General Consultant Discussion

Given a choice between improving their product and adopting SAP's new license model -- I wonder which Sage would choose?

And a related article: http://www.businessinsider.com/sap-insider-sap-booted-its-north-american-president-for-missing-one-quarterly-target-2012-4#ixzz1vWljRbk5

Well, it is interesting that Sage is now ensnared by SAP so they should be feeling the pain soon......... Interesting concept. If you want to export your data to Excel, you are going to pay more for that feature............. No wonder Atlas isn't worth a damn to us.

Sounds familiar - go for short-term growth, customer be damned.

What you risk is this 'take no prisoners' approach from Bill is that crappy deals get done with huge discounts to save ones job. I've seen it at epicor. It leaves alot of pissed customers which can come back to bite you.

Doesn't this charge that SAP is trying to enforce underline the legal question of ""who owns the data?"" It doesn't appear to be a user license to access the application, but a fee to extract data. It will be interesting to see the legal action on it. FWIW, I doubt very much that 1 quarter's missed sales is the only reason the NA President was fired. But that they chose to make the public reason speaks volumes. This news probably made Larry Ellison's day. Maybe his week. And, relevant or not, news like this does get used by competition against SAP in unrelated product sales, such as SAPOne. On a much broader scale, the driving force behind this stupid, counter-customer decision is Wall Street's constant pressure for growth. It didn't always push like that, and I do wonder if that quarter-by-quarter push for growth is really sustainable.

Both Oracle and SAP have ruthless sales pressure environments. I've known some of their sales reps and its a very short lived job unless times are really good. When you say 'wall street' I assume you mean being a public company, not specifically Wall Street banks since they simply make the market. It's the owners of these shares that insist on consistent returns. Considering they are paying 10 - 30 times earnings (and way higher for crazy companies like groupon) and that the founders were happy to take the money, they are expected to perform. This is very different from a private business sale where the multiple is 3-5x earnings. If you were paying 20 million/year for a star quarterback, would you settle for less than awesome? Essentially that's what you are doing when you buy a tech company stock. Excuses need to get checked at the door. It's part of the reason Epicor went private. So that they could reinvest for the long haul without quarterly pressure from shareholders. Sure they have pressure from the buyers, but they know going into it, its a long term technology cycle.

If Google ever saw a material dent in their revenues, the 'shiny happy place' it is to work would change in a heartbeat to folks running for cover under desks trying to save their hides and selling ice to eskimos for ad revenues

Mark, yes, I mean the public capital markets. I understand exactly what you are saying, and it is true. However, that is all fairly new since ~1980. One of the streams of economic analysis in the past couple years looks at the reasons that Germany continues to be a very strong exporter, despite it's non-bargain-basement labor structures. One reason (but not the only one) is that most of its manufacturing companies are privately held, mainly family-held. And they get the capital they need from local banks. And even the public firms are held to a different standard; maximizing shareholder value is not their only legal requirement, as it is in the US. Look into it when you get a chance; it is worth pondering whether elements of it might make sense here. I do think that over the long term, shareholder value and customer value align. However, I am not so sure that the timing is ever the same for more than a short period.

I do agree that for a long time Japan killed us because they had 10 and 20 year outlooks, while we had quarterly outlooks. The Pinto is a perfect example. Eventually other issues, including socialistic policies killed their economy but they had a great 30 year run. Of course, SAP is a German company, so not sure if the German philosophy is still intact. In addition, the Japanese, and now the Koreans, have put a significant dent into the German automotive industry. But alas, Sage UK, and now Sage US, fueled by a president from Sage France is trying to figure out how to maximize, profits with a minimum of product investment. I saw this 10 years ago and started software publisher focus as I didn't want to go down with the sinking ship. Just as I saw in 1999 it was time to sell my company because the Y2k party was about to end. I had a pretty good track record until 2 days ago when I bought Facebook pre-ipo thinking I'd make a quick kill and now I'm punching myself. On another note, if any of you want investment advice, just ask me what I would buy and short the stock...:)

I wasn't completely clear about Germany. The bulk of the mfg is done by PRIVATELY held firms. The public firms, like SAP, compete for capital WW, so there's little difference between SAP, Sage and Google. Japan is a whole nother thing. I don't think any economist would call the melt down there due to socialism. Government Corporatism is closer to the cause; propping up privately-held firms is not Socialism. But the relevant point here is attitudes towards customers of SAP vis a vis Sage. They both have their best growth in the rear view mirror, and both starved product development for a very long time. milking the customer base for more $$$ is about the only option they really have.

FYI - IN SAP B1 the issue with indirect access licenses is that developers are using the SAP infrastructure and database and then putting lots of functions outside the UI to avoid SAP licensing. Up until recently it has not been about reporting (but with SAP owning Business Objects...) but with master developers replicating functionality and then calling the APIs to write the data back to the database. It is a tricky issue.