By Carolyn A. April
Tuesday, August 12, 2003
Like many solution providers that sell software to midmarket companies,
Carrier Logistics has gone the extra mile and then some to become
a domain expert for its transportation-industry customers. For 31
years, the Tarrytown, N.Y.-based independent software vendor (ISV)
has immersed itself in the unique business processes that govern
a subset of the trucking industry known as "less-than-truckload,"
a market in which small shipments of goods are consolidated onto
trucks as they wind their away through multiple stops on the broader
trip from point A to point B.
Going the niche route has panned out quite well for the midmarket
ISV, which sells a soup-to-nuts application solution--built and
updated on Progress Software's platform--that automates nearly every
aspect of the less-than-truckload operation from order placement
and pricing to tracking, delivery and payments. The solution plays
to midmarket needs, including being highly customizable and flexible
enough to give users a choice of a GUI or no GUI.
Ken Weinberg, vice president of marketing and a principal founder
of Carrier Logistics, says that selling software to the midmarket
does differ from working enterprise accounts. Primarily, midmarket
sales are all about honing your people skills and gaining insight
into how your customers' businesses run. Then you figure out where
software fits into their overall goals. In many cases, the small
and midsize companies he encounters seek the same degree of software
functionality as large enterprises; the difference is that they
can't handle the implementation, support and maintenance in-house,
That's where VARs and ISVs can come in, really roll up their sleeves
and offer the midmarket personalized service. You can't take the
cookie-cutter approach to midmarket technology jobs, Weinberg warns.
"This isn't buying an Excel spreadsheet," he says. "I
know transportation. Microsoft can't come in and say they have the
tools to address my customer's needs. My customers want apps that
are right for them."
The Microsoft machine might not be steeped in the ins and outs of
the less-than-truckload industry, but that is not stopping the software
giant from running fast after such midmarket companies and the partners
who cater to them. The company's very public push into the applications
arena has come via the acquisitions of Great Plains and Navision
for their popular financial and ERP apps, as well as internal development
of its own CRM package.
And the folks in Redmond aren't alone in this quest. Enterprise-software
vendors such as Oracle and SAP and infrastructure giant IBM have
identified the midmarket as their next untapped frontier, fueling
a flurry of major technology and marketing initiatives, such as
IBM Software's lineup of Express products and SAP's SAP Business
It's no wonder: Unlike the battened-down enterprise that spent
lavishly on software in the '90s and is now tapped, the midmarket
represents a new reservoir of opportunity. This is a space inhabited
by countless companies that have not upgraded their financial applications
or ERP in years; they are limping along on dated systems and proprietary
infrastructure that is just ripe for an IT overhaul or Web-oriented
In addition, these smaller companies also often lack--or eschew,
in some cases--an in-house IT department, and therefore look more
than ever to VARs and solution providers to aid with technology
decisions and implementation, outsourcing and hosting.
"For the midmarket, it's all about a solution sell with products
that typically have a smaller footprint and meet a specific business
need," says Jon Derome, industry analyst at the Yankee Group,
Boston. "They also want a fixed price and low overhead on service
A number of software technologies are bleeping across today's midmarket
radar screen. Not surprisingly, security solutions top the list.
VARBusiness' State of Midmarket Spending survey found 68 percent
of respondents singling out antivirus software, and 60 percent citing
firewall and intrusion-detection technologies as their top software
priorities for 2003. Other key spending areas identified by survey
respondents include server and desktop operating systems, databases,
accounting and ERP applications, antispam software, disaster recovery,
and office suites/productivity applications.
When it comes to software trends, a lot of midmarket buzz is happening
around portals and e-commerce front-ends. It seems that the Fortune
1,000s clamoring to get their businesses onto the Web and link electronically
with partners and customers now is filtering down to midsize firms.
In fact, according to VARBusiness research, more than one-third
(36 percent) of midmarket executives polled say their companies
offer an extended enterprise network to customers, suppliers, vendors
Suffice to say, companies with 100 to 999 employees are eager to
see the benefits to be gained from systems integration and automation,
including operational cost reductions, supply-chain efficiencies
and higher customer satisfaction gained through faster service and
multiple sales channels.
VARs and developers can capitalize by crafting solutions that unite
the right pieces of technology to extend old systems forward to
a Web environment.
"The integration of the front- and back-ends is really where
the midmarket wants expertise right now," says Peter Boni,
chairman and CEO of Surebridge, a solution provider and application-hosting
company based in Lexington, Mass.
One of Surebridge's customers, Chicago-based EA (Energy Absorption)
Systems, recently shook off its legacy shackles and standardized
on PeopleSoft's software for a range of run-the-business applications
needs. The 330-person company, which manufactures highway safety
devices and is a wholly owned subsidiary of Quixote Corp., also
latched onto another burgeoning trend within the midmarket: application
Bob Latek, senior vice president and controller at EA Systems,
says the decision to go with PeopleSoft came after careful deliberation
over whether to go with a tier 2 or tier 3 software player instead.
