Security of Investment

Vendor Consolidation

The number of accounting systems vendors is reducing dramatically in the face of increasingly fierce global competition. This has resulted in numerous systems simply being discontinued following takeover or liquidation, or continued but just milked for support revenue with no investment in R&D. Illustrating this is the recent bid by Peoplesoft for JD Edwards, promptly followed by a bid from Oracle to acquire Peoplesoft (June 2003 – completed December 2004).

We believe this consolidation will increase to leave Sage serving small companies (<15 employees), Microsoft dominating the mid-market and SAP competing with Oracle in the Enterprise space (5000+ employees).

The amount of resources required to fund the necessary R&D to remain competitive is constantly increasing. Most existing suppliers have even struggled to find the necessary resources to get to a true 32-bit Windows based system – something Dynamics GP achieved over 7 years ago. Dynamics has already now been developed for 64-bit SQL, enabling astonishing performance for larger organisations. It is quite remarkable how many currently available systems are still based upon DOS or UNIX technologies from the 1980s but with a Windows Screen Scraper as a front end.

Microsoft invests more in R&D (over US$6 billion YE 2006, increasing to US$8 billion YE 2007) than any other software company and has over US$50 billion of cash, even after paying a special dividend of US$32 billion. We believe few companies will have the resources to keep up with the dramatic advances being created by this R&D – such as Role-based User Experience (now shipping), deep integration with Office 2007 and Windows Vista (shipping January 2007), which will bring huge productivity benefits because of the embedded Workflow Engine.