Sage Vs. Microsoft: Photo Finish

In its "Small and Medium Business Applications and Web Survey," Yankee reported that companies "seek alternatives to their current applications to support a greater mobile work force, enable employees to be more productive and interact more efficiently with their customers, suppliers and partners."

What's intriguing is the way Yankee broke market segments into tiny chunks. In the "very small" segment, Intuit kicked butt, with 68.3 percent of all respondents. In the 20 to 99 group, Best Software (now Sage) grabbed 29.6 percent vs. Intuit QuickBooks' 28.8 percent and Microsoft Business Solutions' 19.2 percent.

Where things get interesting is in the medium (100 to 499) and midmarket (500 to 999) categories—where Microsoft's Great Plains, Solomon, Navision, Axapta and Excel hold sway over Sage's Peachtree, BusinessWorks, MAS 90/200/500 and Accpac by a narrow margin. Why the discrepancy between small businesses and their larger cousins?

"Microsoft talks technology, technology, technology. But companies with fewer than 100 people are not necessarily buying on technology, they're buying on features," said Stan Kania, president of Sage partner Software Link, Alpharetta, Ga. "That changes somewhat in larger companies, where people buy because of the name. They don't do research. They don't care about the features. They just want it because it's Microsoft."

So how do VARs compete? Yankee analyst Sanjeev Aggarwal recommends VARs specialize in growth verticals, allowing them to sell more add-on apps and consulting services. And he says VARs should build those apps on top of the base accounting packages they sell.