Latek's initial belief was that a tier 1 software suite, such as
PeopleSoft's, would be too massive to implement and difficult to
support without an in-house IT staff. But then he was pleasantly
surprised by PeopleSoft 8 and its browser front-end, which he lauds
as user-friendly and facile at getting data in and out of systems
quickly through querying.
And when Surebridge suggested a hosting arrangement, Latek knew
it was the way he needed to go. By outsourcing the operation and
maintenance of the software, he could focus more energy on applying
the suite in ways that helped the business meet its goals, he says.
"Now I drive the software; it doesn't drive me," says
Latek, who has contracted with Surebridge to roll out additional
PeopleSoft modules at EA Systems, as well as begin migrating Quixote's
other subsidiaries over to the suite.
EA Systems completed the first stage of its PeopleSoft project,
courtesy of Surebridge, in a quick three months. In fact, fast results
are an economic imperative these days, so much so that companies
hang their technology decisions on what can deliver them the fastest
The midmarket, of course, is no exception. Midmarket firms have
seen the effects of the enterprises' late '90s software binges on
SAP and Siebel, and it's not pretty. You either end up with a shelf
full of expensive, unexploited software--and a ticked-off CEO--or
you face a painful and lengthy application rollout that jams up
daily business operations and costs a fortune in service contracts.
It's a headache either way, and for many midmarket firms whose
application needs are strictly defined, it's also unnecessary.
"I know what I want a product to deliver to me, and one major
goal is that it not disrupt things [when it is implemented],"
says Patty Stibbs, practice administrator at the Plastic Surgery
Center of Hampton Roads, Newport News, Va., which recently deployed
a new patient-tracking automation system courtesy of Austin, Texas-based
integrator Ascendant. "I can't afford any implementation that's
going to slow down the business."
The surgery center's new solution is based on IBM's Express products
and Lotus Sametime collaboration technology (all running on tablet
PCs from Hewlett-Packard). The combination enables the company to,
among other things, electronically sign in patients, track how long
they have been waiting and classify them according to medical priority.
In addition, it's also an employee-communication tool, putting
instant messaging into the hands of technicians to improve collaboration
and cut down on the overhead paging, which Stibbs says sounded "like
Stibbs says Ascendant's solution is meeting all of her prerequisites,
including being simple to use.
"I really needed the software to be user-friendly from an
administrative point of view, so that I could go in and make policy
changes and not have to call someone to do it," she says.
Such targeted, project-oriented solutions, like the one completed
at Plastic Surgery Center of Hampton Roads, are where the software
dollars are being spent in the midmarket today. Keen to this, PeopleSoft
and SAP, for example, have tailored their suites to be sold and
implemented on a per-module basis, so that users can buy only the
piece of functionality they need.
Hand in hand with such projects, however, comes the need to integrate.
Whether it's tying the new solution into older, siloed software
packages or extending systems to the Web, integration and messaging
technologies have become a new area of urgency--a finding backed
by VARBusiness research (see "Web Wares," right). Web
services hold appeal in this regard because of their relative simplicity,
low cost (as compared to a full-blown EAI solution from the likes
of Tibco or webMethods, for example) and open-standards nature.
Tim Huckaby, CEO of InterKnowlogy, an integrator and Microsoft
partner based in Carlsbad, Calif., says the midmarket companies
he sees tend to be more agile--less hog-tied than large enterprises
by 20 years' worth of capital investments in hardware and software
That opens the door for innovation at the software level, a willingness
to try new technologies such as Web services and, by extension,
Microsoft's .Net platform.
"In the enterprise, you see a lot of CIOs who say, 'I would
love to switch to .Net, but see that big piece of iron over there?'"
But for midmarket companies without all the baggage, .Net can be
a "no-brainer" choice, contends Huckaby, who says that
software developers have a golden opportunity to drive technology
shifts within this particular market segment.
The development appeal of .Net to the midmarket lies in the expediency
with which applications can be written, Huckaby claims. Midmarket
companies typically do not have in-house Java development expertise,
nor do they have the financial wherewithal to hire J2EE integrators
to build applications or buy the J2EE infrastructure.
CIO Technologies, which provides order-fulfillment software services
to companies that sell products via television infomercials, recently
extended its COBOL-based flagship application as a set of individual
Web services. Pieces of the core application's business logic have
been extracted and are now available to its customers as services
over the Web, representing various processes such as "ship
to" and "get customer address," according to Gunnar
Fredlund, president and CEO at CIO Technologies, Santa Barbara,
Web-services technology, along with IBM's DB2 Express, have enabled
his company--which used Acucorp as a solution provider on the project,to
take its operation to the Web without needing to rewrite the entire
application or employ a large internal IT staff to manage it all.
"And it has allowed us to hide the complexity of what we are
doing for our customers," he says.
That's the bottom line for many midmarket companies: Technology
is merely a tool for achieving a business goal, not an end in itself.
"When you are in the midmarket, people want to talk about
how they can solve particular business problems that they have,
not about technology," says Sam Fatigato, president of Ascendant.
"Technology just isn't the primary dialogue that you have with
these executives and managers."
Copyright 2001 CMP Media LLC.