Sage News and Discussion

Pascal Houillon talks about Sage re-branding. Nobody really seems to challenge the assertion that changing the brand name will be better for the customer. Any time you make a change and use ""it's better for the customer"" or ""our customers told us"" - it's like a get out fo jail pass and no more questions need be asked... Toward the end Pascal talks about how a Peachtree customer doesn't know they're a Sage customer - which in my opinion is probably partly true because they stare at the splash screen day in and day out - which I believe is (and has been) Sage branded. In reality it seems what Sage wants to do with re-branding is make it easier to cross sell Sage payments and other Sage branded add-ons to customers who recognize the name Sage. That's the theory as best I understand. Whether that works or not I think we find out in a year or two.

These audience for these interviews is always the business community that hasn't been paying attention to the company. For that, this wasn't bad. The cross-sell, especially of web services, is clearly their first priority, as it should be. I think they are betting on the ad campaign for the rebranding to help with primary demand generation. We'll see. Without growth in net new customers, it becomes a house of cards in a few years.

Focusing on the Sage brand instead of products awards the following benefits (in theory): 1. Less overall marketing spend. 2. Pre-establish warm and fuzzies to Sage name. 3. Ease cross-sell. The reality is all they are doing is #1 above. A brand isn't just advertising - it's how you are perceived in a market. Because Sage refuses to invest in product R&D, they are not known as anything positive from most people's perspective. Look at the products with the massive reach and it's clear: Peachtree and Act! Where are the R&D in those products? If #2 fails as I suspect it is, the brand starts to stand for something completely unanticipated and ugly. That will not help them reach #3. The general cry from Sage execs is ""it's too late to spend on R&D so this is what we have to do"". Bullshit. Take a look at the money going back to shareholders every year. If the executives had convinction of principles and knew how to properly right the ship, they would go to the board and the shareholders and say ""Hey guys, we got to cut back on dividends for the next six to eight quarters while we ramp up R&D to take advantage of this historical opportunity to increase marketshare as people transition to internet-based solutions."" But ... they won't.

I had my issues with George Klaus of Epicor (now gone after merger and cashing out), but I really respected when he told us at a presentation that he's willing to take crap from the analysts and investors in order to invest a significant amount into R&D so they can be competitive over the long haul. In other words, take a long term, Japanese like, view of business and not just manage to the quarter via cost cutting to make bonuses. Now they are sitting here with an extremely broad, modern, flexible and deep product that can now be back filled on the quality and performance front which is what their latest release, that had a 50 man year investment, focused on. MAS90 is reliable (for the most part), because fundamentally most of the logic is 25 to 30 years old! With the same design issues of detail, history files, etc to deal with the huge cost of 5 MB hard drives. Before they had history files, they dumped the data monthly. Then storage came down, and instead of redesigning the software they cheaped out and didn't mess with the core logic and instead built 'history files' to shuttle off data to other tables (which then become out of sync due to the crappy flat file shared database). So in 2012 we have to deal with ""AR Open Invoice File"" (which contains way more than just open invoices now), vs. AR Invoice History File, (which contains AR Invoice History AND Open Invoices). And it seems many of us here just give this stupidity and extreme cheapness on Sage's part to invest the R&D to fix design issues dating back 25 years a pass...

From a business strategy, today's low-R&D situation is what you get after 25 yrs of the same management following the 20-yr old growth strategy of just buying operations. Growth by acquisition is fine for awhile, but then you must deal with what comes next. Newcastle was at least 5 years late to see that maybe the game changed and new leadership was needed. But then they promoted from within. Not a good sign. They are doing a not-bad lead on integrating web services; sData is pretty good. But for new growth, I think you're only going to see x3 hyped, the and others barely more than mentioned.

@MarkChinsky is right on the money. You either have leaders that lead or leaders that are supplicants to the shareholders. Sage has the latter and until that changes, Sage is doomed to keep circling the drain. It's unfortunate. There was a huge opportunity for them - starting a few years back going on for the next few - as people shift to Internet-based software.