertise is still solid. Each software implementation presents a unique challenge. Understanding the customer’s requirements and devising the right solution for the customer at the beginning leads to a successful implementation and a solid ongoing professional relationship.