General Consultant Discussion

Sage Inventory Advisor Presenter showed basic graphs. Q&A very weak.... Looks pretty, probably not nearly as good as Valogix.

Presenter needs to learn product.

I am in the Sage advisor training with @MoiraGoggin and @MikeBrown and @RebekahVeuger

Does it work with Work Orders??? Still don't know. Does it blow through the BOM??? No Clue. What will it take to implement, you will find out later.

How many customers have clean data?

Only Sage able to install advisor. Partners will participate in future... after Sage has had their fill.

How long is the subscription good for and are there any cutoff provisions if you don't continue to sell? If only 2 years tier, does that mean only 2 years subscription?

Q&A was supposed to be the best part of the webinar. This guy couldn't answer 2 simple questions and hasn't stopped talking for 45 minutes!

For those not on the call, I have attached some screenshots

Not sure how many clients will be in the $299 category. Most of my clients have more than 5000 SKUL'S when you calculate all the whse's? It will be interesting to see what @MoiraGoggin @JimWoodhead say after the class they are taking. He didn't show us if there was a way to customize the look up per user. A Way to see only the items you want to see. Can we exclude certain whse's - so you don't get charged SKUL's for them? These are just some questions I have already but I guess to technical for them to answer .

I have been told that warehouses can be excluded.

Yes SKU and locations can be limited!!! it is all in the scripts and where clauses.

Thanks @JimWoodhead and @PhilMcIntosh

I wrote up notes for the two days of training on SIA and will post them under a new thread. Also, note that limiting SKUL (sku by location) for Sage 100 is handled by reorder method - if it's set to none, then it's not included. You can further refine with scripts.

I'm very interested in your notes Moira. Based on other comments it seems the VAR'S place in this particular sales cycle is to feed leads and recommend the product. I thought I read elsewhere that Sage does the initial install/setup. And certainly while the vision of recurring commissions on $300+/- per month customer payments is attractive I have to believe that there's some level of continuing sales (which probably can change as markets dictate) required to keep ""earning"" commission on something you have already sold.

@WayneSchulz no Sage isn't installing it. Their word choice ""implementaion fee"" is a misnomer and @JimWoodhead, @RebekahVeuger and I made sure that Siobhan Finders, the Sage Prodcut Manager for SIA, knew what a poor choice of words that was and ""encouraged"" them to change it to ""Setup fee"" or ""Inititalization Fee"". All of day 2 of SIA was on installing - the reseller will be installing this product. Sage hasn't decided what our cut will be of the implementation/initialization fee but my suggestion was that it be a sliding scale - first and possibly second installs lion share to Sage with a sliding scale so that with future installs there is an increaseed benefit to the reseller. Also need to correct on the $300/fee - it goes to tier and possibly some to recurring revenue stream, again they're working out the details. $300 is the low end btw on the SKUL scale. I'll have my notes posted over the weekend.

It boggles the mind how Sage can go to market with a product, but has hardly any details worked out for the very people that are supposed to promote, sell and install it. Amateur hour.

So let me get this straight - the customer is charged an implementation fee by Sage - yet the service is not yet installed. Then the VAR is left to offer yet another implementation fee to actually install the software? Can that be right? As a customer how would that make you feel?

Wait - Sage is still going to keep 100% of the $2000 charge to get started even when they hand over implementation to the channel?

So, in a nutshell, if my customer is on the 400/month plan, how much do I, the VAR get out of that?

It is a subscription service where the software is already installed. The setup is really a connection to the installed software and configuration if the connection. The VaR gets a cut of the recurring revenue at this point and should theoretically get more of the up front fee once trained in how to do the setup. I spoke with Tom Glacken at Valogix who offers a competing service. The real work for the VAR community will likely be in data cleansing so the service works properly. SIA will be a lower end product compared to Valogix, but likely a good fit for our typical customer. Gary Feldman President I-Business Network,LLC www.I-BN.com

But again, does anybody know the percentage the var gets of the recurring fee? Folks, if you don't take on product with significant recurring revenue opportunities for you, your business is basically worth zilch...

I believe they said starting at 25% on the call Gary Feldman President I-Business Network,LLC www.I-BN.com

have a client using it and they love it so far (been on for 1-2 months) - not Valogix but after diving deep into both they couldn't justify the higher price tag for Valogix. SIA had the functionality they needed, they have bills and are satisfied with how it handles their BOMs

@EricAnderson 1) What does Valogix do that this doesn't? 2) What percent of the monthly do you get?

