Exact Holding, parent of Exact Software, said because of the current economic environment, it will no longer provide a specific outlook for results for 2008. The company’s prepared announcement also noted that it had cut its headcount by about 10 percent to fewer than 2,500 employees as the result of what it termed “a further organizational alignment within the Americas and Netherlands regions and a global recruitment stop as per August 2008.” The board expects EBITDA for 2008 to “be at least on the same level as for 2007.” CEO Raj Patel said the company first experienced a “notable impact from the current economic conditions on license revenue” in October with results falling below expectations and deals continuing to be postponed in most regions.

In a company that has seen a number of name changes, Sage Software has been renamed simply as Sage for public consumption, in line with the way the rest of the companies of the Sage Group operate outside of North America.
The new URL is www.sagenorthamerica.com. The new branding strategy of “Just Say Sage,” [OK, that’s not Sage’s phrase] is in line with what the English parent, Sage Group, does in operating units in other countries. There is also a retreat from the Sage 360 marketing program that tried to establish the corporate name in the United States; too quickly in my opinion. At an interview at Sage’s Summit Conference, Sue Swenson, CEO of what is now called Sage North America, was asked if the 360 program buried some of the company’s product brand names. “It is likely it did,” she said. She referred to the 360 program as “in transition.” Swenson pointed to programs such as “Intel Inside” as examples of campaigns in which product brands are maintained while another brand is also promoted and suggested that will happen with some Sage products in this country.

Epicor Software has cut staff and implemented spending controls which it said will result in annual savings of between $16 million and $20 million. While the company said it would not disclose the number of jobs cut, reports in the industry placed the number at 300. Epicor said it was also curtailing technology initiatives and that it would incur restructuring charges of about $4 million for the quarter ending Dec. 31. The company called the actions part of an ongoing comprehensive review of its operations and business plan. Epicor has been battling a hostile tender offer by Elliott Associates, a hedge fund, and there has been speculation it might be the subject of an acquisition by Infor.

Regardless of what Microsoft said about strong sales of Dynamics for its September quarter, the mood does not appear good. One major Dynamics dealer, who had very harsh words for the management of Microsoft Business Solutions, said he believes that Microsoft ultimately wants to shuffle aside Dynamics GP in favor of the NAV and AX products. (Microsoft has said it’s committed to all four ERP packages.) One Sage reseller said that while it had appeared Microsoft had “gotten its act together” after some tough sledding the first years of MBS’s operation that it seems to have lost its footing again.
The other picture that is emerging is of a not-very-friendly organization that is tough to do business with.

The last issue suggested Sage Software was loosening up a bit in monitoring members of its Sage Software Select program, which offers extra margin and other goodies for resellers who do not sell competing products. It was as much a trial balloon to see how VARs reacted. And nobody believes that the approach is kinder. It’s pretty clear the Sage Select folks are carrying a big stick and not speaking quietly. If I were a Sage VAR in this business, I’d pass on the Select program and make sure I had some other baskets with differently branded eggs to ensure my survival in a market that’s going to be tougher. I’ll repeat my statement that vendor loyalty programs are great—for the vendor. In view of the number of high-quality VARs that have picked up other programs, and risk losing Select status, I think Sage should re-evaluate whether the Select program does what Sage wants it to do, which is encourage people to sell more Sage products. It may be time to switch the reward system in light of competition, especially competition from Intuit’s QuickBooks Enterprise Solutions.

As a public company, Epicor is under the spotlight with Elliott Associates, a hedge fund based in the Cayman Islands, having launched a hostile tender offer to buy the Irvine, Calif.-based software vendor. What is not on the record are several weeks of rumors the company was up for sale anyway and attendees at Infor’s recent conference said that Infor CEO Jim Schaper had a presentation that started with an unsolicited comment that he couldn’t talk about Epicor, which is being read as confirming that some discussions are occurring. Infor was one of two possible buyers mentioned—the other was Microsoft and no one is taking that possibility seriously given the belief that Microsoft doesn’t need another GL package. Certainly, Epicor might need an ally since some analysts think the company management does not own enough shares to block the $529 million in cash, at $9.50 a share, that Elliott is offering shareholders. Press coverage regarding Elliott does not make the company look like a warm-and-fuzzy bunch. The term “vulture fund” was used in more than one article. Analysts have been quoted as saying such things as Epicor’s management doesn’t have enough shares to block the deal, but also that Elliott doesn’t want to end up running the company day to day. Elliott is also making a $2.25 a share tender offer for Endologix, which markets treatments for vascular disease, and which was launched on Oct. 15.

