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Opinion: Is the era of the Independents drawing to a close?

It may well be Independence Day in the States but will our independent software suppliers still be around the celebrate their freedom in years to come?

With the acquisition of Drummhor by Iris being simply the latest chapter in market consolidation, many are wondering whether the era of independents is rapidly drawing to a close. Even more important to the customers themselves is what will this really mean for them.

One person who is arguably better qualified than most to know the answers is industry stalwart Anthony Boggiano, Director of Keytime, one of the few remaining independents. It was back in 2,000 when Boggiano then General Manager of APEX, first encountered the effects of market consolidation.

Sage ended up an acquisition run – PACS, TaxSoft, Hartley and CSM – by swallowing up APEX for £15m, boosting the sum they had spent on takeovers during this period to £40m.

The end result – according to Boggiano – was unfortunately little more than “chaos”.

“Inevitably post acquisition, changes happened and promises tended to be broken,” says Boggiano. “What we actually witnessed was a draconian product and staff rationalisation.”

Having acquired five offices, 250 staff and some 40 products in the five company swallow-up, this was paired down to two offices, 180 staff (initially) and a set of eight products. And there was a dramatic change in culture affecting both staff and customers.

Sage’s biggest mistake at that time and one that cost it dearly in PR terms – according to Boggiano - was “enforced migration”.

“It seems that Iris has learned from this mistake because this has not happened with its acquisitions – at least not yet,” he says.

With the dust now settling on the Drummhor deal, what does the future hold for Keytime and the other remaining independents?

Boggiano insists that his company is not a Drummhor whose owners – brothers Stuart and Kenneth Ritchie - admitted to have been struggling to keep up with legislative changes.

He reels off the key differences:

“We are in a solid financial position in that our recurring revenues cover not only our operating coasts but also provide substantial profits...”

“Our client base is made up of 1,500 accountants and a further 1,000 SMEs

“Keytime’s development team deals with any legislative changes in-house”

“We own the IP of all our products”

“We have the largest ratio of support staff to customers in our sector”

“Unlike Iris and Sage we have more people in technology and support than sales and marketing... so we have not forgotten our roots... "

So would Keytime would never consider a buy out?

“We’d be mad to say never but it certainly doesn’t figure in our plans,” says Boggiano.


Number of comments: 4

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Phil Rees, 09 July 2008 @ 15:29 PM

What does "independent" mean exactly?

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John Ryan, 09 July 2008 @ 14:35 PM

Software suppliers
Perhaps the HMRC will now wake up to what damage their mamoth and repeated changes to legislation are doing. We are going to be faced eventually with two or three suppliers of tax software and be completely at the mercy of the results of non-competition. Time I retired.

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jc, 07 July 2008 @ 11:44 AM

Last of 'legacy' independants
This may well be the case with 'traditional/legacy' software houses but is probably a questionnable statement with service based models which in some cases are in relative infancy

Unless one wants the customer base of traditional software house why would anyone want to acquire one - after all the same applies with any product why buy yesterdays model?

With this in mind is it really a question of 'would you sell' or rather could you find a buyer?

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Dave Smith, 04 July 2008 @ 14:55 PM

What is the point of this article?
It doesn't tell me anything. One company sold out, another is saying that they don't intend to but they'll never say never.