• BHE Consulting in Weymouth, Mass., had a client interested in the Sage Acuity package (since rebranded as Best Enterprise Suite), but needed to track contracts. "We offered to develop the module free," recalls vice president Russ Carey. The result was an enhancement that can recognize revenues on a monthly or quarterly or yearly basis. "We have resellers calling us constantly because they have opportunities for that module," says Carey.

• San Francisco’s Lefkowitz Systems, a former Accpac VAR, has developed and sells the SO-2-PO Pro for heavy-duty drop-shippers, and for distributors who sell special-order items. The add-on automatically converts sales orders to purchase orders, and ties the two documents together. "It’s a great way to reduce inventory without sacrificing service to your customer," comments Matthew Lefkowitz.

• Macdonald Consulting Group, an Atlanta-based VAR, has made a specialty of front office/back office integrations. "We take existing pieces of software and make them work together," says executive vice president Nicholas Hoad. Maybe four years ago, MCG had a MAS 90 customer who was on the GoldMine contact manager, but seemed an ideal prospect for SalesLogix sales force automation. To make the migration more appealing, MCG developed the integration link itself. "We didn’t think of it as a product we would OEM," says Hoad, but Dynalink sales grew so substantially and therefore required more and more of MCG’s engineering resources that MCG has since licensed the link to MAS 90 publisher Best Software, whose own parent acquired SalesLogix developer Interact Commerce.

So how do accounting software publishers feel about this trend toward VAR-developed vertical packages? For the most part, they welcome it especially those vendors that make source code easily accessible to the channel, such as AccountMate, Navision, and Accpac (via its SBT/Source Solutions line).

"The accounting software industry has evolved to the point where, in order for resellers to prosper, they have to go into niche markets," states Ben Tse, president of Novato, Calif.-based AccountMate Software.

By giving resellers access to functional specs and beta software, Navision actively encourages its VARs to undertake their own R&D. "Through vertical add-ons, resellers have the opportunity to own that specific market, and through prospect profiling and intense marketing, can become known as the industry expert," observes Janet Kahr, vertical solutions manager for Navision-US, based in Duluth, Ga.

It’s crucial, however, that VARs clearly recognize where they fit best, cautions Kahr. "Our advice to resellers is, Go where you know, and subcontract where you don’t have domain expertise,’" she says. Being a software development house is not for every reseller, suggests Jim Kent, vice president of North American sales for Marion, Ohio-based Exact Macola. "If you’re doing customized reports and front-end integration for your installed base, that’s fine," in his view. But developing and marketing a full-blown vertical package is another matter entirely. "Unless you have thirty to forty people [on staff], you really can’t take that task on," states Kent, drawing on his own extensive experience as head of The Kent Group, an Andover, Mass. based Macola reseller purchased by Exact this past September. "That’s not a trivial task," he adds, noting that for every VAR that can function successfully as both a reseller and software house, "there are probably ten who tried it and failed."

ISV Enhancements

Fargo, N.D. based Microsoft Great Plains Business Solutions has a disparate bunch of Independent Software Vendors, some of whom sell the Dynamics, eEnterprise, and Solomon packages and many who don’t. Of those who do, most focus on developing modular "enhancements" to the packages they sell rather than stand-alone but complementary vertical software, explains solution development team manager Mark Albrecht.

"There’s more to selling software than putting a package out there," says Albrecht. There needs to be documentation, training materials, a distribution strategy, advertising, and a budget to accommodate all of this. Confronted with those kinds of expenses, many resellers have opted not to push ahead with aggressively marketing an add-on or vertical package they developed for a particular customer, notes Albrecht.

But of course, some have-and with much success, he points out. AKA Enterprise Solutions, for example, headquartered in New York, offers assorted e-business enhancements including Credit Card Processing, Payment Plan Manager, Special Pricing, Auto Purchasing, and Auto Allocation. Likewise, Cole Systems, also in New York, provides real-time integration between Web sites and back-office Great Plains software. Cole products include eCredit Card as well as Auto SOP, which automates order-to-invoice transfer and posting.

The Taylor Group, headquartered in Bedford, N.H., is a leading Microsoft Great Plains reseller in New England. "Integration is our core competency," says president Nick Manha. He recalls how, six or seven years ago, "we found we were doing one-off integrations all the time" between the Great Plains back office and various third-party applications. The R&D staff came up with a generic integration methodology, and the Integration Manager module was born. It can link with almost any vertical package, such as Portera for professional services automation and Blackbaud for nonprofit accounting. Great Plains put the module on its price list and marketed it; the Taylor Group was responsible for its further development. Taylor sold the module operation to Great Plains last year.

"We still have a full-scale custom development group; it’s one of the biggest growing areas for us," notes Manha. That’s in addition to the staff at ManagedOps.com, Taylor’s hosting applications affiliate, which has ten to fifteen employees engaged in R&D. The latter personnel review and adjust applications so they’ll work efficiently in a hosted data-center environment.

ManagedOps has its own reseller network for hosted