Accounting software vendor, Attache, has dumped outright sales in favour of the recurring services revenue model, which will see the company offer its software on a 'pay per use' basis.
The new model would require a different sales approach, but would offer revenue stability to resellers, the company's managing director, Michael Rich, said.
Rich has been on the road in Australia and New Zealand selling the new Fast Track plan to resellers with the mantra that “cash is dead”. The vendor of mid-range accounting and business software said that “most other vendors will soon go this way. They will have no choice.
“The accounting and business software market has been a nightmare for the channel for the last two to three years. The difference with us is we’ve had the guts to can cash.”
While admitting that the idea of software as a perpetually billed commodity was still in the early days of acceptance by customers, Rich argued that customer response had been positive so far.
“Probably only one in 20 customers would query it,” he said.
Under the new model, customers will be given a 30-day cooling off period to trial the service and decide whether they want to sign up. Rich said the provision had already changed the sales environment for the better as “consultants are going on an installation [instead of a sales] call”.
The move to ‘pay as you use’ would help address a difficult market, marketing director of Integrity Business Systems, Allan Mellor, said. Many businesses had bought full accounting and business systems with the implementation of the GST, he said. the result was that “a lot of people who might have traditionally been in the market are no longer in the market.”
While some “traditionalist” customers might still prefer to purchase outright, Mellor said Integrity was prepared to walk away from a deal.
“Often the people who want to buy are the people who don’t want to pay, they’re reluctant to upgrade,” he said.
Managing director of CA Management Services, Colin Atkinson, said customers were giving “mixed feedback” to the new sales model.
While it could be attractive “if you’re a young business and you don’t have the cash,” Atkinson said that a month into selling the Fast Track plan, “we’re all at that stage of not knowing how the market will react.”
“We’ve had some existing clients refuse outright. They don’t want to rent when they’ve already bought. Some new prospects say they don’t want to go that way.”
While the recurring revenue would be a boon for dealers if the new system was embraced by customers, Atkinson said Attache’s new model was pushing dealers out of the ownership loop.
“Normally you the dealer would sell the system and do the support," he said. "Now you sign them up on behalf of Attache.”
But dealers were protected, Rich said. The new system was actually reducing poaching between them.
“We have an agreement with the dealer which guarantees them the income from that site for the next three years," he said, "regardless of whether that customer wanders off and gets support elsewhere.”