The Accounting market for independent ASPs and ISPs

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The SME (small/medium enterprise) market is an attractive market: According to Computer Reseller News, Dec 7, 1998:

  • Account for 98 percent of businesses in the United States
  • Represent about 50 percent of the gross national product
  • Spend approximately $445 billion annually on IT products and services

    Big Opportunity:

  • There are four resellers selling to every large business
  • There is one reseller selling to every three midsize businesses
  • There is one reseller selling to every 145 small businesses

    Big Employers:

  • 7,500 businesses with 1,000+ employees
  • 163,100 businesses with 100-999 employees
  • 800,000 businesses with 20-99 employees
  • 9.2 million businesses with less than 20 employees

US Government shows 21 million small businesses filing business tax returns in 1998. 

The economics of internet accounting or business processes are obviously of two types: revenue increases, and cost savings by eliminating manual work.  The department of labor shows incredible numbers of clerical workers ranging well up towards 30 million people, depending on how you count.  That's a hell of a lot of paper shuffling.

There are a number of very well run websites with information on Web-based accounting for large businesses.  For example, see http://www.aspnews.com.

ISPs and new-generation ASPs serving small businesses will need lower cost solutions than the ERP software currently offered by the large ASPs.  The ASP industry is busy rolling out Oracle Financials, SAP and Great Plains to large companies.  But there are very few, if any, compiled accounting packages that can be hosted on internet, right out of the box, with  prices, performance and features attractive to small business.

Some midrange packages have the technical functionality but prohibitive license costs in relation to the level of functionality over a thin pipe. AccPac and Solomon come to mind as nearly cheap enough.   Many other packages have both the features and the price point to enable web accounting, if interfaced to a webserver with COM.  For example CYMA IV, Adapta, AFD Accounting for Delphi, and Peachtree 7/32-bit Btrieve with Pawet. Visual Accountmate, a Visual Foxpro product, is being run successfully delivered to web clients with the Wild West products.

So your immediate business choices might include installing something like Great Plains or perhaps another midrange package, perhaps on Win2000AS or Citrix servers, and then marketing it like hell, to deep-pockets regional companies before SAP and Oracle knock on their doors. Another very credible choice would be AppGen, a mature unix package which also has a web client.

Another top choice, if you can qualify to host their platform, would be Biztone, either for your own clients or for regional branches of Biztone global customers.  They will rent you the application for increasingly lower pennies per transaction, the more layers of support you provide.  Finally, if you have great technical ability and patience, you could install one of the open source packages, Linux Kontor, etc. and grow a whole indigenous linux business. You'd be in for life, and way below the artillery shells where nobody could ever really compete with you.