Sage 100

In another episode of As The Sage Turns...... Sage CEO Stephen Kelly steps down. UK software firm Sage Group Plc announced the departure of Chief Executive Stephen Kelly on Friday, appointing an interim chief operating officer and starting the search for a successor as it seeks to prop up slowing growth.

W.O.W.

Here's the UK based Financial Times story. I saved it to PDF since sharing a link doesn't seem to work.

It was time for him to move on. North America needs reorganized.... or organized. You need to first be organized before you can be reorganized.

#toodamnlate

To be totally honest though, I don't think it matters. He was so out of touch with the products Sage really offers, that he came across as a puppet to whoever, or whatever, the true leadership is at Sage. ""Sell Cloud products"", they said. ""We don't have any Cloud products"", I said. Their response? ""Lie!!!"" That strategy seems to be failing miserably and Kelly is just collateral damage as are the resellers.

I agree, too late. I think they hung alot of hopes on Sage Live (Financials) but didn't invest in making it what it was billed as. Then bought Intacct too late. I feel for SK's successor.

I am not going to feel sorry for his successor - collect a ridiculous salary for a couple of years knowing that it doesn't matter what you do because the board is convinced ""cloud"" is just a marketing switch that doesn't need any investment to execute.

This makes me sad. Stephen was a shill, but in the last 3 years there was more development around Sage 100 than the previous 3. His initiative to ""finish what we started"" saw Payroll, Job Cost and maybe Work Order brought into framework. Previous regimes weren't willing to address or touch those. My fear is that we'll fall back to the dark days when MAS90 is seen only as a cash cow, and we pay maintenance for ""Expanded Inventory Item Length.

Initial tasks: 1. Bring back forced migration. 2. Announce end of life for some products. 3. Jettison Sage Live.

I think this shows several things that really, really hard to change: 1. Executing a major investment in upgrading your technology offered without taking a hit on the bottom line. They never backed off the promise to keep the dividend coming. 2. The impossibility of successfully managing a large N America operation without an American/Canadian actually running it. 3. Starting a new product on new tech for a new market without experience selling into that market is nearly impossible for a large company. Sage One and Sage Live required far more attention to how that market could work than they got. 4. Customer service in NA is really hard to deliver in this industry. Especially when you move the HQ and lose all institutional memory and customer support traditions.

My main point here is that Sage UK has a deep-seated tradition of aggregating products and selling them through channels of some sort (with a couple exceptions on the low end). They have no realistic, successful tradition of new product development and technology adoption. They have no tradition of successfully entering a new market from the ground floor. Their product marketing has always been pedestrian or worse. They are, in their bones, a financial management culture. Kelly was interesting to me because he was a successful sales guy who had succeeded (apparently) within bureaucracies. If he couldn't change this, I don't think anybody can.

@MichaelNottoli true, Kelly did commit to finishing the work started or selling it off to someone else to do. Better than Harvest/Sunset Pascal or was that someone else?

And now we await three new envelopes....

The story of three envelopes is a business classic for dysfunctional organizations. It starts with an incoming manager replacing a recently fired outgoing manager. On his way out, the outgoing manager hands the new manager three envelopes and remarks, ""when things get tough, open these one at a time."" About three months goes by and things start to get rough. The manager opens his drawer where he keeps the three envelopes and opens #1. It reads: ""Blame your predecessor."" So he does and it works like a charm. Another three months passes and things are growing difficult again so the manger figures to try #2. It reads, ""reorganize."" Again, his predecessor's advice works like magic. Finally, about nine months into the new job, things are getting really sticky. The manager figures it worked before, why not try again. So he opens the envelope drawer one last time and opens #3. It reads...""prepare three envelopes.

LOL.. Have we become conditioned to expect so little? Updating the module to framework should have been done years ago. People are disillusioned if they think updating the modules to framework is progress. A technology company needs innovation and customer service to be successful (and to survive). Innovation includes new and compelling features competitors and customers didn't know were needed until you showed them how great they are (You can't vote on something you don't know is possible.). Great service means communicating often and clearly with the channel partners. Great service also means answering support calls promptly, proactively making improvements to the software and fixing bugs before counting how many people voted to see if it should be fixed. It means communicating the same message from the top throughout the organization.

