MBS GROWS 4 PERCENT, AND OH MY!
Microsoft Business Solutions reported 4 percent revenue growth for the third quarter ended March 31 as Microsoft's CFO cited MBS's failure to execute. Meanwhile, MBS revenue predictions for the fourth quarter were lowered to $180 million, down $25 million from original expectations and, isn't somebody's neck on the line since quarterly revenue was $179 million a year ago? March quarterly revenue was $153 million, up from $147 million, with overseas sales of Navision producing most of the gain. In a conference call, CFO John Connors mentioned the effect of having new people in district sales positions and the fact that MBS was “less effective with traditional partners.” He added, “We're kind of doing what the competition is doing.” (Like, I suppose Best Software's 21 percent growth?) The MBS operating loss (not yet disclosed) dropped 29 percent because of lower expenses. Remember when I raised the possibility that a 40 percent revenue gain in the second quarter could be a fluke? Reports at Convergence had it that the merger of the Classic and MBS sales forces was not done in all regions and might be undone. And, am I imagining things or has salesmeister Orlando Ayala become less visible? Zero growth will make a lot of people less visible.

TECTURA EYES BIG GROWTH.
Tectura is making a run at the No. 1 spot among accounting software resellers in the United States. The Arizona-based company, which sells Great Plains, Solomon, Axapta, and Macola, has around $40 million in revenue, with $25 million to $35 million in the funnel, depending on what deals close. CEO Terry Petrzelka says there is a deal looming in Europe that could really kick the numbers up. (Apparently the targets do not include Columbus IT Partner or Aston Business Solutions.) There seems to be this European thing going around. Those guys in Texas, now No. 1 in the United States, what's the name, oh yeah, ePartners, opened an office in London earlier this year. InterDyn, the consortium of Great Plains resellers that one of my contacts labeled a “faux consolidator,” has also talked about moving into Europe. (Do you think the folks in Texas have a sign at the company picnic that says, “eHowdy, ePartners?”) Also interesting, NetSuite had a name tag for Petrzelka at its user conference this week—an active recruitment is underway, which would be a real coup if NetSuite can sign Tectura.

EPICOR MAKES MONEY, READIES CUTS.
Epicor Software reported net income of $3.5 million for its March quarter, up from $2.4 million a year earlier. Revenue in the recent quarter was $43.4 million, up 26 percent from $34.3 million a year ago. The company expects 2004 revenue will hit $174 million to $177 million. This does not include numbers from the purchase of Scala, which is expected to bring it to $210 million to $215 million for the year. After the deal is done, Epicor expects to cut costs, including redundant facilities, and “streamline” R&D and tech support spending. Epicor did not give any estimates about how many people will be streamlined.

NETSUITE RAISES MARGINS.
NetSuite, (the former NetLedger) has implemented a tiered margin system for its resellers. Previously, resellers got a 30 percent margin on the initial sale and “a piece” of the recurring revenue from the online system. Now, they can start at 30 percent and get up to 50 percent on sales of more than $1 million. The same margins will now apply to the monthly subscription revenue. CEO Zach Nelson, who earlier predicted $40 million in revenue for 2004, now predicts around $50 million, based on Q1 results. The company had just under $30 million in sales for 2003. Nelson made those comments as he was getting ready to respond to an email from NetSuite's chief funder, Oracle chairman Larry Ellison, asking for predictions for the year. NetSuite held its annual reseller conference at the Oracle Conference Center in Redwood Shores, Calif. Larry gives NetSuite the keys to the building on occasion.

CHANNEL VIEWS.
Accounting Technology asked its readers what's driving business. There are so many illuminating comments, here's some that did not make the print version: Sue Bennett, Bennett Porter -- “Our software sales this year, compared to last year, are up 22 percent, while our expenses have decreased by 6 percent.” … Eric Sheehan, Olsen Thielen Technologies -- “Consulting revenue is 37 percent ahead of last year's numbers, mostly as a result of getting some larger and longer-term client engagements. Software revenue is down almost 7 percent, compared to last year. This is mostly due to some software licensing changes involving Microsoft.” … Richard Paul Thomas, TBC International -- “Our earnings are roughly the same as they were last year with slight increases this past quarter. However, the biggest change is that we are seeing a pivotal switch to increased earnings from new clients, which is something we haven't seen much of since 9/11.” … Bob Kohlmeyer, DWD Technology Group -- “Many of the companies that we spoke with a year or two ago are now coming back to us ready to make an investment in software. We've recently closed on five separate engagements that were originally proposed more than 15 months ago.”

CHANGING OF THE GUARD.
A couple of weeks ago, my family and I witnessed the changing of the guard at Buckingham Palace, something I had also done in 1987. At times, we were unable to see over the crowd, but we watched part of the ceremony through the screens of the picture phones and cameras that tourists held up. That didn't happen 17 years ago. … The border area of Scotland has a great number of pheasants. Many of these beautiful birds end up flattened on the roadway. I told my wife, “Even the road kill here is expensive.” (Be sure to watch for “Bob Scott's International Road Kill Field Guide 2004.) … We spent much of our time in an area populated with monuments to William Wallace, the guy who gave us the original meaning of spilling your guts. It wasn't far from where my family of Scotts stole their first herds of cattle and sheep. … At The Witchery, a pricey restaurant near Edinburgh Castle, one of the featured entrées was Steak Tartare, made with Aberdeen Angus. Thought they should have labeled it “Mad Cow Special.” … Looking at the Rosetta Stone in the British Museum, we discovered a previously un-translated paragraph that says, “The user hereby agrees to be bound by the terms of this license…”

NAVISION TOO CLUNKY?
One item left over from Convergence, the Microsoft user conference held in March, is the MBS effort to make Navision easer to use and install. Jan Sillermann, direct of mid-market solutions, said at one of a number of “product theaters” that Navision has become too complex and too difficult to install. New features, he continued, are aimed at solving those issues, particularly with the aim of boosting sales in the low end of the Navision target market. At a session with MBS president Doug Burgum and two PR people held shortly thereafter, I thought I saw the three jolt a bit upright when Sillermann's comments were relayed to them.

