Sage News and Discussion

Guess today's webcast surprise - win no prize... BPAC excluded Today's Sage Reorganization Update is slated to include new info about : "" ... increased partner and customer engagement for ERP products."" Closest to the pin wins ... nothing.

Most likely some type of direct sales effort though Sage won't call it that. Probably not about selling the core ERP direct. Expect that instead they may announce that add-ons (Sage and Non-Sage) will be sold direct. To date Sage have not discussed much about what margin (if any) they would pay on connected services. They could announce today that they will not be paying any margin and that they're going to be pushing these connected services directly to the customer. In my opinion there is some risk here because partners still have a lot of influence over their customer buying decisions. Piss off the partner group and you could see partners actively recommending other connected solutions. Sage may also announce something slightly ""less"" intrusive such as frequent pushes for existing users to upgrade to ERP X3. You may recall they did this previously with MAS 500. I'm not sold this was a long term success though it probably grabbed some short term revenue growth. Backup bet: - Some type of changes to tier that may reward first year sales over subsequent renewals of maintenance.

Sage have already started a very ""bare bones"" connected services page - http://www.sagenorthamerica.com/Solutions/Cloud-Solutions/Connected-Services

Sage should bite the bullet and spend the big money needed to buy Avalara. That's a company in the right place at the right time.

Do we really want them to ruin that product also???

On line now listening to the sooooothing background music. Wonder if that is Pascal tickling the ivories....

can you post the dial in? I can't seem to find it. I wonder if I was 'accidentally' missed from the emailing :)

http://sage.adobeconnect.com/e23joas0wf2/event/login.html

Did you register for the event after getting the inittial e-mail???? To access the event, please go to the following link at the time of the event and enter your username and password: http://sage.adobeconnect.com/e23joas0wf2/event/login.html Then dial in to the audio portion: Toll-free (US and Canada): 888-339-3507 Conference code: 333491# Outside the US and Canada? Dial: +1 719-325-2300 Note: Your username is the email address you originally used to register with. Your password is the password selected when you registered. If you no longer have your password, choose the forgot password option on the logon page. To register someone else for this event, please go to: http://sage.adobeconnect.com/e23joas0wf2/event/registration.html

Then dial in to the audio portion: Toll-free (US and Canada): 888-339-3507 Conference code: 333491# Outside the US and Canada? Dial: +1 719-325-2300

888-339-3507. Code 333491#

Wow, everyone there but Pascal......

Just logged in - what did I miss

Someone please screen shot these -- I'm only in via audio

10 user, $13,200 per year. That sounds high. But maybe it just takes some getting used to.

What this does is open the door to true SaaS vendors to compare what they offer vs Sage.

What modules r included for $110?

Can't set the slide but they're talking like it's everything save for payroll and CRM And includes GOLD support, upgrades - no multi-year agreement. Ask for 120 notice.

Screen shot of the new subscription model

Value to New Customers screenshot

Is it just me or does this seem like it's primarily an offering for 1 to 5 user companies. I can't see this being hugely popular with larger customers though maybe.

The big hiccup here for us is the requirement of a new customer every qtr. you miss a qtr. no more subscription revenue.

@JohnnyPabian I think this means partners will merge to be sure that margin doesn't drop.

Kiss VAR discounting goodbye on the subscription planning..

@WayneSchulz . Discounters will discount services instead.

This sounds like what Microsoft rolled out 5 years ago = verticalization

I think the overall message is ""Sage to Channel: Drop Dead

He is moving faster through slides!!!

@JohnnyPabian I must have been distracted. Where did they say you lose your subscription if you don't sell a net new in a quarter?

@MarkChinsky I definitely heard that you must make certain level of new sales a quarter.

One of the earlier slides. You have to sell one per quarter. If you miss a quarter, you have to sell two the next quarter to get back on track. Doesn't sound like there are carryforwards though.

Tom gets soooooo excited....

I'm missing a piece here though -- they've changed to subscription on a nearly similar price as SaaS except they still have all the overhead of the customer performing upgrades, workstation setups, etc. I'm not sure customers only want pricing change but perhaps I've missed something.

@WayneSchulz Plus they aren't actually hosting. If you pay for a standalone hosting service. That's about $50 to $75/month/user. You still have upgrade service costs. If they enforce this new sale per quarter requirement, this will create a very fast consolidation of remaining partners. This is actually pretty good news for the likes of DSD because nobody wants to risk getting nothing.

R these guys drunk. Last oct SQL same as 200. Nov 1 price increase for SQL. Now SQL back down same as 200!!

They have effectively killed all the small resellers if I'm reading this right

So is subscription pricing the end of MAS 90 as we know it? Why not just install MAS 200 as Mark Chinsky has been suggesting?

Did I hear them say that if Sage sells something direct to one of your customers that you don't handle they will change the whole ROR to a VAR who does have all the products?

