Beans Beans are Good for your Heart

Accountants don't just sit around counting beans all day.Increasingly, says Simon Meredith, they're dabbling in providing softwareand services

At one time, a professional accountancy firm would have taken a dim view of anyone suggesting they might supply products. They would certainly have scowled if anyone dared suggest they might supply them for profit.

That was something dealers did - and of course, accountants are not dealers.

At least they weren't.

Many now take on product. As dealers struggle with the need to find more margin in post-sales service, they are coming into conflict with accountants seeking their own revenue streams.

Tony Williams, manager of Sage's Accountants' Club programme, says that as margins have declined, dealers have taken on a more advisory role.

'They tend to go in and look at how the company operates as a business and then look at how IT can help.'

At the same time, accountants and consultants increasingly find themselves faced with competition from other types of businesses. Products have become so mature that it's a subjective matter as to which one to chose.

Purchasing decisions are made not on functionality, but on suitability, reputation, flexibility and platform. The supplier is a factor and there is additional work to be done here so, accountants and consultants are increasingly offering such services.

Williams says accountants now fall into three main groups in terms of their approach to accounting products. Some bring in external assistance and claim to have no real knowledge of systems, some claim to know products well enough to advise on selection, and others supply products as well.

Of the 20,000 or so accountancy practices in the UK, Williams estimates that only about 4,000 fall into the second group and a few hundred supply and install product. But the numbers are growing and pressure is building on accountants to find new revenue streams.

Sage recently signed Deloitte & Touche for a UK-wide membership deal with all its UK branches. Deloitte & Touche said this was aimed at providing clients with a more hands-on approach. It wanted to be able to demonstrate in-depth knowledge of the product. Through the Accountants' Club, the company's branches get additional information and support.

Neville Russell is the most striking example of accountants getting involved in the provision of software. Last year, it adopted Great Plains' Dynamics range of packaged solutions as its standard offering.

Chris de Silva, an IT consulting partner at Neville Russell, says the company abandoned its neutrality on products because it felt the need to offer a specialised service and make a commitment to the future. Offering a broad-ranging consultancy service meant maintaining an in-depth knowledge of different systems. Neville Russell decided this was impractical in the long run.

Dynamics, which is centred on the Microsoft Windows NT system, is where Neville Russell has decided the future lies for most of its target market.

De Silva thinks it is questionable whether the mainly Unix-based systems in the high end of the market will be able to meet the wider IT requirements of large organisations in the future. Hence, its adoption of the Windows-centric Dynamics system.

Many companies still approach Neville Russell for independent professional advice. When they are not already aware of the relationship with Great Plains - but many are, says de Silva, and actively seek out Neville Russell because of it - they rarely have any problems with the vendor/accountant alliance.

Neil Robertson, MD of Great Plains in the UK, says the appointment of a company like Neville Russell to resell accounting products is inevitable.

'Over the past few years major accountancy companies have been getting more involved in pre-sales and post-sales - it's just a natural progression.

If you look at most of the English-speaking world, you'll see more accountancy practices selling software. In the UK we tend to be more conservative,' he says.

From the vendors' point of view, there is a flipside to this. It can give the user a great deal of comfort, and the credibility it gives Dynamics' products and Great Plains is worth the cost. It says something about the viability and integrity of the product.

One could argue that if it does make the product more credible, there is a positive effect for resellers. In the case of Great Plains, which has only 30 dealers in the UK, there is a strong case in this respect although Neville Russell and other resellers will offer service on a nationwide basis.

We are sure to see more accountancy firms joining the move into provision of product, installation and after-sales service. There are signs of a developing trend in both the higher end and the lower reaches of the market.

Another important driver for Neville Russell in adopting Great Plains was to find new ways of generating income. By making a commitment to Dynamics, Neville Russell can derive income from implementation, support and post-sales services rather than traditional search and selection.

Many users seeking accounting solutions are on their second and even third search and selection process and have greater confidence in their ability to select and install systems. As a result, there is very little desire for pre-sales consultancy among small to medium-sized organisations.

'When you get into very large sums of money, the cost of pre-sales consultancy is fractional, but the smaller the budget the more difficult it is to get into that scenario,' says de Silva.

Daily consultancy rates range from about #400 for independents and #1,000 for experts from the large firms. With the cost of even quite sophisticated packages falling all the time, consultancy is looking more expensive every day.

But for many businesses, if the dealer knows what it is talking about, why shell out several thousand pounds to have a verdict confirmed. This tougher attitude in corporate circles is forcing some consultancy arms of major accounting firms to provide committed services on certain products.

Ernst & Young has developed specialist methodologies for reviewing SAP and JD Edwards implementations. It provides health-check services for other major systems.

As functionality becomes less of a differentiator, the shortlist of products is getting shorter and negating the need for the once lucrative process of matching requirements of the business to the capabilities of the product.