I'll find out about the % - Tom at Valogix would love to tell you why it's better than SIA, and I think it is definitely a better product overall, but clients can get into SIA for $2200 (activation/implementation services) plus 299/month. Valogix is expensive - I think a minimum of 6-8K in services and then product or subscription base Valogix models are both so much higher. I warned the client that Valogix was tried, tested - great product and SIA was very new - they spent a lot of time reviewing both, and actually went on SIA before it was even officially released I believe, but have been pleased so far.

Eric sounds like you did it the right way - give the customer the facts and let THEM make the choice. I'm a big big proponent of that which usually keeps you out of the cross fire if something were to go wrong down the road.

thanks Wayne - our experience with Valogix has been hit and miss, I think it's a great product and the difficulty has probably been more on the customer understanding/effort side, but before I sold another expensive Valogix deal I wanted to let the client see the more affordable option, and I think it was the right fit. FYI - we made $104.65 last month and $74.75 this month - not sure how that all works out but the customer is on the 299 subscription. And as far as Manufacturing and BOMs go - I don't think there is a huge difference, neither one is an MRP system, but both have the ability to drill down into the component level of the bills.

I agree with Eric and his approach. SIA will be the low cost simple solution. Valogix has advanced regression routines for seasonal analysis, product launch spikes, etc. and typically needs 2 years of historical data to do its excellent job. The data need not be in the ERP (they can load from other sources if it is a new implementation), but without data the analysis can't be as accurate. You can set levels of assurance for stock out (90% certainty inventory available vs. 95%), etc. Lots of other bells and whistles for using a prior model for current model forecast, etc. SIA may have some of these as well, but I am not educated yet... Valogix is also cloud or on-premises. With SAP B1 the screens are actually embedded within the inventory module and the tool replaces the MRP module and creates the POs and WOs directly in the system. i also agree with Eric that Tom would be willing to do a webinar for 90 Minds. When Netsuite came out with an inventory planning module, sales of Valogix shot up in that channel because customers became aware of the functionality and then saw the advantages of Valogix. I think he believes the same will happen with the Sage channel.

here's the partner facing SIA doc - 24 pages, some good info in here about what it does, how it's priced, etc.

This document indicates that Sage thinks they can sell to 20% - 34% of customers. Wow.

The person writing that must either be in Washington State or Colorado and ahead of the legalization of pot.

There is huge potential, because of what the product offers and the way it is priced - and I haven't smoked anything so far this morning, if memory serves.... what were we talking about?

I think you read that wrong Wayne. 7500 of active Sage 100 customers scored high and in the wholesale and retail trade they think they can get a 34% attachment rate and 19.8% of manufacturing customers. Assuming that 50% of the customer base were in those markets we are looking at 750-1000 sales nationwide over a period of time. I also think a % of these will go to competing products once eyes are opened.

Actually an excellent document Thanks Eric

Still no mention of official partner margins. Do you know if that $75/month you get on the $299 is perpetual unless the client cancels? If there is an ROR, do you keep it or does it 'go to the house'

@GaryFeldman - Still seems high no matter how they're slicing it. I wonder if SIA subscription will be a way to get penalties waived for customers moving back on plan. I still say that this is a huge gamble for some of the Sage execs. If the attach rates don't hit the # forecast there are going to be some heads rolling.

Really liked the paper @EricAnderson shared. The date of June 7 of this paper concerns me since during the SIA training 6/18 & 19 they seemed to be ""open"" ""undecided"" about resellers portions of proceeds. Looks like they had their numbers in mind already and we'll all have to live with that.

Thinking about Doug LaBahn and his penchant for number crunching, I would bet they have #'s in mind for everything (VAR margin, attach rates, ISV compensation, what % reverts to house, etc.) They just won't share because we are merely a revenue source and not partners.

So people are selling this without even knowing what their cut is?

@MarkKotyla - it looks like 25% is the number and that's perpetual. I'm assuming that if the client changes resellers that moves over like everything else. I don't care too much about the cut - it's small. I want a happy client that trusts us and values our services.

@MarkChinsky - I think @EricAnderson explanation is key to why this should be sold. It's also similar to what @MikeFitzgerald told me years and years ago about Sage Payments. If we don't sell it someone else will. Provided the customer experience is excellent then we should not be as concerned about the product margin (provided it doesn't cost us a lot to demo/train). I also assume that customers mean they are also on a support plan tied direct to your company and not only to Sage so you have incentive to keep them renewing your plan.

That's actually a pretty decent cut. Since this is a 3rd party solution, I would guess sage's cost is 40% to 50% of the selling price. If they are giving 25% of the selling price they are giving up about 50% of their profits. Even if my math is off and they are getting a better deal, they have to still be giving up 35% to 40% of their profits, perpetually to you.

