Sage News and Discussion

I wonder how much of this is growth due to the forced Bronze -> Silver migration (aka fee increase), how much is organic and how much is cross sell. I cannot remember the exact date but I want to say on Sage's last earnings report they only had 1/2 year of the Sage 100 ERP Silver fee bump. What will Sage look like once they are not able to raise the fee again this year? Or maybe they're going to reduce the partner share? Only speculating.

Partner share? Can't reduce what isn't there.

We've had a few threads on the M&S renewals most expressing that the process is filled with errors, time delays, and frustration (for partners and clients). But perhaps that's how they've increased the revenue by misquoting/charging more and dropping bronze.

The Client Care reps no longer automatically send a list of clients who are expiring in the next 2 months as Sage used to do, so I ask them to do this and to include a column for cost of Gold, if the client is on Silver. In some cases, Gold is worth the additional cost, if they need Anytime Learning or to license additional users with the discount. Since the new program without Bronze, we have caught approximately 8-10 that are incorrect or are more than a 25% increase from the previous year, which is the maximum increase year to year I was told. This, of course, is not common knowledge. I imagine there are many clients who have paid the maintenance and were overcharged, because their partner was not reviewing the amounts.

Good ideas @JohnHoyt and no, didn't know that 25% was a maximum.

@BrianRice - This may be hard to believe but the average partner margin is just north of 48%. The reason being that the ""big boys"" make up 80% of the sales and they all make 53% or 58% margins. @WayneSchulz - I was just in Irvine on the 17th and the word is that they hired a consulting firm that specializes in channels to help ""correct"" the current margin imbalance. Does anyone remember the days when companies would do the right thing by their partners and customers and not have to bring in consultants to justify crap moves? No? Me either.

I believe a primary reason here for bringing in a consulting firm is to deflect blame in case the implementation of advice goes south. There's not exactly a super thriving market for VP level ERP management folks - so I suspect a good amount of this use of consultants is to protect jobs until the next economic uptick. If cutting margins causes major partners to defect - the blame can somewhat be offloaded to ""the consultants"". It's also possible that Sage UK mandated this (similar concept to deflect shareholder blame though)

I liken the 25% maximum increase to boiling frogs. If you do it slowly enough, clients might not be so tempted to jump ship or even notice.

@PeterWolf - I'm referring specifically to Business Care renewal (forced Bronze -> Silver migration). We still get margin on new licenses but our renewal margin has gone Pat Kramer.

At the partner day before the Customer Symposium in Atlanta, one of the presentations contained a slide showing that the rate of renewal fell off for partners with less than 50 customers. I pointed out to them that a better explanation of the correlation would be that renewal rates fell off when the partner's margin on the renewals fell off. Kind of like their standard line that customers who are on maintenance are happier because they are on maintenance, not that happy customers are more likely to stay on maintenance.

@PhilMcIntosh - Yes ... it's amazing that people can look at a set of data and draw really insane conclusions. Relevant: http://www.youtube.com/watch?v=UTdDN_MRe64

Correlation does not necessarily indicate causation.

I generally agree with the gist of this thread. However, the consultant for this could also bring insight to execs about margin and channel practice details in competing areas. I have some sympathy with Langner's problem: one way or the other he really does have change that average margin, but still maintain sales. He is essentially cleaning up the mess left behind by earlier regimes who let the channel devolve to a few ""big guys"" and many more smaller ones. I've been warning them about this (from various perches outside, in howling wind) for a decade. If you let the channel develop that way, eventually those few VARS can hold you ransom.