Neville Russell is the first major accountancy company to make such an open commitment to a single product, but de Silva thinks others will follow.

'Large firms often have pre-prepared shortlists,' says David Rees, a member of PA Consulting's management group. 'Few people come to us wanting a compete scan and often have three or four systems that they want us to look at.'

'The role of consultants is changing - they are often implementors and specifiers of systems,' says Gerry Boyle, a partner at Deloitte & Touche.

'Consultants want to implement systems because it's better leveraged and more profitable. Clients are interested in consultants doing it because consultants have a broader business perspective'.

This trend is not confined to the large systems market. Smaller accountants are getting involved in installing and supporting systems as well as specifying them.

Sage has more than 2,000 members in its Accountants' Club and Pegasus' influencers scheme has just under 1,800 participants. These groups are not set up to turn accountants into dealers - the idea is to make sure accountants know about the respective products.

Accountants do have a strong influence on users' purchasing decisions.

It is worth vendors courting them and trying to keep them informed.

'Clients should be able to ask their accountants about accounting issues and accountants should be able to answer them,' says Williams.

'Whether accountants know about other products is not my concern, my job is to ensure that they know about Sage products.'

Sage and Pegasus claim there are also advantages for dealers. Informed accountants may be able to assist resellers that don't have the resources to employ their own accounting skills.

Leak says: 'Some of the more reticent dealers are probably against anyone moving in on their territory. We want to help dealers take a more positive attitude and realise they can't do everything. They should bring in help if needed.'

Most dealers can go only so far when it comes to setting up complex nominal structures or detailed reports. This is where the accountant's role begins.

Williams agrees with this view.

Accountants should do what they do best, resellers can deliver a separate set of skills. 'Accountants should advise on accounting. Some dealers have their own accountants, and there may be cross-over, but there is no reason why they can't work together,' says Leak.

He believes that there is potential for dealers and accountants to work in harmony but feels their roles will become more blurred in time. 'It is inevitable that this will happen because users recognises they can do more with products. Some of the leading dealers can afford to employ professional accountants, but many of them can't and that's who we want to help.'

Even so, resellers feel more threatened by the cross-over of roles than accountants. Williams says Sage's efforts to bring accountants and dealers with expertise in Sage products together has gone down better with financial companies than with IT suppliers.

'Those circumstances where the dealer has received advice have worked well; the problem is getting them to do it,' says Williams. 'What I'm now getting is accountants asking for dealers they can work with. I think they see it as competitive and they're scared. But they need to understand it is complementary, not competitive.'

The prime advantage to dealers in working with accountants is not in the expertise the professionals provide, but in the access to a captive user base. If the reseller can establish a working relationship with the practice, the potential for business via that route is considerable.

Most practices have clients in local areas.

By developing a close working relationship dealers also exclude other local rivals from establishing a bridgehead with the accountant. But this type of alliance can create problems. If a dealer forms a relationship with a particular accountant in a locality, rival of accounting partners are unlikely to be as interested in working with the reseller. Dealers must select the right partner.

This decision is important in the lower end of the market as the base functionality is relatively easy to deliver and the opportunity for consultancy is minimal. Dealers need to draw a clear distinction between what they and the accountancy practice provides.

Accountants are able to provide a higher-level service that focuses on the business issues as opposed to the IT functions, says Boyle. But there is every chance that some consultants will migrate towards the provision of services. Leak believes this is inevitable.

'We're introducing a scheme to get them closer to us and to become trainers for our software. Most of the profession is looking for additional revenue streams and I have always believed they are the right people to deliver this sort of service for us,' says Boyle.

With accounting software vendors looking to harness the quality of the accountancy profession, more accountants are bound to seize the opportunity to address the post-sales and pre-sales services markets.

For Neville Russell the alliance with Great Plains has been a success.

After 18 months the company has 15 Dynamics customers and many more prospective ones. While this is steady progress it is probably not making a major dent in reseller business on the Dynamics range.

It is as likely that such business would have been forced on Great Plains as it would have gone to dealers. Customers that want to use the product but aren't confident of the level of reseller support might insist on seeking other suppliers.

The other side of this argument says the involvement of the practice in an advisor capacity and as support for the dealer would be enough to convince the user that the reseller should supply, install and support the system.

It might make sense for resellers to work more closely with the accountants to secure the recommended business, but as Williams points out, accountants seem more interested in working with dealers than vice-versa, even though they don't really want the resellers' business.

'Initially they see selling software as a profit stream, but when you explain that the box is not where they make the money, that its in consultancy and in service and support, they start to think in different terms.'

Most of the time those terms are in how they can provide more consultancy before and after the sale. But resellers have been trying to find more services business so it is easy to understand why accountants look like a threat to dealers.

In the end though, if they want to move into the market, it is going to be hard for vendors to resist forming a relationship. This means that dealers have to either match or be better than them in terms of the level of advice they provide. If dealers cannot compete against accountants, they should compete in partnership with them.