Wasn't my impression but can't say for sure.

He skipped past the ROR stuff pretty fast.

If that minimum sales requirement is true, small var's are either going to fight selling subscription and bad mouth it, or there is going to be a mass rush for small var's to get gobbled up.

It sounded to me like if you don't handle what the customer needs, it will be aligned with a partner that does carry it. He was referring to leads at that point, I think, but it would most likely apply to existing customer add-ons as well.

The one sale per qtr applies to the module pricing as well, not just the subscription.

VERY few MAS90 var's are doing one net new name per quarter these days. The product just isn't that competitive and the overall industry sucks crap. Can somebody find something in a slide or writing on this issue? Might be time for the 90minds not part of DSD to 'roll up' if this is true

Maybe I misunderstood something but didn't he say the subscription pricing is based on SQL but the customer has the option to choose which version they want??

Here's the slide about channel requirements

@MarkChinsky Here's a screen shot of the slide. I get the impression that Sage believes they're being generous with the ""Cure period.

@MarkChinsky - I like that idea. I've been thinking even before this that 90minds probably has the collective expertise to take an open source ERP, fill in the holes, and do unto Sage...

See my poll

Note that it looks like 'net new customer' add, so if you Sell sage CRM to a MAS90 customer that doesn't count.

Seems that smaller vars can either consolidate or do their own thing and just take the initial 50% tier. No discounts (on subscription pricing) levels playing field when competing against larger vars. Larger deals are better suited with on-premise, module based pricing. I wonder if subscription pricing will affect SPS commissions?

According to the quarters requirement, even talking the 50% you might only get one or two quarters.

I think it said the quarterly requirements are effective AFTER the first year.

Just gives var's 1 year to either switch publishers or roll up. Time for Taylor to staff up on recruitment.

I've been talking to some AccountMate resellers who are all very happy with how they treat their resellers. Hope to be delving into the product soon.

The other piece was the 90% retention, which no one is going to have after the 16.5% maintenance increase. Or was that just to get leads?

I'm sure if you did a poll on who thinks they will have a 90% retention rate, the results would be same - 0%

Subscription pricing for payroll is $50/Compnay/month. Also requires 120 termiination notice. That temination notice undermines the Flexibility to adapt the customer solution to ther fast moving environments.

I like how they think we won't have to explain modules to customers anymore as a result of this.

I thought that amusing too!

Wayne, based on the Accpac per-user pricing, I ran some VERY ballpark numbers for a 10-user user Accpac system and I came up with a 2 year ""break-even"" period. In other words, after two years of paying the monthly subscription fees, they will have paid approx the same amount as if they had purchased the software outright. IYO, how does that sound to you in terms of the value proposition? Oh, and BTW, I pay no attention to Sage making a big deal out of including GOLD maintenance instead of Silvert. That's the oldest trick in the book. Most customers don't wnat that and giving them something they don't want and making like it's a great deal cuz they're getting it for ""free"" is like throwing 6 stale donuts into a box with a dozen fresh ones and telling the customer what a great deal it is because they're getting 18 donuts for the price of 12!

Having had some time to digest this --- I simply don't see how Sage is doing anything except financing their software at a pretty hefty rate. I'm obviously missing some way that they're going to sell this to customers who ignore that it's much more expensive than the per module pricing. Why not just lease or get a loan?

I agree...... I just don't see the value, even if you factor in the cost of the hardware (which, for a 10-user system, equates to maybe another year's worth of cost). Of course, what I haven't factored in is the DISadvantgae of going with a hosted solution vs. on-premise, including the unavailability of many third-party modules, the lack of having your own data in your own location, and the difficulty of customizing. Those limitations reduce the value of hosting. IMO it's not a matter of whether or not hosted vs. on-prermises solution is ""better or worse,"" it's a matter of pricing. The client will choose whichever gives them more value for their money, period.

I think a two year pay back is right on the money when comparing to other solutions. I look at something like Salesforce.com and if you compare that head-to-head with buying an on premises solution, it's about 14 months before Salesforce.com costs more. Of course, that's in the cloud so there are extra benefits that maybe justify the higher amounts. For an on premises subscription model, 24 months equivalency to owning it outright seems ok to me. A few months back, we converted our add-ons for Sage CRM from up front pricing to subscription and came up with the same pricing strategy. Let's flip it around, what do you all think would be a more reasonable rate / cross-over point? 3 years? 5?

Of course, that's in the cloud so there are extra benefits that maybe justify the higher amounts."" BINGO What Sage introduced here is a new form of financing which includes enough extra that customers cannot back into the rate they think they're paying. But there's little if any benefit to the customer to make this comparable to a SaaS offering. - Same Sage product - Same integration capabilities (let's see how SDATA really works first) - Same upgrade and maintenance costs Convince me that what's happened here is not just a new type of financing

@WayneSchulz They said it themselves. It's all about cash flow ease on customers. It's not like Sage is even hosting the software

and the same code they use to lock down the software will be recycled for their hosted model which will probably just cost $50 to $70more per month. That way they can get the stock bump because they are now a 'cloud' company even if they don't sell much of it.

