Accountants Stick with Sage in Software Battle
BIG technology companies may already see recession on the horizon, but further down the scale in the accounting software market, vendors predict continued healthy growth.
Sage, the leading provider of systems to smaller companies, admits to having seen demand tail off in some overseas markets, particularly the US, but in the UK it remains confident of the medium-term outlook, particularly at the entry level where it has long been market leader.
Accountants' traditional conservatism, however, is being blamed for the fact that demand for hi-tech internet-based products has not materialised as envisaged a year ago.
One of the key trends forecast for this year was the emergence of application service providers (ASP) - companies that developed different types of business software and made it available over the internet, on a rental basis.
As recently as six months ago, vendors were talking up the prospect of companies renting their accounting software over the internet, but demand for ASP services has fallen well short of expectations.
The accounting software market's experience mirrors that in other software sectors, where ASP development - fuelled last year by dot.com hype - has easily outstripped demand. Sage's own ASP activity has proved disappointing, Paul Walker, the company's chief executive, acknowledges. "ASP just isn't working in the accountancy software arena," he says, estimating that just a few hundred of the company's 2m-plus business customers had taken up any of its ASP products.
Other ASP developers have also run into difficulties and scaled back their forecasts. Instead, accounting software vendors are concentrating on their traditional core offerings - back-office business solutions they provide either off-the-shelf in packaged format or through value-added resellers which provide tailored solutions to meet more advanced needs.
Although Sage retains a near stranglehold on the entry-level accounting software market, rivals keep chipping away at the company's mid-range offering.
Bob Morton, chairman of business software group Systems Union, which owns entry-level software developer Pegasus, says market demand is holding up well. …