It’s not just a slicer; it’s not just a dicer. OK, that probably is about the only functionality not claimed for the new Epicor ERP product that was introduced this week at the Perspectives user conference in Las Vegas. CEO Tom Kelley, who wanted to talk about anything other than the takeover bid (which he really can’t do under SEC rules) said Epicor 9.0 is the company’s most important product in 15 years. As outlined by John Hiraoka, senior vice president of corporate development, the product draws together four Epicor products--Clientele, Enterprise, Scala and Vantage—in a multi-database multi-operating system application. Obviously, 9.0 will operate primarily in the Microsoft environment and the guys from Washington were the top sponsor for the conference. Epicor 9.0 introduces master data management into the company’s line up, offers business process management and business intelligence functionality and workflow features, a lot of this drawing from the services of SharePoint Server. It also juliennes potatoes and carrots. Part of the sales of this product will be handled by the 10 new resellers the company has announced, as it works its way towards having 30 percent of revenue coming from the channel. Epicor seems to be recruiting heavily from the Oracle channel. New VARs include Six S Partners of Waterloo, Ontario, and the Estes Group

Pervasive Software, which makes data management and data integration software, reported net income of $1.3 million for the first quarter ended Sept. 30, more than double the $600,000 for last year’s corresponding period. Revenue hit $11.9 million, up 17 percent, from $10.2 million a year earlier. The company expects revenue of $10.5 million to $11.5 million for the December quarter, compared to $10.3 million for last year’s second quarter.

An Epicor shareholder, Elliott Associates, has made an unsolicited bid to buy all outstanding shares of the Irvine, Calif.-based software vendor for $9.50 a share. The company urged shareholders to take no action and is reviewing the proposal. Elliott owns 10.2 percent of Epicor’s common stock and holds $28.7 million of its convertible notes. A prepared statement from Elliott noted, “As you are aware, we have made numerous requests to the Company's executives and board of directors asking that the Company commence a process to explore strategic alternatives. Unfortunately, each of these requests has been denied.” Given the sense of aggressiveness I get when listening to the Webcasts featuring new CEO Tom Kelley, I don’t see a real eagerness to sell. The stock closed yesterday at $6.25 a share. But then again, Elliott’s price was offered a few hundred Dow points ago and attitudes could change—on the part of both parties. I sense Kelley wants to hang around for the launch of Epicor 9.0 this year, which he has touted as putting the company back in the financial software business (as opposed to being largely manufacturing-oriented).

Sage Software has filled the CFO position that was left vacant through the 2007 ouster of Jim Eckstaedt and three other senior executives. The New CFO, Marc Loupe, most recently SVP finance for Xojet, which provides global business aviation services, started in June, according to a press release. The company also named Greg Hammermaster as the new president of the payments solution division. Hammermaster joined from SunTrust Banks, where he was senior vice president of commercial card and payment services in the treasury and payment solutions division. That followed the September appointment of Lindy Benton as COO of Sage Healthcare. To me, these moves answer the questions I’ve heard about what new CEO Sue Swenson has been doing, since she hasn’t been visible. My answer is that given the replacement of executives, the overall effort to fix the healthcare group and the decision to offload the company’s payroll services to CompuPay, she’s had her hands full. The fact is that Swenson, Nina Smith, president of the business management division, and VP Paul Johnson, are coming to town this month for a feast with our editors. So things must be easing up a bit. Or they just want to view the wreckage on Wall Street.

Given the state of the stock market, it shouldn’t be a surprise that analysts have downgraded stock ratings for NetSuite and Intuit. Goldman analyst Sarah Friar lowered the rating for NetSuite to Sell from Neutral. While UBS downgraded Intuit’s securities also to Sell from Neutral. My analysis is that Intuit might not maintain the pace of sales it expects with the general QuickBooks lineup. But I would assume QuickBooks Enterprise Solutions ought to do relatively well. Accounting software is something of a discretionary spend. There are people still happily using pre-Y2K packages out there and there’s every reason to assume a bunch of buying plans are going on indefinite hold. But for those companies that must buy, paying for QBES, which is far below the price of traditional mid-market products, will probably be increasingly appealing in the current economic climate. I just got a recommendation from a broker on some of my stocks with a rating I haven’t seen before: “Please dispose of properly.”

After the last issue’s comments about Sage Software resellers that have picked up QuickBooks Enterprise Solutions and Deltek Vision, vendors want to speak. This started with one of those involved, Kevin Cumley, a partner with Forepoint, explaining why he added the other two products to his Accpac business. One of the main points was that QBES serves as a feeder to the Sage MAS line. Everyone is trying to feed off QuickBooks, but this certainly doesn’t say much for Sage’s Peachtree line. Already having voiced his opinion was ex-Sager and current Deltek channel VP Taylor Macdonald who said Cumley was adding products that don’t compete with Sage. Waiting to find time in the Bob schedule are Intuit’s Angus Thomson and a draft pick to be selected by Sage. However, what I read into this is that vendor loyalty, such as Sage's Select program, are of benefit mainly to the vendors. Diversity is what’s good for resellers, especially in tough economic times, and we have plenty of indication there will be more for them. I think the answer is simply that members of the Sage Select program have realized in numbers that Elite is not that beneficial. Ultimately, Sage is paying a penalty for putting margins above growth. When Microsoft was struggling with the Dynamics line in its first five years, Sage had an opportunity to improve itself competitively. Instead, the company opted for short-term profit margins over long-term market leadership.

