Even in troubled times the mid-market represents the hub of the economy. Small businesses account for the lion’s share of employment and GDP yet, with its own culture and characteristics, it is an extremely competitive area for business software vendors– something that has tested the mettle of the global ERP vendors who have sought to take market share in recent years. One company that is mid-market to the core is the IRIS Group, which with a diligent strategy and deep understanding of the sector is carving a substantial slice of the UK market. Gary Simon, FSN’s managing editor reports.
IRIS Group builds UK mid-market presence with niche strategy
Under Martin Leuw’s leadership the group has made a number of acquisitions but unlike some rivals which appear to have bought companies for the sake of scale there is a clear purpose to the IRIS Group which is focusing on vertical sectors backed by deep industry specialisation. In itself not an earth shattering mission or particularly differentiating but in a crowded market, it is the group’s ability to deliver on its strategy, with a ‘direct’ business model that is giving it the edge.
The best value model for selling and distributing software is the so called ‘indirect’ model in which responsibility for developing and marketing industry functionality is ceded to dealers and partners. It is a popular model in the mid-market propagated by the global software vendors such as SAP and Microsoft who have vigorously sought to build their dealer or re-seller channel. But where does that leave the customer or end user?
“We are trying to leverage the scale of our organization by combining our own accounting and business solutions with front office verticals and not-for- profit functionality,” says Stuart Dawson, MD of the Accounting and Business Solutions Division at the IRIS Group. “You have to demonstrate business value, especially in a rough period. Solving business problems is our mantra and competing effectively against the dealer or re-seller model is all about the quality of the people in the front of the business and the quality of the service we provide to customers,” he told FSN.
“You can’t dismiss the power of Microsoft in the mid-market but the channel model and their offerings appear confused for end users with some resellers selling different products whilst others promote specific solutions,” he adds.
With a large direct sales force, attuned to vertical sectors IRIS Group believes it keeps its offerings fresh and relevant, a point illustrated by the group’s selective foray into selling hosted solutions over the web (fashionably called SaaS or Software as a Service). It’s a concept being pushed by a number of software vendors but very much in a ‘one size fits all’ kind of way. This is in sharp contrast to IRIS which, through its vertical market specialisation, has identified for example, that the professional services sector can benefit particularly well from a hosted delivery model. Dawson believes that much of the software industry has been focussed on the pricing model for SaaS rather than the business problems it is trying to solve. “Project focussed businesses such as consultants and professional services firms that employ a very mobile workforce need access to time recording, billing and management information on the move. The business problem can be satisfied by a hosted model –this is the first priority - we can then talk to customers about how they want to pay for it.”
It is a message that resonates well with Ian Ashby who runs the more vertically oriented Major Business and Not for Profit side of the IRIS Group business. “SaaS isn’t for everyone. Sensitive data is still a problem, but for those that do not have in house IT skills it can be a good solution. The SaaS model is proving popular with sports clubs, arts centres looking for an on-line ticketing solution such as the TS Web product we brought into the group via a recent acquisition. But if customers want a functionally richer ‘on-premises’ solution that is available as well; it just depends on the business need,” he adds.
Ashby continues to illustrate how deep vertical market expertise can really add value to a business. “Charities suffer in a downturn with a drop in legacies and donations – some unfortunately have been caught out with investments in Iceland. Specialised Not-for-Profit solutions take a lot of the cost out of charities and membership organisations, by making members do more of the work, for example, keeping their personal details up to date, making donations or subscriptions on-line and so forth. The economic model is compelling and one of the reasons that we work with organisations such as the IOD, WWF and Guide Dogs for the Blind.”
“You can get only so far with generic products such as CRM but our ability to harness that extra functionality, broader application base and a financial engine has proven critical in competition. We now have 54 percent of the top 100 charities,” says Ashby.
Sector specialisation allied to a broader range of services is also what attracted David Pinches, formerly marketing director at Sage, in a major coup for the group last year. After just a few months in harness Pinches is pleased he made the move. “The vertical market strategy is absolutely right but I have been pleasantly surprised about the depth of expertise, for example, supplying about 70 percent of the medical GP practices. It has confirmed for me the absolute importance of domain knowledge – people that talk the language of the businesses they are involved with,” he told FSN.
Now the challenge for the Group now is to take the learning from one sector to another and to propagate best practice and technology through all of the vertical markets. But the Group’s close knit team appears to be on message. It’s careful acquisition strategy seems to have produced a collaborative culture unlike some rivals still mired in organisational politics and fiefdoms post-acquisitions. IRIS is a group that knows what matters to mid-market businesses but just as importantly understands how to deliver it.