This also explains MAS 5.x. Putting in the Web interface makes it more immune from the Netsuites saying its just a citrix port solution. This is going to get all their client on on-premise and off premise subscription and make them equally competitive vs. cloud companies. Now they don't have to spend a billion to buy an unprofitable small client base company like Intaact. They can become a cloud company in a damn hurry by nudging clients into the cloud, but offering the on-premise fallback with little extra R&D/support/overlap costs...

I really 'misunderestimated' how smart Pascal is (or whoever thought this up). A good chunk of the channel will just take this in stride, see the 2013 date and put their head back in the sand and go on their merry way stuffing 'cheap mas90 support' keywords into all their web pages (MTSI, can you hear me now?) Topless (or Chipendale for you ladies) car wash anyone? Seems like a more viable business model.

@WayneSchulz - it's not just a new financing move - it's a also a clear land grab where Sage is taking over the customers.

@MarkChinsky Sage just cancelled plans to take ACCPAC to the full web UI that they've been promising for the last three to five years. I'm not sure that they will have the skillset to get Sage 100 there but perhaps. Also per user pricing had been discussed for a long time. Laurie Schultz announced it and there was even a price list for it some time ago. The problem is that nobody at Sage had the balls to push this out and make the transition. I guess that's why they brought someone in from France. I agree with Mark that this is a brilliant move by Sage and although as ""partners"" we don't like the move -- I think if given the chance and I was in Pascal's shoes I would have played this the same way. It just looks smart for Sage and it's not Sage's job to worry about us. @PeterWolf - I think the component that the local presence fills (for probably the next 5 years) is the on-site customization. Depending upon how VARS play this they will either do well (by requiring enrollment in their own plan) or lousy (by billing in 5 minute increments at their best rates). TIP: Sage is dumb in many ways -- however ALWAYS ALWAYS ALWAYS look hard and fast at their major initiatives. If Sage is rolling up every service into one price -- it's time for us to do the same. This means upgrade, on-site consulting, support = one local price. Fight it if you want but eventually someone is going to swoop the customer and offer this -- it might as well be us. We must change -- or at least offer this all-in option.

Did anybody notice on the slides that Silver and Gold will get identical margins on subscription? Also, why wasn't platinum (or whatever the upper tiers are called) mentioned? Will they get the same or higher?

There was a brief note Mark that said that Silver woudl result in a $10 per month per user discount.

@PeterWolf I'm referring to var tier level, (maybe I'm using the wrong terms). Seems being a higher tier based on the slides doesn't have any affect on subscription margins

@WayneSchulz Support will be history, starting with this Silver issue now, and with subscriptions everybody will end up gold. The rest, you might be able to eek out a living on. Most other vendors have gone to this 'per user' pricing. Microsoft Calls it Business Ready Licensing. SAP started it long ago with R3 and brought it to our market with SAP B1, but the per user price was so high for small user counts they had to make it more complicated by offering different types of 'mix & match' user options which got almost as complicated. Epicor is still a hold out on modules and their price list spreadsheet is over 6 friggin megs. They break their functionality into much smaller chunks, similar to the old Navision Granual module, but gives their inside sales folks lots of stuff to sell to existing clients. All those inside sales efforts become moot with subscriptions...

I honestly could live with these changes and think they could be good for sage and us (not so much the customer but they are too stupid to figure it out like how the 49% who don't pay taxes are fleecing them) IF it weren't for the 1 deal per quarter, 90 percent renewal rate requirement. With that requirement, the game changes. In addition, no outside person valuing your company will offer you crap since this recurring revenue is far from guaranteed and the business they acquire could be wiped out by a slow quarter. What if we have another depression and nobody is selling a unit a quarter? Now what??

@MarkChinsky - You are right - the tier is flat for all partners. I'm not sure if I'm necessarily against that. Again, it sucks for the partners who, for years, were encouraged to merge and combine efforts but on the other hand it stops the consolidation push. The flip side is that the one per quarter accelerates the consolidation push.

Accpac has had a per user option for seven years (give or take). Most customers do prefer it.

@MarkChinsky - these changes are not good fo the partners at all. Don't even think that way. Sage is going to end up owning 30% of the client base within the first year. And if they proceed with the piece that says ROR'ing a client brings in zero revenue, that is a deal-killer for client inheritance by anyone but Sage. Why take on a potential shit client that will lower your retention rate for no money?

