Big fish, small pond

Waterman says the international culture certainly hasn`t filtered down to his family. All marketing material is generated from the Rivionia office, and one gets the impression that the African outpost is independent of head office. With him claiming a 50 percent market share of the accountancy software and lower-end ERP space, Accpac International most likely feels confident that Waterman is quite capable of running his office without their interference.

The looming threat

In stark contrast, the US marketplace is completely fragmented in terms of accountancy software. No single vendor claims more than three percent market share in that country – one of the justifications Microsoft had for buying Great Plains, through which it hoped to bring its strong brand and large marketing machine to bear on the leaderless but lucrative US accountancy software world. Microsoft represents a new threat to Waterman`s local business, which also includes Pastel at the low end, ERP vendors at the high end, and Impact and Navision head-on.

“I think there`s no doubt that we are in the same space as the Microsoft suite of confused, jumbled up products,” he says, grinning. “So whether it`s Great Plains or whether it`s Navision, we`re very much in the same space.”

Selling in Africa makes the definition of a horizontal market space difficult.

In South Africa, Accpac is clearly in the mid-tier space, primarily servicing corporate accounts, although it does have a small business edition available.

“We would define ourselves as a mid-range ERP system,” explains Waterman. But in Africa, where most organisations are relatively much smaller than in the US or Europe, it is considered an enterprise product. Customers include the likes of Malawian Airlines.

“In the African market, we want to go all the way, but we do accept our limitations – you can`t compete with mainframe-based systems, but everywhere underneath that we would want to be.”

Its vertical market split is quite broadly, although it`s had most success in the financial distribution and manufacturing services industries. “Our great strength is integration of back office component to front-end systems. Accpac is able to accept information easily. So there really is no definition – I can`t think of any place we`re not. That`s because of how long we`ve been here, and because we`re easy to migrate to.”

Having a large market share gives Accpac Africa a little more clout than most South African subsidiaries when asking for software changes to suit local conditions.

“I guess the old figure is that if there are 100 computers in the world, there is one in Africa, which would make one percent. If that`s true then we certainly have a significantly better share than that. It`s a big enough percentage of their revenue that they really do care.”

Coming from Canada gave Accpac a better foothold in the market originally, believes Waterman. “In the early days, they had multi-currency systems and multi-exchange built in because it was Canadian. So we had a head start on that.”

In 1993, the product was re-developed for a Windows environment, although DOS users are still clinging on to their old ways of doing things. Although the argument that DOS is more reliable than Windows no longer holds much water, DOS users still get support and upgrades locally. However, the balance of power has shifted to the Windows users.

The hot spots

The company has also shifted from its pure accounting focus to supply chain and HR components, and, with the large number of Accpac developers in South Africa, integration and custom-written modules are easy to come by. There are currently 110 Accpac channel partners in Waterman`s sub-Saharan Africa, of which about 85 are in South Africa. Other Accpac “hot spots” include Ghana, Kenya, Tanzania, Mauritius, Namibia and Zimbabwe.

In the recent pricing fluctuations, Waterman says his price strategies were supported by head office. “Because we`re in the software business, we can aggressively differentiate ourselves on pricing. We`re not restricted to an absolute pricing model.”

Like most software vendors, the channel holds very little – if any – physical product, and most are equipped with master CDs rather than bulky boxes. This too helped soften the currency fluctuation blow last year.

“It`s one of the advantages of having been in the market for some time. We are able to set appropriate pricing strategies. Microsoft`s strategy is pretty rigid. It`s all local decisions for us.”