THE NAVISION BODY COUNT RISES.
Sillermann provided one of the most interesting tidbits from Convergence with what is, in my recollection, the first accounting of the Navision installed based since the product's acquisition by Microsoft. His PowerPoint presentation said there are 37,000 Navision installations, up 4,600 over the last year. That's 12 percent growth in the count. Great Plains had about 23,000 sites, and Solomon about 16,000, in September 2002. (The GP count for that date does not include the 17,000 or so DOS Great Plains Accounting sites.) I don't have a feel for the size of the Great Plains installed base, since the company combined Dynamics and eEnterprise into the Great Plains Edition. However, 30,000 would represent significant growth, and the main thing MBS has been talking about as a contributor to growing revenue has been Navision. Resellers say the Microsoft purchase of Navision made the product immediately credible with buyers in the U.S.

EXACT PROFITS ON SOFTLINE.
Exact Software lost the bidding war for Softline to rival Sage last year. But it did not walk away empty-handed. In the takeover battle, Exact acquired a minority stake of 15.1 percent in Softline Limited for roughly $11.1 million. The sale, minus legal and due-diligence expenses, generated income of about $16.3 million, for a gain of roughly $5.2 million for the year ended December 31. Not bad at all; in fact, that's a better return than Exact got selling software. Also not bad is Exact's decision to pay founder and CEO Edward Hagens his salary during his 10-month sabbatical. That's a little over $192,000 (and he's getting paid in euros, not dollars.)

EXACT NUMBERS UP AND DOWN.
You need a currency lesson to get through the results for Exact Software. The company's presentation shows that U.S. revenue for Exact North America was $58.3 million for 2003, up from $52 million the year ago. Sent back to the Netherlands, the U.S. numbers fell to 51.6 euros, down from 55.6 million. But when the company issued its email newsletter, SoftWire, for April, it reported U.S. results at $57 million, a 9 percent increase from a year ago. That was translated from 60.7 million euros. The Softwire numbers are in constant currencies, and improve the North American contribution from 25 percent up to 27 percent of Exact's overall revenue of 206.4 million euros for the year.

VAR PRODUCT LINE CHANGES.
A surprise attendee at Convergence was Accpac loyalist Peter Kaufman, owner of Dynamic Software Solutions International of Miami. DSS is adding Axapta to its product line to address the manufacturing market. There seems to be a lot of that attitude going around when it comes to Axapta. Meanwhile, Judy Thomas and the TM Group, one of the premier resellers signed to carry SAP's BusinessOne line, has parted ways from SAP. P.S., it's hard to get very excited about SAP's alliance with American Express. When associate editor Carly Lombardo interviewed SAP's Gadi Shamia about the BusinessOne channel program for a story published in March, somehow he never volunteered a single word about AmEx.

TOP 100 MEA CULPA.
Dyslexia struck in my reporting of the numbers in the Bob Scott VAR 100 in Accounting Technology in April. Someone, I was looking at the 2002 and 2003 results for Blytheco, and ended up picking up the 2002 numbers and printing them. Blytheco should have been around $7.6 million. This is a mistake I should have picked up because owner Steve Blythe routinely wins about every award that Best Software hands out for sales performance. My apologies.

MY INFLUENCES.
At Convergence, someone asked me what authors influenced me. It reminded me of the time a former girlfriend admitted that she tried to figure out something about my personality by looking at the walls of my apartment, but there was nothing on them except white paint. But it's not that there was nothing there--white has all the colors of the rainbow. And that's the mistake many people make in trying to judge others, figuring that if they know what goes in, they will know what's inside. But that seems to me like the wrong exercise. Often, the really meaningful questions in life are not the complicated deep question, but are ones we can answer, such as, “One lump or two?” and “Who was that lady I saw you with last night?” And what is really important is to see the rainbow inside, no matter what happens to be hanging on the wall.

CAMDEN, CENTERPRISE FOCUS INTERNALLY.
Matt Camden, who just took the newly created job of CIO at Centerprise Advisors, says his job over the next year is to put the company's five main offices and 15 satellites on the same platforms so that the group of rolled-up firms can act as one organization. That means putting Centerprise on one email platform and moving the firm from three different practice management systems to one. Camden was chief technology officer at Clifton Gunderson, where the IT unit was expected to report $13 million in revenue for the year ending in May. At CG, Camden headed both internal IT and IT consulting. At Centerprise, he will be “a friend to consulting,” but not actively involved in it for the moment. Centerprise is also trying to put together a more focused consulting operation.

RANDOM THOUGHTS.
The Small Business Administration has ruled that buying a tank of gas for an SUV qualifies the owner for an SBA loan. … Software giant Computer Associates is introducing a new financial analysis formula for the benefit of investors. It will be reporting an employee indictment-to-conviction ratio. … ABC is introducing a new game show called “Debits and Credits,” in which contestants bet on which Big Four accounting firm goes under first. … The public terminals at the Oracle Conference Center feature Netscape and the Mozilla Web browser. Say, isn't there another popular Internet browser on the market?

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Consulting Insights April 2, 2004 (next issue mails April 23, 2004)
By Bob Scott, Editor
robert.scott@thomsonmedia.com

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