There is going to be a ton of 'sandbagging' as well. Suppose you closed a deal this quarter. You have another one ready to close by end of march but have no idea what will happen next quarter. I would sit on it until april one to secure my next quarter. You can't discount subscriptions and Sage can't hold a tier carrot over you with like margins, so its all going to be about spacing it out to ensure 1 deal per quarter where humanly possible.

@PeterWolf I forget now, so we don't throw around unnecessary fears, was their something said or a slide that said doing an ROR meant you weren't going to get maintenance or subscription or are we just assuming that (which might be a safe assumption)

I was told that by Ed Kless. They conveniently brushed over it during the presentation. I will try to get confirmation.

We have done two things in the past six months that I am now very happy with 1) we joined ERP Partner - they are a Sage and Microsoft business partner that in effect gives us the ability to sell these product and we maintain the customer, 2) we have changed our consulting model from being only Sage MAS 90/200 to consulting with any small to medium sized business to assist them to get the most out of their existing software. We have found that 80% of what we do is not necessarily product specific. Based on what Sage is doing I like our direction even better today. Our company has always made our money from services, any money from product sales and maintenance was minor compared to services. We will continue to focus on service and with ERP Partner hopefully make more money on product sales and maintenance. With ERP Partners we also maintain the customer which is the key to our services model.

@PeterWolf the no tier is the way it now works for Easy Pay customer on maintenance. I have had customers leave (and gained some) where I either still got the tier or didn't get it depending on which partner renewed on easy pay. I think the clarification should be over whether this ROR policy is different than the easy pay policy which already provided the VAR who enrolled the easy pay with 12 months protected commission even of the customer ROR'd.

83 comments has to be a record and that doesn't include the 50 or so in other threads

@WayneSchulz but it's ever.

So I think what you're saying is that the margin only goes to the originating VAR. If the customer ROR's to a new VAR then there is no future margin that the new VAR gets for renewal and that this applies from that point forward for the customer (no time limit) - and Sage just keeps that margin if the original partner gets replaced. I'd want to see some confirmation from Sage on that because what incentive would I have to take on an ROR and/or I'd make the pricing more expensive.

We can all speculate on this until we're blue in the face - which is why I like @PeterWolf's comment about ""Why don't they just tell us?"" We're not idiots. Just come out and confirm our suspicions so we can get on with our lives, in the Sage realm or not.

@Wayne (responding to your 7:04 AM post): Wayne, just a point of clarification Accpac is (and has been for the past 6-7 years) ""web-deployable"" i.e. its ""shell"" can run under IIS and thus you CAN technically run Accpac strictly thru a browser. That's been around for years, and in fact is how/why Accpac integrates with Sage CRM so much better than MAS does. All of Accpac's screens can run as web-screens and thus can be opened up in CRM. However, that ""web-deploy"" capability was a fast-and-dirty (and clunky) deployment option given to Accpac years ago. It is NOT Accpac as a true web app when you run the program thru the browser, as soon as you open up any of the program components, they (the ocx's) download to the machine you are running the browser on. It was finicky to install and maintain and was universally hated by everyone, and only really used when necessary for CRM integration. So again, it is by no means a thin-client true server-side app. THAT is what the recently-abandoned Orion project was attempting to be, i.e. Accpac re-written as a true web application. But alas, they only got as far as the front-end Accpac ""System Manager"" (similar to MAS ""Library Master,"" I think), which they called the Accpac ""Portal,"" and then as we all know they abandoned the project. My point being I think that is all I think Sage is planning to do to MAS, i.e. emulate the web-deployment option that Accpac has had for years. Now that they've abandoned Orion, which would've been a pretty thorough re-write of Accpac to make it a true web app, I don't think they are going to re-take on a total UI re-write project of that magnitude for any of their products. No, they are gonna try to tout X3 as their product of the future. and leave the rest of us hanging out in the wind with as little development investment as possible in mature products while trying to milk all they can. This is Pascal's brilliant new strategy. Accpac has been available as a hosted option at Sage for years.. it's simply a Citrix/terminal server farm. As you already stated, that does not, by a long long long shot, a ""Cloud"" or 'SaaS"" offering make. And I belierve this hosted option has been less than 5% of the Accpac implementations. And I don't see anything in the value of what they are currently offering (i.e. a ""hosted"" but not cloud/SaaS solution) to increase that adoption rate for any of their mid-level products. The only product I believe Sage has that could be successfully offered as a real clouds app would be Sage CRM. maybe Peter can speak to that.

I thought at one point that MAS 90 ""web enabled"" was to be done through something called JavX -- this was showed at Insites a couple/three years ago, and that seems to have been abandoned. Now MAS 90 Online is just regular MAS 90 but scaled down and run through Citrix.

Dawn I think MAS90Online is a different animal that MAS90 5.0 web enabled. I've not seen what they are plotting with 5.0 but I think it's a separate road map.