Software designed specifically for specialized verticals could be an excellent way to dive into the large, but often untapped SMB market. Sage North America is one company offering software designed for specific small businesses, including the non-profit and healthcare industries. Its accounting software developed for small construction companies has seen success in Canada.
From Simply Accounting to simpler accounting
Tercera Construction, a small business based in Vancouver with six staff, switched over to Sage Timberline Office, an accounting program designed specifically for construction companies by Sage North America.
Before switching to Sage Timberline, Tercera was using Simply Accounting, another Sage product also aimed at small businesses, but on a more general level. There are several software programs out there for the SMB market, such Intuit’s QuickBooks line, but using a program designed specifically for his line of work was a major benefit to the business, said Dennis Donovan, Tercera’s president. “It’s a really powerful tool for us,” he said.
“The construction industry does have unique requirements,” said Dennis Stejskal, vice president of product management for construction real estate solutions at Sage. “It gives us the ability to sell very focused into the product market,” he added. “By writing software specifically to the need of the vertical, you’re just going to better serve the market.”
Construction projects typically involve a number of different subcontractors and companies providing materials. “Cash flow is huge in our business,” Donovan said, and billing people correctly is hugely important. “I get one big cheque and I have to distribute it out to sub-trades and people who work for me,” he said, so accounting is actually a major role for him.
Integrating with industry software
Sage’s Timberline product also links to AutoCAD Revit, design software that Donovan says is widely used in his line of work.
When using it to design a 3D wall, for example, all the individual elements-drywall, paint, insulation-must be broken down for costing purposes, Donovan said.
Before, he would have had to put all the individual elements into a spreadsheet for accounting, which was separate from the project management side. With Sage’s program, the individual elements are now inputted directly into the accounting software, so determining costs for an estimate is now much faster, he says.
“They like the configurability of the job cost system,” Stejskal said. With general software, it’s more difficult to break down costs and discover where your money is going. Both Donovan and Stejskal agree- whether you’re building a home or a 10-storey building, it helps to break down the project. “[SMBs] do need technology that will streamline their businesses,” Stejskal said.
“We really like the dashboards that they have,” Donovan said, which breaks down cost of materials, cost of labour and other important information. “There could be hundreds of people involved in the project; you’ve got to communicate. Especially when talking millions, you really want to count your pennies.”
Selling to the market
Sage now has more than 700 customers using Sage Timberline Office in Canada.
“Most of the clients haven’t gone through a transition like this in many years,” said Patrick Baker, president of Constructive Solutions for Business Inc., a Sage reseller in Vancouver. His company would go in and try to understand the construction business’ internal structure and apply that to the software. “My company is responsible for getting you up and live on the software,” Baker said.
For a company about Tercera’s size, which does about $30 million of business per year, the cost for implementing Sage’s solution would be about $25,000, according to Baker. But, with the product, you’re essentially replacing a person you would have had to hire, he said.
The training typically isn’t too challenging for the staff, since they already input data into a spreadsheet anyway, Baker said. Sage’s program just streamlines that process.
The whole process of switching over usually takes about three months, Baker said. After that, it typically takes a company three to six months to get comfortable with the software and understand the value of their investment, he said. “Change is tough,” he said, but the investment is worth it.
Sage partnerships
“We are always looking for companies that are interested in ‘verticalizing’ their business,” Stejskal said. “Typically, we are looking for companies that have a familiarity with the construction market,” for this particular program.
Sage resellers need to know why it’s valuable rather than just knowing the product, he said. “We don’t just add business partners that really are not into the market.”
Serving local customers is also critical when reselling this kind of software, Stejskal said. “We can do true product training over the Internet, but there’s that local touch that many of our customers do appreciate,” Stejskal said. “Through that local support, we can put a consultant in that office who really understand their industry and particular needs.”
