Exact Chief Seeks Midmarket Growth

Jim Kent stands out as a software company's CEO: In a previous life he was the CEO of a VAR. Today Kent is the chief executive of the North American division of Exact Software, which is headquartered in the Netherlands. Although Oracle, Microsoft and SAP all target the midmarket ERP space, Exact is among a handful of incumbent vendors that has been serving the midmarket space for more 20 years. In an interview with CRN Editor-in-Chief Michael Vizard, Kent says Exact not only is delivering on the promise " made by so many potential competitors " of offering integrated suites for this market, it will also expand its product base in 2005.

CRN: How big is Exact Software?

KENT: The revenue as of last year was about $240 million to $250 million. We are represented in over 60 countries. We have products that work in all those different languages. The first really entree into North America was about three and a half years ago with the acquisition of Macola, which was based in Ohio.

CRN: What market areas do you focus on?

KENT: In North America, we go after distribution and manufacturing companies. We actually say we're the only vendor in North America that has over 11,000 customers that are all manufacturing customers. We traditionally play with the $5 million to $50 million arena in terms of the revenue of our customers.

CRN: What's next on the agenda for Exact?

KENT: We've got some products we're going to be introducing in March and April and May over here that are already introduced outside of North America. I don't want to spoil the surprise for our partners. But we absolutely are going to offer more products in North America. And because we are going to introduce some new products in 2005, we are going to invest in marketing with regard to business partner improvement this year. Right now, in our target we have 15 new partners we want to go out and recruit for specific geographic areas where we feel we're not getting the penetration or we don't have any coverage at all. Our whole focus as a company worldwide is to show people that we are taking our product offerings beyond ERP. Sometimes you may take a step back in order to move two forward. We feel that in 2005, with the product that we're going to be introducing and the products that we have today, that we have three or four cards that we can play that differentiate us from the competition.

CRN: How many channel partners do you have today?

KENT: When Exact bought Macola three and a half years ago there were about 400 business partners. I came on board at that time and saw that 50 percent of them did less than $200,000 in revenue for us. This was pretty typical of a lot of vendors in the North American channel. We went on a conscious effort to promote quality over quantity in partners. We feel like we've got 75 real quality partners right now spread throughout North America. Right now capacity is not an issue. But I'm hoping that it will be in 2005.

CRN: What differentiates Exact Software?

KENT: We have a product, called e-Synergy, which is a front-office offering that is fully integrated with our back-office offering. You'll get portal capability, document management, workflow and financial integration. That's what separates us right now from our competition. You'll see a PeopleSoft and SAP offering that type of functionality that's integrated, but no one in the midmarket space has that right now.

CRN: Do you expect to see more of your channel partners playing across multiple countries?

KENT: Absolutely. Boundaries have disappeared, the world's becoming smaller and we have a major initiative worldwide. It's called Parenting and its specifically focused on multinational companies that have multiple locations, that have to deal with multiple currencies and multiple languages. Our products are all multicurrency, Multilanguage-capable. And the product that we're going to install in North America is the exact same product that we're going to install in China, Taiwan and Malaysia. So we have a group inside North America that partners go to and then they take care of all the logistics, all the communications, the proposal writing and installation, while protecting the partner's margin. It's all seamless to the prospect. It's a huge advantage that we absolutely will be touting in 2005.

CRN: How tough a competitor is Microsoft in this space?

KENT: They're formidable. Obviously, we cannot spend the market dollar that they spend and we do not have over 5,000 small business resellers in North America. We have to be very focused in our offering and how that translates into vertical messaging and vertical positioning. We feel we can win in the right environment with our solution.

CRN: What about Best Software as a competitor?

KENT: They do have some good manufacturing capability in their product offering. But again, there are a lot of generic resellers out there that sell accounting and distribution software. We feel like we can compete in the manufacturing arena quite positively with our solutions. But we do see a lot of price competition out there with Best right now in our deals. That is an issue. In general, we've seen a lot of price competition out there that we haven't seen for a while.

CRN: As a VAR, what led you to Exact Software?

KENT: As most often happens, it was all about the Benjamins. I was not looking to sell my company but Exact made me a wonderful offer. Part of that was a contract for two years to stay on and I subsequently extended that contract to help them grow in North America.