Sage is not a technology company. They are a holding / sales company, buying and licensing tech., wanting credit for being a ""world class technology company"" (something I remember SK saying at Summit a couple years ago), but not actually consolidating the different business units / product teams / companies they purchase into a winning corporate structure. Google buys a company and absorbs it, building onto what they purchased. Sage: slap a green label on it and give us a pat on the back. I can't think of a single aspect of business where Sage would be considered ""excellent"", and corporate excellence can only come from the top.

But who will all of these charitable and service organizations look to to replace Sage's philanthropical lean under Kelly. That seems most of what I saw recently.

I don't think he had anything to do with Job Cost & Payroll. And relative to what I see with other products, Sage's R&D into Sage 100 is still pathetic. They probably put <1% of what they charge in maintenance back into product development

@MarkChinsky I disagree. During the Pascal's reign, Erika Jelovsek stated emphatically about payroll, job cost- ""Everything that is going to Framework is already in Framework."" When Steven Kelly came on board, that attitude took a 180. Sage doesn't spend enough on R&D, but I fear it's going to go from <1% back to 0.

@MichaelNottoli Only because they realized Payroll is one of the few highly installed modules they could screw all those who already paid for and have been paying >20% maintenance for, that could again be charged recurring revenue and additional revenue through employee growth. Job cost I'll give you although it's still a joke functionally compared to real Project Accounting systems.

WADR, I remember distinctly when modules were FIRST going to framework sitting in a Sage Summit session where they were brainstorming ideas of things to include as new features. This was for modules where the design went from being described as a total re-write to more of what I'd describe as a port using some type of code-o-matic. When Sage made maintenance mandatory (years ago) is when I recalled development appearing to slack off noticeably.

Kelly definitely had a vision, and for the most part I agreed with the concepts. The messaging, unfortunately, has been confusing to the market, and the execution has been poor.

@WayneSchulz And now as they move from required maintenance to subscription, watch development drop off the face of the planet.

I suspect a year after buying Intacct and spending 800 million the board questions the ROI of that decision. Could that money have been spent better elsewhere!

@JohnnyPabian Intacct seems like a very well run company. The software is well thought out, and the pricing is simple to understand. I hope Sage doesn't mess with it. The $800M is a sunk cost (nothing you can do about it now.). Let's hope the model is profitable to Sage so they can keep investing in it.

Or perhaps so they can perhaps invest in Sage 100....

I am hoping it was just a normal process where a large public company wants to have a refresh meaning i have often seen large public companies replace a CEO or CFO just to stir things up.

I guarantee you, standalone Intacct will take about 20 years to earn 800 million. As part of sage it will end up like MAS 500

The purchase price was actually $850M. 2016 revenues of $67M with a net loss of $23M. Not sure if they are even profitable. I certainly hope they don't end up like Sage 500 but yes the way Sage has managed some of the other products it is a bit frightening.

I don't see any math that ever gets to break even on the investment, let alone break even taking into account how much money you could earn on 850m sitting in the stock market compounding, let alone how sales and development will fair once the same geniuses behind the Sage 100, 300 & 500 R&D departments get their hands on it.

It was 850 million in _cash and stock_, no specific breakdown on amounts of each.

ref: Original Sage announcement on purchase price including Intacct revenues at the time - [here](http://www.sage.com/company/investors/regulatory-announcements/2017/07/25/acquisition-of-intacct)

Man I'd love to get acquired for 9x profits, let alone 9x revenue (which is infinity if you used profits since they have none)

But there's always MoviePass...

As I recall, the issue at the time was who might buy Intacct? Wasn't the Sage purchase made against a fairly realistic alternative?

I could be wrong, but isn't Intacct really a vertical player in complex financials. Often sold to silicon valley startups and other saas and software companies? If the NASDAQ were to take another nosedive, it seems they have alot of industry exposure. My understanding its distribution functionality is limited and manufacturing almost non-existant

Intacct has a significant share of the non-profit charitable foundation market. Very strong in AP, AR, GL. They also have SO, PO, Inventory, and Projects, multi-currency, multi-company consolidation, accrual, cash basis or both. I have been through the implementation certification, financials, advanced financials, and customizing courses. It is very impressive in many respects. Look for distribution modules in the near future that will provide a cloud path for distribution companies looking to migrate from on premise solutions. Intacct is endorsed by the AICPA. I believe it is the only ERP solution in the small and mid-market the AICPA endorses.