MYOB will do what many resellers and retailers thought was unthinkable and relinquish monopolistic control over upgrades before the GST takes effect in July.
Currently, resellers' angst with the software vendor stems from MYOB's policy of taking responsibility for all upgrades after the initial reseller sale.
This is set to change according to MYOB's national reseller sales manager, Lance Shofer, who last week outlined a plan that allows its channel partners to sell upgrades alongside MYOB that will commence 'a couple of months before the GST.
'We will do a big mail out every time we release a new version and will give the customer the choice of buying from either MYOB or the reseller.'
The customer will reregister with MYOB either through the Internet or an automatic telephone system, which will maintain MYOB's ability to keep track of a particular customer. It will then be up to the reseller to decide the price of the product and their margin and how to compete with MYOB, said Shofer.
This change comes about despite MYOB CEO Craig Winkler telling ARN there was no groundswell of discontent from the channel about MYOB's upgrade policy (January 26, page 10). Shofer concurred, adding that although the burning channel issue at the moment is definitely upgrades (a taskforce was formed in December to analyse the issue), he only got 'asked the question (about resellers wanting to sell upgrades) from time to time'.
This attitude, coupled with MYOB's reluctance to damage the integrity of the customer relationship, means the changes are not sweeping, with some products initially excluded from the new upgrade program and MYOB maintaining the exclusive right to upgrade customers when minor changes to the software occur.
'We haven't made a final decision on what upgrades will be made available to the channel. But FirstAccounts, Accounting, Accounting Plus and Premier Accounting are the products the channel is crying out to sell upgrades to because they are the most popular. My hope is that over time upgrades to all these and PowerPay, AssetManager and others not so much in demand will all be available to the channel,' said Shofer.
Yet channel discontent is not isolated to MYOB's upgrade policy, with resellers last week expressing their disenchantment about the fact that accountants are included in the vendor's reseller lineup, selling MYOB software at cost price.
'One of my customers who had no accounting system at all wanted a full version of MYOB FirstAccounts. I was going to sell it to her for $199 but she rang and said she was going to buy it off her accountant for cost,' said Liz Key, managing director of Leading Edge retailer Ballina Business Machines, who claims that other Leading Edge members share her concern.
Winkler believes this is not an issue as accountants acting as resellers are part of the channel and have the right to set the retail price of the software they sell.
'An accountant can sign up as a bona fide reseller. It purchases from us at the same price as any other reseller but under the trade practices act we can't fix the price they sell it at,' explained Winkler.
Yet Key expressed concerns that the inclusion of accountants as resellers would undermine the traditional channel's selling power, with business more likely to go to accountants with GST concerns than a retailer.
'Accountants are the first line of attack. If they are allowed to order software people will buy it off them before even going to a retailer to prepare for GST.' And accountants can sell it cheaper, because they have an entirely different line of business to rely on, added Key.
But Winkler believes that a retailer also needs to differentiate on the basis of value added services and if they don't they 'don't deserve the sale anyway. You can't expect to get a sale just by a customer walking in the door.'
Besides this, Winkler assures the channel that an accountant doubling as a reseller is very rare and, according to Shofer, has been a part of the channel for years without any detrimental effect on the traditional reseller or retailer.
'We see accountants as referrers - that's their role in the channel. Harvey Norman says 30 per cent of MYOB sales come from customers walking in and saying that their accountant told them to buy it. Ninety two per cent of businesses rely on accountants for advice but we don't encourage accountants to become resellers,' said Shofer, who believes that the GST will keep accountants too busy to worry about selling software and that most have an ethical issue with selling products as opposed to services anyway.
Yet Key also suggested that accountants doubling as resellers would hurt the customer as well as the channel. 'Accountants are not registered retail or reseller outlets. They don't have the right experience.'
According to MYOB's channel selection criteria, the right experience includes a list of three distributors or vendors that the reseller buys product from and a minimum initial order of $500, to stop people being able to buy product for themselves and friends at wholesale prices.
Additional knowledge of the product or software in general is not required, as MYOB undertakes the customer education aspect of the sale through extensive marketing campaigns and things like GST seminars, Shofer added.