Sage News and Discussion

From Bob Scott's post today. Sounds like there is a rapidly increasing momentum of people losing faith in Sage: CHANNEL LOSING FAITH IN SAGE Top It could be just enough to take this publication's recent article ""Flight of the Sage VARs"" and couple that with the blistering analysis Dennis Howlett made about Sage's financials on ZDNet last month. But it's hard to hear anything good right now from Sage resellers, including long-time loyalists, about what the company is doing. Reports are popping up about Sage undercutting VARs via direct sales and that many channel benefits are gone. Howlett's analysis was Sage has lost a lot of customers. And that means that maintenance income will inevitably shrink if they aren't replaced. Meanwhile, every vendor signing new resellers is having success at Sage's expense, including AccountMate, whose channel's reliance on extensive modifications is a much different than the Sage model. That's on top of high-profile channel wins by NetSuite and SugarCRM and the reports that Sage VARs were numerous at the recent Infor and Epicor conferences. (Although with Epicor buying its largest VAR, I think I'd be very cautious there). Resellers complain they don't know anyone at Sage anymore and cannot get information. Add that on to product line that lacks integration and a clear path and an invisible top management focused on increasing maintenance revenue But ultimately the big problem is the reliance on maintenance. NetSuite says the cloud model will kill the maintenance model as a reliable revenue stream. I think it's correct.

Story should be ""Sage loses faith in the Channel

I'm still not sold on cloud. I think there will be a slow down on investment after the Facebook debacle takes the wind out of the Sails of the Venture Capital/IPO promise market

I am sold on cloud but only to the extent that it's: a. Integrated b. Affordable c. Self maintaining (upgrades) d. Perceived as secure Right now I believe the biggest issue is that costs are 6 to 20 times what our customers pay yearly for on premises. I have customers now who are starting to make moves to the cloud for Gmail, etc. I do think ERP will join that list. I don't know how long it will take for existing users to migrate (if at all).

In a rational world, a posting like that from Scott would result in Sage UK poking into what the hell is going on. The whole thing becomes self-fulfilling. But I think Sage thinks its in a different world, even if the posting were translated to French. So sad.

Loses or lost?

Robert, good point. My guess is that Pascal & Co. questioned whether channel would do all they wanted, so they tried to cover their bet on the channel. I think that was reflected in their choice of Exec VP for the BMD: little real channel experience. Anybody who's paid close attention to US technology channel management knows that you can't really execute a split game. You're either ""in it to win it"" with channel, or you will sell direct with channel around the periphery. IMO, another consequence of non-American at the top of Sage NA.

What if at the high level Sage is right. What if two or three new Sage execs (I believe most of the 5+ year execs are lame ducks) sat together in a conference room and concluded that since Sage has no real SaaS product that the channel would go elsewhere (which they have started to) so that Sage better build resources to manage customer sales and support directly... It's actually a pretty forward thinking strategy -- if you assume that Sage indeed has been planning for the exodus of the channel.

If you think about it, sage 100, 300 & 500 are 'dead end' products. Only enough R&D to keep customers barely paying maintenance. They have a robust full time phone support department, and now an inside 'CAM' group to try and push add-on sales etc. They can't have much in the way of expectations to sell alot of new deals. If the average var is only doing 5 or less net news per year (probably alot less), the channel could shrink to about 20 material var's for net news, and why should sage give up 20% of their real source of cash, maintenance, to the rest of us. On top of that, if Sage had so much faith in the net new power of var's why have they done nothing to contract or eliminate their X3 direct sales group which is substantial? Writing is on the wall, like MAS90, sage will keep the channel around as long as the channel is willing to stick around (and a large percentage are 'lifestyle' retiring in 10 years, cheese sniffing dinosaurs who hate change), but they will put as little expense into the channel as possible. Any 'enablement' programs like Ed Kless will be run as a profit center, not a way to increase the quality of the channel. If Sage was smart, they would realize, their brand means nothing. Nobody outside of our buddies and Bob Scott recognizes the Sage brand. To this date MAS90 has alot more name recognition than all of Sage if you ask me. No sane amount of money can change that if you ask me. They should create a new company/brand, and buy/build a real SaaS product for that brand and forget about tying it Sage. Then market the crap out of the new brand. The little recognition Sage has, is for being a buyer of ancient solutions and milking them to death. Not a brand identity you want to have for a new future facing SaaS product.

