The impact of major strategic and organisational change during 2012 was plain to see at Netherlands-based SME ERP provider Exact. It resulted in headline revenue that was barely positive - up 0.7% to €217.1m – and was 2.1% lower on an operational level. A c13% decline in licence sales did nothing to help the cause but there were other issues too, from a fall in consultancy business to a high cost base. There was also an EBITDA decline of €8.1m to €42m. One bright spot was the 47% increase in revenue from cloud solutions, although this was from a low base as Exact is really just getting starting in this area.
The wholesale business revamp, which also included top management changes, is designed to stimulate growth but even so the company is still only looking to 4%-7% growth per year. This would put it back on par with manufacturing-centric mid-market ERP provider IFS who delivered 4% revenue growth during 2012 but had a varied year (see Slow period for IFS). It is also in the same ballpark at Sage who is also restructuring the business and looking to its X3 ERP suite as a partial contributor to its annual growth target of 6%.
There appears to be consensus among the SME-focussed business software providers around growth levels, although Exact and Sage still have to achieve them and have had to undergo major changes to position themselves to attempt it. A c4%+ growth target means there is limited room for adjustment if the business or economy takes a downturn. It can hardly be a comfortable place in a low growth market where cloud computing is a major and deflationary disruptive force. So many mid-market players have already been acquired that you have to consider Exact a target. Acquisitive Infor (see the HotViews archive here) has a reputation for taking on mid-market players and it has been quiet on the acquisition front for a while now…