Ground Hog Day 2011: Will CPAS Be Any More Successful As SaaS VARS?

Bob Scott reported last night on his excellent newsletter service – Bob Scott’s Insights – that CPA firm Baker Tilly has joined Netsuite as a Value Added Reseller. That firm follows CPA firm Clifton Gunderson who joined the Intacct solution provider program this month as well.

It’s fitting that the announcement of Baker Tilly broke on Ground Hog Day 2011 because it seems as if we are suddenly starting to relive the very successful practice that former State of The Art CEO David Samuels introduced in 1985.

Under Samuels’ reign at State of The Art the company essentially signed up all CPA firms who had $500 and wanted to be a reseller. No specific training was required. If you could fog a mirror you were on board.

Will The History Of CPA As Technology VAR Repeat?

This practice of onboarding CPA firms worked well. In fact it worked so well that State of The Art was able to go public and subsequently was acquired by Sage UK in 1998 for $ 263 million dollars.

However the aftermath of the “if you can fog a mirror you can resell” phase of State of The Art was ugly.

Slowing Markets Shakes Casual Channel Reselling

Once sales of ERP began to slow there were many concerns that some of the CPA resellers were giving away their own internal copies of the accounting software.  And to be sure there were also more casual resellers who similarly gave away software in order to sell services (which they often poorly performed leaving a black eye on the software).

Gradually Sage ramped up the requirements to be an authorized reseller and most of the casual resellers left.

My question is whether we’re about to see this same pattern repeat. Are we going to se CPA firms jump on the SaaS bandwagon because the requirement to configure and setup the software is removed and it’s now easier for them to consult.

Once the CPA resellers have marketed into their client base, much as they did in the State of The Art days, will there be similar channel conflict where the casual reseller under-prices their services or subscriptions just to gain accounting clients – thereby repelling the pure ERP consulting firms from the market place due to a similar channel conflict as happened in the State of The Art era?

2 Replies to “Ground Hog Day 2011: Will CPAS Be Any More Successful As SaaS VARS?”

  1. Maybe – however back in ManagedOps day there was really no Facebook, or web based application that people used to soften their resistance to hosting/SaaS/Cloud (or whatever term applies).

    The idea of hosting an application was REALLY foreign to most business owners.

    The “Facebook Generation” may change that. The next wave of business owners and managers are familiar with hosted applications that they access via a web browser.

    Back in the 1990’s many (most?) people weren’t. I think that’s a lot of the reason around why ManagedOps never took off like they felt it would.

    Also today the pricing on SaaS is just all wrong. I’ve yet to find any configuration for a SaaS ERP solution that isn’t about 2.5 times (or more) what a customer is paying for their on-premise solution.

    I have never felt the “yeah but you’ll eliminate your IT guy/ Bookkeeper” argument was bought into by most business owners. I don’t think it will be this time either. Ultimately I feel like SaaS ERP costs have to come down by about 50% in order for people to realistically consider them.

    For me to got to a client presently paying $6,500 per year for an on-premise solution and suggest a $20,000 annual SaaS ERP is not very realistic unless that SaaS ERP brings some hard dollar savings to the table.

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