The first question that came to mind after hitting the floor of the reseller conference for QuickBooks Enterprise Solutions this week was “Where’s the Sage reception?” Indeed, the Solution Provider program, which now has 207 members, also looked like a committee meeting of the Information Technology Alliance. Among the Sage devotees who have signed on to QBES are Steve Birdwell of IncorTech, Kevin Cumley of Forepoint, Kevin Martin of Martin and Associates and Jeff Roth of SWK Technologies and a couple of others who haven’t yet given Sage Software the news. This comes on the heels of reports that Sage Software’s June quarter did not quite meet expectations, as they say in the financial analysis biz. There’s also a notable trend of resellers picking up QBES and Deltek Vision. These include Forepoint, Stan Kania’s Software Link and regional accounting firm Clifton Gunderson. This is partly because former Sage EVP Taylor Macdonald, who is leading Deltek’s VAR program, has been cherry-picking the Sage channel. I think we’ll see more of the QBES-Deltek combo.

In January, Microsoft will stop marketing Small Business Finance, a product that was supposed to be an entry point to the GP line. Chris Caren, general manager of Dynamics product management for Microsoft Business Solutions, said the move was made to focus on mid-market companies with roughly more than 50 employees. SBF will be supported until mid-January 2011. MBS is also dropping Entrepreneur, a year-old product that was introduced in Europe with some thoughts of bringing it to the U.S. to combat QuickBooks Enterprise Solutions. MBS is concentrating on trying to convert QB customers with a program called SmartMove that’s designed to use wizards to make the move easy. SBF was introduced in 2002 as Small Business Manager, but really has its roots in a project code named “Project Blue”, which was aimed as a Windows replacement for Great Plains Accounting. I believe that when Dynamics and Solomon IV launched in the mid 1990s, the programs didn’t just go from DOS to Windows, they went upmarket. Great Plains wanted to fill that space with SBM, but after the acquisition, Microsoft tried to make the product a QuickBooks killer and it went sideways. I remember during the early days calculating that during one year, SBM resellers sold an average of a quarter of a unit each. The name was changed in early 2005.

After a long buildup in testing its payroll services, Sage Software has decided to place its money elsewhere and has signed a deal under which CompuPay will provide those services to Sage customers. Meanwhile, most of the St. Petersburg, Fla.-based Sage staff involved in this area was to be offered jobs with CompuPay. Karl Grass, the vice president and general manager of employer services, said that while payroll grew faster than other business segments, the investment required could be used for a greater return in other areas. Sage will now concentrate on its Abra HR business in Grass’s area. In another piece of corporate repair work, Sage picked Lindy Benton as the new COO of Sage Software Healthcare, which was a drag on corporate earnings for the half ended March 30.

A few years ago, the idea of an enterprise suite from Intuit sounded improbable. But Intuit dropped the next three shoes in the QuickBooks Enterprise Solution story, adding three Web-based products to the desktop lineup. The three are sales management, warehouse management and field service management. Intuit wrote the sales management but partnered with AccuCode, which wrote warehouse management, and with Corrigo, which authored field service management. The knowledgeable will recall that Corrigo was the company for which recently former Sage Software CEO Ron Verni is also a recent former CEO. Intuit, which wrote sales management, stated the obvious—that it needs to go beyond core accounting to compete in the mid-market. The prior week, Intuit CFO Neil Williams told financial analysts that QuickBooks had a soft year in fiscal 2008, which was attributed to the functions in the 2008 edition. The company had geared much of its engineer around Vista conversion. “Vista wasn’t the catalyst we expected it to be. Our old versions worked pretty well with Vista,” Williams said.

This may not even be a new term, but it applies to a variety of initiatives being taken by software vendors, including both Microsoft and Intuit. Microsoft has made its online Dynamics communities accessible from within the midmarket software. Intuit did the same thing with Live Community in Intuit’s tax and accounting products so that users could post questions that could be answered by peers without having to exit the program. CEO Brad Smith said that 40 percent of all questions were answered by other users “at an accuracy rate we have not been able to achieve in 23 years.” Microsoft had similarly made the link to peers available from within Dynamics GP. The obvious impact of getting so many questions answered is that it makes users happier and reduces the demand on Intuit’s support staff and reduces costs.