The multiple Sage product strategy is great and creates a ""sticky"" client. Sage 100, Sage Payment Solutions, Sage Inventory Advisor, Sage Intelligence - if I can get a client on 3 or more Sage products they are most likely a very long-term client for (for Sage and for the partner).

@WayneSchulz Building a business based on being a 'great guy' to our clients and being so great, that they keep paying you a few bucks every few years to do their 4 hour MAS upgrades (that will become the norm as everybody moves to 4.4 and above) might make you feel good, but it doesn't pay the $2,000+/month health insurance premium and growing, along with the other rapidly rising expenses and dwindling net new name opportunities. This same company we are championing is killing your recurring phone support plans with lowball and forced support embedded in maintenance, they are going more and more direct where in scenarios where you get nothing and have little 'ownership' of the client. Allowing them to get you to sell their product on the assumption that its ok that you get no margin is a recipe for selling your business off someday to a Net@Work or Blytheco for about 6 - 12 months of your annual take home pay....Maybe you can buy a Biggie fries with that. In this particular case, if its indefinite recurring income of 25% of the selling price, that's very attractive. Do the math, sell this to 6 clients per year (many will be more than the $299 number), you will have $27,000/year in recurring revenue that you do nothing for on the existing customers after 5 years. Most people will pay you at least 5X on recurring profits to acquire your business. In some cases alot more than that.

Shameless plug: This recurring revenue carrot is what I'm betting on to get other companies to partner with us on our EverSafe! disaster recovery solution http://disaster-recovery-services.net/eversafe-partner-pr-plan/ We all need to be finding things we can sell to customers to bring them value AND that brings us additional income to our bottom line. I used to make some pretty good coinage on commissions from forms companies before laser printers killed alot of that business. Same thing here. You can't keep living each month hoping that something breaks and needs fixing, or a customer thinks that sages bi-annual 1-3 Macabe enhancements is reason enough to upgrade.

@MarkChinsky - I think you may have misunderstood Wayne's rational for selling something like Sage Inventory Advisor or Sage Payment even if you don't get a huge cut. It isn't to be a ""nice guy"" but rather that you can't stick your head in the sand and ignore it, because you can bet someone else will be in selling something like it. You then run the risk that they take hold of the customer and start talking other ERP/CRM solutions. Granted this is all based on belief that existing customer has more value to you than the 4hr per year upgrade you spoke of. If that is all an existing customer is worth to you today, that sucks ... and I am real glad I sold off :)

I still say that holding on to a 'customer' for the sake of it without getting consistent bankable recurring revenue is almost meaningless. Especially in terms of an exit plan. I can guarantee you 75% or more of what Net@Work valued your business for was entirely based on the value of your recurring cut (and their hopefully higher margin) of your clients Maintenance. If you got no cut of Sage's annual maintenance, you'd probably would not have been able to sell for much more than 15% of billings for 2 years. Besides, if you don't have a significant business focused around selling SageCRM, how much money is in it for you to sell CRM to a MAS client anyway? A customer that doesn't make you significant predictable income is not a customer IMHO

Let me rephrase it this way. If tomorrow you woke up, god forbid blind, how much money would you be able to earn per year in your Sage practice??

@MarkChinsky - you are correct on all your points, but it seems like you are looking at everything from point of view of building up value of business (for purpose of sale?) vs current profits. Yes, what I got for my business was based on recurring maintenance, future software sales and prepaid service agreements, but when I was operating it, at least 75% of service revenues came from existing customers, so I absolutely took steps like selling Payment Services as a means of holding on to a customer. Not sure about others in the group here, but I suspect a lot are very defendant on existing customers for revenues (and profits).

No doubt, we came to the conclusion about 2 years ago that for the forseeable future (probably partially correlated to when/if unemployment drops below 5.5%) its all about an 'orphan'/ install base play. But that's why we needed to add new lines of business, just like Sage, to sell into our client base. However, most of the new Sage offerings don't offer significant profit opportunities for the var. More like 'spiff' money, and only after various paid certifications and learning curves in most cases. Most of their new offerings offer little in the way of substantial services opportunities for us. At best, as you say, it might help a client stay loyal to Sage, although outside of 'downgrading' to QBE, I don't see alot of moves from one ERP to another in the same price/market range these days. Not even alot of saas. How many of you have a customer who dumped mas90 for Netsuite? Trying not to 'over plug' (yet :) ) but we also setup another division to focus on producing on-line video marking (www.video-marketing-online.net) and eventually expanded it into holistic web marketing including SEO, email marketing, blogging, btob social media etc. We probably don't want to slug it out with all the other companies pitching that stuff, but among our offices we have hundreds of clients who already trust us and who need these services. So I think for all of us its about either building, or representing additional goods and services we truly feel our clients can benefit from. Hopefully ones that don't have a complex learning curve and offer healthy recurring revenues for all.

