Sage News and Discussion

Perpetual Licensing Rumors are that starting in the new fiscal year in October, there will be less emphasis on subscription. I wonder if Stephen Kelly knows about that.

Pure speculation here: they are starting to bleed cash like there is no tomorrow to support Stephen Kelly's tiny business cloud software grab so they are moving back to a ""cash now, please"" model.

October is 5-6 months away. Still, we've seen promotions come out now that emphasis perpetual over subscription so I don't think this rumor is far fetched. Also, I think it's important to separate the regional (North America) vs the global strategy. Sage has been exceptionally vocal about subscription globally. It is a KPI they repeatedly call out during earnings calls. I think John and Peter are right in North America. I do not think that strategy translates globally, though. Other questions that are in the back of my mind: - Could a shift in NA to perpetual be temporary until Sage can get the cost of perpetual > subscription for a lengthier payback time period (now it seems to be 4-5 years and perpetual pricing is cheaper). - Product sales - I think we will see potential sales on any NA product that is not growing revenues - that probably means Sage CRM, Sage 500, Sage 100, Sage 300. The ability to raise prices and show faux growth won't last once the attrition rates climb to a point where Sage is eroding the value of your product lines. - Sage seems to be standing still in NA except for their report on Sage 50 growth (which is largely direct) - To see where Sage's attention in NA is, drill into the Summit sessions by product - I don't think it's far-fetched to conclude that those products with lots of sessions are the ones that Sage is focusing on in NA. - Strictly speaking from my corner of the Sage 100 world I see no evidence that Sage branding has had a meaningful impact on company's interest in the product - The cross-sell teams seem to have done nothing to shore up product demand except to sell to ""low hanging fruit"" which was ready to buy. Beyond that I don't detect any urgency by Sage to improve or increase the quality of integrations. - The upcoming Sage Inventory Advisor Basics (SIAB) will reportedly ONLY be for Sage 100c users - Potentially the new MFG add-on will only be for Sage 100c users

- I also feel that the Sage NA partner community is in somewhat of a standstill as Sage has not made any moves to make Paige Erickson more visible. She has been on one public partner webinar that I've seen. She has been to the Chicago rally but otherwise Sage is not pushing her out in front on the weekly Sage Sell emails like Rich Spring used to be and there really have not been many emails from her to the channel. To me there is a distinct feel that the regional NA channel structure/management is treading water.

I think that last statement is spot on. I believe that Sage is starting to feel the pain from Pascal's ""Partner Alienation Program"" that he so effectively ran. When I met with the execs at President's Circle back in January, I mentioned that one small, cheap thing they could do to reconnect was to re-launch monthly partner calls. They were all on board with that idea. Still waiting to see it. They simply do not care in the right ways so now they are forced to clutch as straws. No worry though - in 12 - 18 months, there will be a whole new round of executives to come in and talk about strategies. Wahoo!

There is a very real possibility that Sage is so focused on the global partner program they are willing to let the regional programs tread water so long as the products they are involved with are cash flow positive. Based upon job postings and Summit agenda, I believe Sage is rolling out a global partner community powered by Salesforce Communities which will announce at Summit. They have carved out a decent amount of time to talk global partners which is odd when 90% of your partner conference attendance is likely regional partners. I can't tell whether Sage is going to also invite the regional partners (not sure what the correct term is for a non-global partner) into the new Salesforce Community. I'm largely speculating based upon public job postings and Sage Summit agenda. I am not under NDA or subject to any type of inside info whatsoever.

The issue with subscription is very much financial. Because interest rates continue to be low, the best choice for most customers is to lease/finance the perpetual software. They can then include other items, such as networks, consulting costs and support. And they have the flexibility of stopping payment of maintenance if they choose. Sage has also not delivered on the value of the c products that would differentiate them. They add benefits to Gold and Platinum plans, but they are either stripped down versions or not required. It's also not clear if any chargeable add-on products will be worthwhile. Once ""Sage Manufacturing"" is released only for 100c, it may become clear that they are leaving money on the table by not offering it to perpetual customers.

Making a channel work, especially the types of products that Sage has, is very hard. Most execs in the tech world no longer know how to do it. salesforce is very much an outlier the way it grew only direct, and a partner channel grew up around it; yet I think too many vendors, including Sage, think they can somehow copy it. I don't know of any company that has managed to make a mixed direct-reseller model work. We also know that when a CEO publicly and repeatedly promotes certain products as ""strategic"" the peons follow that lead and put their emphasis there. Worse, nobody who wants to grow their career will join a company in a part that is not the strategic side. So legacy channel is not going to get any significant support ever. In 10 years b-school cases will be written about Sage's demise. I think the theme of it will revolve around dysfunctional boards during a period where the founders are no longer helping the company forward, and the very real problems of Europeans trying to lead a US operation. That led to completely tone deafness about the strategic sales issue of channel for an aging product line, and whether a company known for acquisitiveness can really develop effective products when it must. So sad. Like you guys, I don't see return route.