Sage News and Discussion

Interesting overview of a Aktion Associates Inc. (Toledo, Ohio), Armanino Consulting (San Ramon, Calif.), Net@Work(New York), McGladrey (Minneapolis), Tribridge (Tampa, Fla.). Two things of note: a. Net@Work is clearly setup to be a Master VAR - they are Sage Select and too tight with Sage to assume Sage is not on board with the concept. ""The killer VAR of the future is this: building our own channel and us being there to support our sales efforts. It is also going out to accounting firms and infrastructure companies that don't sell ERP and having an alliance with all of them."" b. Every VAR wants to sell service not software - this must upset publishers to no end

Pay specific attention to Net@Work's direct quote -- further indication that a Master VAR type organization (whether officially sanctioned by Sage or not) is coming.

Maybe. I think they are more about pushing their cross-sell sales organization to other ERP only partners.

I can't speak to what is currently going on, but back 2-3 yrs ago during Laurie Shultz time there was some informal conversations at Sage about the concept of Master Vars. Never really got beyond that stage, and with change in sage leadership and more focus on direct sales by Sage, the concept of Master Var seemed to disappear. As for Net@work, I don't think there is any question about their strategy for growth. Peter is right on, it is all about cross sell. And, the more customers they have access to, and the more complete their product/service offering, the better shot they have. This has definitely driven their acquisition strategy and while I was managing the inside sales team, it drove most of our marketing and compensation plans. Not sure the idea of Master Var is a huge plus, if all it means is being a software distributor and getting a small piece of shrinking product margins. I am guessing that the Partner Alliance mentioned by Net@work in the article is probably their alternative to the Master Var concept.

build our own channel

Once you get to know Alex Solomon, you realize every thing he says has a purpose. His use of word ""Channel"" is likely not done lightly. Very possible it was specifically targeted to Sage to let them know that if they don't treat the channel better, someone else will. However, assuming we take him literally, I think the ""Channel"" he speaks of is still more for purposes of cross selling than it is for being a Master Var/Distributor for a small share of margin. Just my $.02 and I could be way off base on this - or maybe it is just semantics.

That's how I was reading it too Mike and you know Alex far better than I do.

I, too, read it as Mike and Peter did. I have a really hard time seeing how the $$$ in a Master VAR arrangement make sense to either party over the long run. Especially when so much of the key to growth is new customer acquisition. If we were talking about more vanilla products and demand, it would be different.

Aren't you overlooking a major point. Net@Work is Sage Select. Except for selling copiers they have no plan B that I'm aware of. Sage pulls their authorization and they're done. Over and out. I do not sense they would go out on a cliff with these public choices of words on the record without Sage somehow blessing them. What else is N building a channel for? If it's to sell Sage to other partners who in turn resell then we are just splitting hairs about what we call it. If it walks like a duck and quacks like a duck..

Wayne, I'm not thinking of other ERP anchors at all. Getting the full value out of your Sage ERP system, for company of $10m+, can easily take additional tools. Ksync, Avalera, etc.. Those tools are nice, but how do you actually USE them? What is the process you have to think about to get to a 2-day closing? How do you actually manage multiple sites and produce close-to-real-time data so execs can make decisions going forward, rather than just having financials for the period 3 weeks ago? That's the ""privately-labelled products"" I think they're talking about. I think it's a huge potential. Way, too many of current Sage 100 users are stuck in thinking of it as just ""an accounting system."" The firms who shopping for their next system do not.

@WayneSchulz - Net@work actually has a pretty good size technology practice including full IT services group, managed care, share point, web development and doc management. They had some early development of some mobile apps and as I was leaving there were plans for developing some IP of their own and some consideration of a cloud solution. This is the cross sell i have been talking about. Reality is, other than CRM and a very occasional upgrade to X3' there is very little opportunity for cross sell of other sage products. Given how far off the reservations some other partners have gone with no action from sage (DSD or WAC are closer to a Master Var than Net@work) I have doubts sage would boot them.

When I say Master VAR - I also should make clear I'm talking about something which appears to now be officially sanctioned by Sage. That's the news part. The DSD and WAC groups certainly (to my knowledge and believe me I've ZERO insider info) were not blessed by Sage as any type of Master VAR although Sage would have to approve the merger/acquisition/combination which they did by transfer of accounts. In my personal opinion Sage just hadn't given much thought to the impact all their margin cuts would have on partners. At one point I had partners coming back to me who had lunch with Sage employees who indicated displeasure with these types of models. Now it appears that there is a 360 (whether it continues is anyone's guess) where it appears that those types of organizations are allowed. That's what my original post is noting. I've argued for a while that given the right people there's nothing wrong with that type of combination (the danger is when you have laggard partners merged in who are subpar, poor at servicing customers, make sales that go bad and only along to ride out retirement). The point about the original article is that N is actively talking about building a channel. I don't think a channel of subcontractors works in our model. I've seen in the CPA world where a highly technical tax person breaks off and offers up their services as an ""outsourced tax partner"". I've not seen this work because in the world of CPAS and Consultants - they all think they can do it themselves (the ones who don't think they can do it themselves are typically asking for help at the 11th hour just as the train is about the wreck on some project). I see this also repeatedly in the VAR community. It happened to some extent with eBusiness which VARS tried to be an expert in but ultimately most failed.

I am no expert on N, but I am under the impression that its founding roots are in IT, not ERP/CRM; it acquired operations with those domain specialties. So, @MikeFitzgerald's suggestion about its focus on product-ized IT to build a channel around makes sense; there are a lot of IT firms doing exactly that. I'm OK with Sage looking the other way on informal Master VAR arrangements. The informality keeps the Master VAR ultimately on the hook for any laggards they use. And customers can easily ROR to another. It is much harder to police a formal Master VAR agreement in a way that won't drive out exactly the type of sub-VAR that a Master VAR model is meant to attract. I completely agree about the limitations of a channel of subcontractors. Incentives and ego's of the various parties do not align. (While not exactly the same, for the same reasons I'm still a bit skeptical of the long-term viability of the more diverse roll-up VAR organizations we've seen.) Azamba's model is unique, and seems effective. I don't know how it will work long-term, but I suspect that CRM tools will look very different in 5-8 yrs anyway -- so there's not much point to worrying about it. As for different, take a look at Blytheco's CRM practice -- it almost looks as if it considers itself a marketing agency; I don't think they're crazy.