2009 was a year marked savagely by recession and uncertainty. Unsurprisingly many companies took money off the table waiting for the storm clouds of the financial crisis to blow away. High end ERP systems were the most notable casualties as companies made do with the systems they owned and made sure they had fully paid up maintenance as an insurance against unplanned events.
But that didn’t mean to say that businesses were not spending at all.
The downturn made companies question why they had not seen the crisis coming and what they would do differently in the future to manage risk and uncertainty. Vendors that could provide a safety net by strengthening, governance, risk and compliance or could provide greater predictability around earnings and future prospects stood to fare particularly well. More esoteric requirements, such as environmental reporting took a back seat while boards of management focussed on survival in the short term rather than saving the planet in the longer term.
Those software vendors that could quickly bring value, adding to systems architectures already in place rather than uprooting and starting again were welcomed by a market place eager to enhance their existing capability. Software houses with the relevant skills saw an uptick in their services revenue whilst growing new licence fee income remained a challenge for most.
So who stood out in 2009 and who stands to gain in 2010? Generally speaking the niche vendors proved to be the success story of 2009. Companies such as Trintech and Blackline that could offer specialist and complementary capability in financial reporting, financial close, governance, risk, reconciliations and compliance traded particularly well. Their offerings resonated with a market keen to manage risk and shore up gaps in their financial processes that had not been well served to date by some of the more globally recognised vendors. There was a palpable sense that companies acquainted with the offerings of the ‘Big 3’ (IBM, SAP and Oracle) were looking for fresh solutions supported by agile, enthusiastic and smaller software houses that may have appeared more approachable.
Clarity and Tagetik are further examples of smaller more nimble software vendors that were able to introduce innovation and market it successfully around the world. Clarity it will be remembered brought Clarity FSR to the market, a specialist product aimed at streamlining the so called ‘last mile’ of finance and automating the production of financial statements. Tagetik built considerable momentum in performance management in 2009, leveraging its unified applications approach to deliver solutions for complex financial reporting. A third vendor, BOARD recently introduced a new financial consolidation application using its performance management toolkit. BOARD, with its very innovative user interface and toolkit approach to business applications could be an interesting company to watch in 2010.
Although more broadly positioned, Infor too has interesting niche capability. It’s expense management capability resonating with a marketplace keen to enhance control over employee expenditure against the backcloth of a slow economic recovery.
Whilst traditional high end ERP has been hit by the downturn some of the more agile vendors have traded successfully. CODA brought legitimacy to financial applications in the Cloud through leveraging the Salesforce.com platform in addition to its on-premises financial solutions. Its newly formed company Financialforce.com was launched in the autumn whilst its parent company UNIT 4 Agresso continued to take advantage of its uniquely positioned architecture to offer business processes, information warehouse and analytics/reporting in the same environment.
Microsoft took the SME accounting market by surprise by dropping the Microsoft Office Accounting package and handing over support of both the free and paid for versions to its rival Mamut. It remains to be seen whether the decision has dented Microsoft’s brand image with accounting professionals who are key influencers in the SME market but in the immediate term, Mamut seem well positioned to migrate disaffected users of Microsoft Office Accounting over to its well respected Mamut One and Mamut Enterprise solutions.
One of the big stories of 2009 was the decision to mandate the use of XBRL as the reporting language of choice for regulators such as the SEC in the U.S. and HMRC in the UK. Any lingering doubts about support for the language can be dismissed and now the race is on to produce new tools and software solutions that can help with electronic filing and the analysis of documents rendered in XBRL. One of the companies leading the charge is Corefiling, an Oxford based company with an impressive pedigree of working with regulators as well as developing leading edge tools such as the recently announced “Seahorse”. Corefiling will definitely be on the FSN watch list for 2010.
But the competition around XBRL is hotting up with both SAP and Oracle providing their own solutions for tagging financial data. Following a string of acquisitions these companies have a formidable blend of applications stretching from their ERP foundations through to performance management, GRC and beyond. But the breadth of capability is a two edged sword. The broad reach of the solutions on offer can be a major advantage to Global 2000 companies but can seem foreboding to smaller enterprises. Furthermore, these large vendors have yet to convincingly ram home their advantage of sheer scale and comprehensiveness of solution versus the niche players. But SAP and Oracle have now had time to digest their acquisitions and bed down their product offerings. 2010 could be the year when the niche players face emboldened competition and newly fashioned products from the global ERP vendors.
