Pegasus chief heralds 'brand renaissance'

19 March 2008 Accounting Web

Comments about the state of the business software market at the recent Softworld event in London prompted a riposte from the Kettering base of Pegasus Software. John Stokdyk reports.

While Pegasus commercial director Kevin McCallum agreed with his rivals that most business software sales were coming from second- and third-time buyers who wanted more comprehensive solutions, he argued that his company's recent resurgence challenged AccountingWEB's analysis that this sector of the market was turning into a cul de sac.

McCallum also took issue with the increasing tendency to compartmentalise software developers under the banner of "mid-market ERP". The concept of enterprise resource planning (ERP) developed by SAP in the 1990s has gone through a reclassification as SAP and rivals such as Microsoft and Oracle moved down market, he explained.

"The danger is people wanting to pigeonhole stuff. But as developers claim there's a particular sector or size of business where they find their 'sweet spot', it is an increasingly wide classification."

The Pegasus user footprint, he noted, ranged from one to 1,000 employees, with turnovers from £500,000 to £100m. "They're all subject to the complexities of the businesses they're in - with different transaction volumes and user counts. It's increasingly difficult to spot the edges of the marketing boxes - they're becoming blurred," said McCallum.

The credit crunch cast a shadow over Softworld, but as a company picking up customers coming up from the microbusiness market, the Pegasus director claimed to be insulated from the effects of the tightening economy.

"Our normal customers tend to be more local, owner-managed businesses than multinationals. There will always be businesses that grow and those that don't. We're above the boom and bust and the churn you get in the instant accounts market," he said.

A fifth of Pegasus's business comes from completely new users and that proportion is growing, he added. "There are a lot of upgrade sales around for the Sage 50 base - as it is for everybody, including Sage. It's a well established brand and product, but has certain limitations and we want to supply the next step up for those businesses."

Pegasus has also been targeting is existing users with new products such as the CIS-equipped construction package, CRM modules, the XRL reporting system and new performance dashboard facilities.

Having a visible and viable product development roadmap was an important element in maintaining momentum, McCallum explained. "Any vendor can patch their product and take the maintenance money while doing very little with it, but that's the key difference customers need to look for. There's got to be an ongoing plan.

"We've still got a number of people who use Opera. The offer is there for them to upgrade to Opera II, but we're maintaining and releasing Opera as well becuase there are still contracts in place. But they've got a path they can go on - which many thousands of companies have already followed."

While distancing his company from the industry's ailing dinosaurs, McCallum also saw little threat from web-hosted "on demand" business software suppliers who are building up a significant presence, particularly among smaller companies. "I still believe there's a gap between what software is purported to do for the business and what it can do if someone is there to make the system work for you," he said.

"We shouldn't underestimate the role of our reseller partners. Software is a big part of the solution, but it's not the entire solution and these are the people who make it work. Our resellers have been doing it for some time. They know the products and the added elements. You don't get that with new entrants coming into the market. Every week there's a new software as a service (SaaS) from Scandinavia - but they're still coming from nothing."

From this perspective, McCallum questioned the underlying logic of SaaS. "It's fine if you get something for £9 a month and you get £9 of value. But if you need specific things for the business such as consultancy on the processes, workflows and reporting systems, you're not going to get it from pressing 'Download Now' on an Internet Explorer screen."

In spite of his scorn for SaaS, McCallum did confirm that Pegasus was looking at remote access options for the Opera II family. "It's something we have to evaluate, because there's increasing demand for it - not a slap-bang browser interface, but remote access through the Web and reuseability from other sources. It's something we're looking at."

The other disruptive force within the business software market is consolidation. "Acquisitions are still in people's minds," he said. "But in our area, there aren't many people left to acquire."

As an established UK business software supplier that retained its identity while being absorbed into the Infor group, Pegasus was in a reasonably good position, he argued.

"We have about 14,000 sites in the UK - and very few can touch us in terms of reach and support. The thing that we bring to the market is scale and length of tenure. Pegasus has been here 27 years and has a very loyal user base. It would be foolish to discount the value of that brand name. With our recent product additions, I get the feeling that our brand has gone through a renaissance."

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