I don't know whether to give Pascal as much credit as Wayne does. I simply don't think Pascal and Langner actually thought through the implications on the channel that their changes have triggered. At the price point of most of Sage's products, they must have an active channel. And with aging products, you certainly can't rely on web sales to take their place. salesforce's no-channel model is pretty much a one-off. That they leave the X3 sales in an ambiguously direct-mainly mode is fairly rational. It has higher price point, and more complexity, and significant direct contact means that Sage could get faster, deeper feedback on changes it needs to make for greater success. I do think Sage sees X3 as a significant medium-term growth engine. If the SalesLogix experience is any guide, large customers can be unpredictable about whether they want to be direct with the publisher or use a VAR. It could be that Pascal is trying to set up X3 to give Irvine the flexibility it needs there. Pascal and Joe think they fixed the channel policies to focus more heavily on medium partners who are willing to commit to regular, 1-unit-per-quarter new customer acquisition. IMO those partners see it this way, too. So, that's where I think Wayne might be right in his assessment of exec decisions. However, I think they underestimate the collateral effects of forcing the Blytheco's to cover their bets. A lot of the medium partners look to them in some matters of vendor selection. Some of those small-to-medium partners grow to larger ones, and it is the leadership of those partners who interpret the future based in part on the tea leaves floated by the Blytheco's; it is that dynamic that will kill the channel of positive energy. (It is not clear to me that the small partners have a viable role in the developing BMS world. So I don't know that Sage's policy effectively pushing them away because of low, new-customer sales is bad.) I also think Pascal has completely underestimated the power of a unified brand with a product line that has no SaaS base. Sales trends in actively changing markets, which the BMS space is now, are generally linear until they're not (see RIM, Palm). I hope I'm wrong, but I suspect that Sage will encounter its non-linearity event next year.

Yea but ERP 100, 300 & 500 sales could go to zero and sage would still generate tons of cash because clients are like us, dinosaurs who loath change unless they are in 'excruciating pain'. MAS90 will still 'work' for at least a decade to come so there will be no material exodus away from it because there is nothing more attractive on horizon. If I already 'owned' my erp software, why would I throw it away for a shiny new Netsuite/Intacct toy that I now have to pay for monthly after implementing? What business benefit would that bring me. There aren't too many 'early adopters' and very few Sage customers are among those types anyway. From: do-not-reply@socialcast.com [mailto:do-not-reply@socialcast.com] On Behalf Of Jerry Norman Sent: Monday, June 11, 2012 10:25 AM To: Mark Chinsky Subject: Re: [90 Minds Consulting Group] From Bob Scott's post today. Sounds like there is a rapidly increasing momentum of people losing faith in Sage: CHANNEL LOSING FAITH IN S...

I think Jerry and Mark both make very valid points. I agree with both. If we accept that on premises ERP is going to be verrrry slow for new unit sales. And we also accept that Sage have publicly laid out their road map = connected services. It is quite possible that Sage have thought that they're perfectly capable of selling an add-on (think Sage Payments) direct to their customer. And to that I'd say they are right. They probably don't need us to facilitate most of those sales -- PROVIDED THAT ..... the eco-system is somewhat locked down. This is where Sage's biggest misreading of the market could be. If the ecosystem to connect external products to Sage 100 (et al) is NOT locked down -- meaning that any third party whether ""official"" or not can develop hooks to Sage -- then in my opinion there's a HUGE company threatening risk to Sage in turning their backs on channel partners. The risk is that partners recommend a non-Sage blessed alternative (think BizNet as a good example) in a situation where Sage now receives 0.0 % of that sale. Whether this is a short or long term risk - I don't know. Could Sage lock down these integrations somehow? Given that they've fumbled and stammered their way through explaining how they may someday but not right now - issue expiring unlocking keys - I'm not sure Sage has through this far ahead. At least not publicly. And I'm not 100 % sold on Mark's assertion that it's time to jump wholeheartedly into another model. I would say I'm 50% sold but I've been looking (and looking) for some business model where we can embrace SaaS and have a niche that enables us to provide consulting services and not rely on any commissions. So far I've not seen it in our pure play var market space.

The maintenance element produces a significant damper on sales changes. There are already Sage 100 customers who feel that they've outgrown it, and are now considering options. If they stay in the Sage family, that news will be used to help build confidence. But if they tire of Sage, they move on to Netsuite, et al, and those moves get broadcast, accelerating the decision of customer management to look for alternative. It takes a couple years to find the alternative, and leave. Sage NA could coast on maintenance for quite a while. But that news would drive its stock price down substantially (price is set by eps and estimates of future eps). At that point, it is in play for acquisition. So, new customer sales matter.

So far the models that I've heard which are the can't-miss-and-you-better-jump-on-before-your-crappy-model-goes-obsolete: - Accpac - Niche (you name it - I've heard it recommended) - ERP X3 - QuickBooks (entry level) - SaaS Most of these flamed out faster and harder than our on-premises dinosaur marketplace.... The one thing I am confident is that in order to render services in the SaaS market space we MUST have our own ""special sauce"" or we will be competing with a global channel who has a cost structure 75% lower than us and works 24 x 7 without complaint... the only way around that is to offer something unique.

Wayne, I don't think you'll find a ""pure play var market space."" I think what happens is development of consultants certified in a couple similar products, who use customer interest in those as a key marketing thread. You set up consulting rules similar what you already have (not much ""free"" pre-sales work), and go from there.