Whatever we do I believe it should involve selling services or products where we are the creator and retain the majority of revenue and control the customer relationship. All publishers are equally capable of cutting margins or raising requirements to continue receiving margin.

@WayneSchulz Although I agree 100% on owning the IP, saying it and doing it are two different things. Building something that dozens or hundreds of companies will pay real money for is VERY expensive. It's expensive to create, to test, and then to sell nationwide, then to support. It can take many years before real ROI hits. And that is the challenge for us smaller guys. And if you don't have a business partner who is a developer, you are at the mercy of 1 or 2 key employees and your business is gone if they leave.

If an existing user of Sage won't pay to go on a support plan directly with your company - then it's time to walk way. I believe that this will increasingly be the case in years to come. VARS who are paying for authorizations, certifications and conferences can't be wasting time with orphans looking for one-off quotes on projects that are sometimes very difficult to quote without a lot of upfront work (which the orphan won't pay for).

But it seems there is an endless supply of morons who will happily quote on what you are walking away from. We keep saying they will go out of business, but there isn't much overhead in setting a desk up in your one bedroom apartment. Big companies are willing to swallow risks and raise prices or change models that are good for them. Remember how cheap MAS was in the 90's where you only paid per upgrade vs. an annual maintenance. Somebody eventually had the 'brass ones' to start the maintenance concept. Instead of customers running, others publishers followed suit. In our business, its fragmented with so many little vars, if a handful decide to 'hold the line' and raise prices and/or create mandatory contracts, there are so many, fairly talented (but stupid business people) consultants willing to take the break fix work. There just aren't enough of those 'good' clients to do much more than make a living here

back to Sage Inventory Advisor - here's another doc (just one PPT slide) that describes the time investment during the implementation/training. The ""You"" column is the customer. Not sure if they showed this during the demo you saw but I thought it might be helpful.

Fix Data = As required. That's where I think many companies could find surprises. This could become a case of where the low hanging fruit (companies with accurate inventory) sell through quickly and the next wave is increasingly difficult. I think to some extent Sage have always had problems moving past the ""low hanging fruit"" stage and keeping momentum rolling.

Posting this here and also with the post on my notes form the training. Here is the link for the installation instructions for SIA - scroll to the bottom to see the recap and hyperlinks for each topic: http://wiki.sageinvadv.net/Installation

Here at training.... Missing @PhilMcIntosh

Here is another Sage annoyance related to SIA... If you go to the main landing page www.SageInvAdv.net there is a link to contact us which shows inventoryadvisor@sage.com as the e-mail. That e-mail address goes to the Netstock team. However, the link sends the e-mail to a woman named Daisy who is on the lead development team.

The product is better than I expected. It will replace the MRP module for anyone not using Work Order. Decent interface, good depth of functionality. Many ah ha moments for customer.

FYI - They have integrated with JOB OPS already and looked at the issue history from the work tickets for forecasting in Make To Order manufacturing.

95% of customers have modified their standard scripts over time. The standard scripts are much better than they used to be so they are expecting a reduction in that % but as of today, scripting is a great skill to have to add value to your customers.

Scripts are stored in Notepad on the customer site, so you can definitely add value.

Was just speaking to somebody on this. They are pretty sure all you get is tier credit, not actual margin cash. Are they wrong?

SIA is consistent with standard subscription pricing and tier. 24 months of tier credit, 35% margin year 1, 20% margin year 2+. Cross-Sell margin is 25% per year for all years.

What's 'cross-sell margin' vs. the 20% margin for year 2+?

I used the wrong term - it's ""Third Party Margin %"" of 25%. The order form is called ""Cross-Sell Subscription"" because the product can be sold for 100, 300, 500, X3 installations. I confirmed that the only margin that applies is the 25% for each year, but we still get the 24 months of tier. (The other categories of margin on the form were there from the standard subscription form, so those should be ignored.)

Ok, so I'm still confused. Is it 35% first year, 20% all other years? Or is it 25% every year?

25% not a ton of money in it for the partners but a very affordable product that demos very well and is easy to get up and going

25% every year - the margin for this Third Party product.