Specialist knowledge

Knowing which specialist software best suits SMEs businesses is crucial before you spend on skills

For a VAR selling all-round IT solutions, one key decision is which software application vendors to work with. After all, applications are the most visible part of the technology that helps drive their customers' businesses.

There are plenty of standard products, from accountancy to content management. But companies of all sizes are more choosy about the specialist packages from ISVs that have been designed specifically to support their type of business.

While some ISVs sell their product directly, most rely at least in part on resellers. The decision about which applications to support is important for resellers because building up the skills to sell and support them requires a significant investment.

The majority of ISVs believe they have a strong influence on end-users' choice of platform, although users will consider the choice of application more important.

It's a chicken and egg situation: separate Quocirca research shows that once a platform is embedded in an organisation, it will influence the choice of applications in the future.

For SMEs, the most popular platform is Microsoft Windows, and this is where ISVs focused on the SME market concentrate their development efforts. Increasingly, these ISVs are writing for .Net, Microsoft's own application server which is delivered as part of Windows Server 2003.

Others who would like a slice of the SME action are rallying around Java 2 Enterprise Edition (J2EE), a Java-based application server alternative to .Net.

These vendors fall into two groups. First, there are the big commercial vendors - IBM, BEA and Oracle - whose main success has been in the enterprise market. All of them have their own J2EE application server and have been nosing around the SME market.

Then there is the open source community. This includes JBoss - which has a J2EE application server that runs on most operating systems - and Red Hat, which recently included an application server with its version of Linux.

These distributors make their money by charging for maintenance and other services, but believe their messages about lower overall cost of ownership should appeal to SMEs.

So should resellers stick with Microsoft or explore other possibilities? For the smallest of businesses Microsoft still predominates, and this is likely to continue.

Some of the largest ISVs in the SME market, such as Sage and FrontRange, deliver mainly on Microsoft, even though Microsoft has upset some of them with the poor availability of its own business software.

The situation changes for medium-sized businesses, which often have applications running on legacy platforms such as IBM's AS400. As the ISVs focused on the mid market migrate their applications to contemporary platforms, those without a Microsoft heritage are often attracted to the J2EE platform.

But there is another choice altogether for all businesses. During the dot-com boom, the concept of selling hosted applications as a service over the internet was touted widely.

Early offerings turned out to be expensive and inflexible, but a whole new breed of ISVs with hosted offerings has emerged. They are doing better than their failed predecessors.

This has the potential to overturn the way platform vendors work with ISVs. If many SMEs are hosted on a single server, the platform sale becomes an enterprise one. This could be a far more effective way for IBM, BEA and Oracle to take on Microsoft. IBM is backing the hosted model more than any other platform vendor.

So where does this leave resellers? Some of the cross-industry hosted vendors such as NetSuite sell primarily through resellers. BT, which is building up a portfolio of hosted applications, is also happy to work with resellers. In the UK, most ISVs recognise the increasing demand for hosted applications and there is no reason why many of them should not continue working with the channel.

Hosted applications may require little on-site work configuring server platforms. But they will require plenty of customisation, integration and business process-related services, providing a continuing seam of gold for value-added resellers to plunder.

To see the illustrations associated with this report please click here.

CONTACTS

Bob Tarzey is service director at Quocirca.

Quocirca (01753) 855 794
www.quocirca.com