Sage News and Discussion

Another problem for the big guys who just did all these rollups... DSD I'm speaking to you guys now... You are now totally on the hook for the quality of all the work done by all of your 'affiliates'. Sure, you can make your sales number. 1 deal/quarter is a joke to meet for a rolled up sales company, but not all of your members are Wayne Shulz...If Sage puts out a buggy release (that never happens), and your clients don't renew, and you drop to 88%, now all of DSD's cash cow maintenance is at risk. The big guys are now 90% dependent on maintenance and if that spigot stops, you have the MIS Group scenario in a hurry, oh and Sage gets to take all your clients direct in a hurry and nobody gets the recurring revenue...

I don't say that I disagree with having a high quality renewal rate. I find that to be the measure of how well you are managing the customer. What I think will be a bigger issue is getting feedback from Sage on what your renewal rates are. Anyone have recent experience trying to figure out their certifications? Now expand that to try to have Sage tell you the renewal rates across all your offices.

I would say 70% of all clients who don't renew or ROR away from us is due to something somebody else caused. IE crappy 3rd party (starship on networks or certain label printing scenarios cost me 2 or 3 clients), Bugs in Sage's software that we are expected to fix for free etc. Why should our ability to merely survive be dictated by a 3rd party or Sage who we can't control? Just recently lost a client because we did an upgrade and got a weird error message (nobody here ever saw it before). We rebooted the server and it didn't come back up. Client's IT person went home sick that day with stomach virus and didn't come back for 2 days. Total down time? 3 days... Blame? Us because we rebooted their server. Eventual reason? A patch Windows update pushed down months ago but never took effect because they never rebooted their server... Now we lose a client who wants a scapegoat. What should we have done differently? They didn't want to pay our rates for us to be their outside IT support so we aren't about to touch an off-contract server.

If you are a small shop, with 30-50 clients, losing just 1 is 50% of your year's allocation. What if they are fed up with sage's monthly fees and go to quickbooks? You are screwed. What if they are acquired and have to move to another system? You are screwed. Every single scenario in this new plan=you are screwed. This gives sage a way to go direct with dying products and not accused of cold heartingly firing all of us and taking our incomes. Excuse the expression, but to use a @PeterWolf term, this is a giant Ass Rape...

@MikeFitzgerald sold in the nick of time. Flash forward a year from now. Why would a Net@work buy a company who's owner is going to retire. There is no way that happens and you don't have a higher than normal client attrition rate. Now every acquisition has to be looked at as an attrition risk and that leaves very few desirable companies to acquire.

This also makes orphan customers much much more riskier. Win backs too. Who will do these deals if potentially the customer renews/wins back then drops maintenance. To be fair I believe that these rules should only be in force against expiring unlock keys.

Sage knows they can't pull this off over night. Their entire var base and many clients would jump ship. For the first time Sage is doing something with a long term planned outlook and not a reactive annually change. For them, its genius, for us its a slow 5 year death spiral. This is the first step in a 5 year plan locked in a safe somewhere. They are counting on Windows 8 or 9 making MAS90 incompatible such that a fair number of clients who are on maintenance but not upgrading, or who are off maintenance, coming back as subscription. I wonder, but doubt, if they legally could stuff something in the next annual maintenance renewal agreement that forces read only capability with no payment if the customer chooses to upgrade past a certain version number where that occurs?

Another interesting tidbit that I'm not sure was clear - customers that ROR will provide $0 (that's Ze-ro) revenue to the new partner. Sage will get it all. But they can count for your customer retention if you don't keep them on plan.

Regarding @WayneSchulz post above about agreeing with the need for high retention ... my only problem with this is that it is completely beyond our control if the customer sees value in renewing or not. As @MarkChinsky stated, what if they just don't see the need to ""upgrade"" and want to stay put because they feel the product is stagnant? Is that a reseller's fault or the vendor's? The bottom line is this plan is just the first step to cut out all margins from partners.

Can you explain that a little more -- does that mean that an ROR doesn't also carry the commission. Example I sell a customer and am collecting commission. Tehy ROR to Mark. He doesn't collect the next year commission? Or is this more like how it works today for Easy Pay. If a customer has renewed maintenance on Easy Pay over say 12 months and they ROR'd from me to another consultant - that other consultant does not collect any commission on the remaining payments until the 12 months is up.

I agree with @PeterWolf bottom line is we'd better be ok with representing a product where you get zero margin or start now finding another line of business. I absolutely think (provided Sage isn't purchased/sold) that within 5 years margin is gone except on first year. Also another interesting thing that will come to the forefront -- how will people who are not invoicing their own maintenance really know when someone isn't renewing? Are you going to sit back and twiddle your thumbs waiting for Sage to notify you that one of ""your"" customers didn't renew and your rate of renewal is now 85% .... Basically everybody better be renewing their own maintenance and handling that billing or you're in real danger of losing control and not even knowing.

The problem is, MAS90 upgrades are 4 hours to 4 days and new implementations are being quoted at <200 hours. You can't build a services only business with this crap. I'm working with an Epicor prospect who bought 75 users direct from Epicor but doesn't like their service delivery. They are looking to us (and somebody we partner with) to implement. They feel the epicor hours are underquoted at 2,000 hours! It's probably more like 4,000 hours. How many Net New Name MAS90 deals do you have to sell or how many orphans do you need to find to generate that kind of backlog??

In response to @MarkChinsky comment. My exit was actually a year or two later than I had hoped. My payout is based on future revenues, so I am not out of the woods yet. In my own calculations, I had purposely discounted the future maintenance revenue streams, assuming Sage would continue to eat into margins and that renewal rates would slow down. However, the latest Sage moves have me concerned that the rate of erosion is accelerating. Not sure how all the others are doing rollups and buyouts, but the smart ones were/are doing it against future maintenance and software revenues, not past performance, and definitely not services. The things that are of most value to you, your knowledge and services, have little value to someone looking to acquire you. So, yes, the value of a Sage customer base continues to decline in terms of value to another partner.