Sage News and Discussion

Sage Tier Call coming up in 15 minutes http://goo.gl/Tp97zc

600 partners registered for this call -- Sage has 600?

600 people, mpl in orgs

Anyone in this group interviewed?

I was interviewed John. I believe Doug Deane was as well.

100's of thousands of customers?

Peachtree, BusinessVision, Business Works

Nothing new here yet - One Sage has been around forever

So Sage has not had a single month with an ""error free"" listing of customer renewals. So now they'll be judging tier (accurately) on a weekly basis? Nice.

This is real clear and easy to understand..... introducing the new Sage Tier Competency tests...

Now I'm a little slow. I'll be the first to admit. But does anyone stop listening when they claim they've consolidated all their tier --- EXCEPT for this, that, the other thing.... Ok, so you consolidated some. Just like you've done the past 5 re-orgs?

At the BPAC meeting, I questioned the ability of their systems to accommodate these on the fly changes. I was told that it will all be fine. :)

Sounds like CRE might be on the block.

Doubtful that CRE is on the block based on activity that I've seen. Who knows though.

It is unlikely to have a margin for subscriptions that makes people happy. The initial year is so much lower than the up-front perpetual licenses.

So in essence the ""sell # deals"" requirement still is there

So Standard Business Partners will have to merge into a Premier Business Partner

I think Peter's explanation is it.

I think the Standard BP classification is for those people that don't want to merge but would still like to get a little something for the occasional sale.

I was thinking the same thing John.

More partners for DSD, Net@work, etc...

Why are they bothering to incent for BusinessWorks?

So they can continue to send mixed messages

BusinessVision too - they just announced incentive/suggestion to migrate away

This is the disincentive for M&A.

Zoom - for 2 years you cannot benefit (get margin on maintenance) if you merge into a partner. So there's a 2 year wait (Sage keeps the money)

They are screwing consolidators too!

No way their internal systems handle this. They must be hiring 100+ people with heavy Excel skills.

What if you do a ROR and become new ROR. Do you get any Business Care margin? Would it be at your level?

That also can be problematic selling a business. I bet Sage looks at it as a straight M&A. Good point @GaryFeldman wonder how they'll manage ROR

@GaryFeldman - You can look at it as screwing consolidators but from an ecosystem perspective, it's rare that 1+1 =2 in channel M&A. It's usually 1 + 1 < 2. The spin of ""hey join me and I'll give you better margins for your accounts"" is being taken off the table so smaller partners won't feel so much pressure to merge unless it's a strategic choice.

Let's overcomplicate everything... Here are some new calculations no one else has...

There is no way Atlas can handle this. But ... I was told everything will be fine so I'll just sit back and watch from the sidelines.

@johnHoyt will figure this out as he gets new small vars to join and determine the best way to screw sage for the rest of us...

My gut is that they'd like this to be so confusing that people give up trying to track it -- other than large partners who I'd bet have side deals that largely avoid this.

I don't think there will be side deals. DSD is one of the biggest partners so you can always check with mgmt there and see.

LOL.

This is true about treshhold but remember it's constantly being recomputed. Even quarterly recompute forces a very active level of new sales.

You have to keep selling to make money. For partners that have even one good quarter, you make the extra money in that quarter. It's a bit confusing though ... if my baseline for trailing 12 is $100k and I have a $75k deal coming in ... does it calculate at the accelerated rate? Or do sales AFTER that sale count at the accelerated rate?

OK so if most reselling partners have diversified their portfolios because of Sage policies... how will this incent people to sell more Sage?

I believe the thought is that if you keep selling more Sage, your margins are actually pretty good compared to other publishers. The assumption is you hit your growth objective ($1 over trailing twelve) or accelerated growth (%growth based on tier).

Tell me if I am wrong... Standard Business Partners = old Bronze so all they have done is complicated things...

I think Standard Business Partner is almost more like a referral payout. They aren't active partners but just make a sale once in a blue moon and want a little something for the effort. I don't see how this will work though because those people still need to be certified and authorized. Why would you certify / authorize if you don't make any M&S margin?

Wonder if the consulting firm that designed all this is going to get paid to keep track of it - nice gig:)

Man I definitely picked the right time to drift away from Sage...

The only thing that would make this more complex is if all sales are converted to Canadian dollars.

Slide deck in G+ --> https://plus.google.com/+WayneSchulz/posts/eQTZgipxNiQ

Yay - it's all going to be on the Portal!!!

Well ... it seems like they will have something to auto report this. That's a plus.

@PeterWolf - I don't believe Bronze gets M&S now! Yes margin % are higher than competitor, but product is not changing and everything is still being presented in a ""wink wink, nudge nudge, you know what I mean"" sort of way. Trust me... Is there anything that you are seeing here that says we really care about our partners? They eliminated tiers across products, but for most one product partners, there is no change. They are incenting you to grow, without providing you anything to increase your growth. They are introducing products and services that they can sell direct. They are giving incentives through multipliers for non-strategic products. And I have to use Atlas more to figure out what level I am at. From a positive perspective, they are putting this in place just ahead of Summit which should begin the selling season. So I am going to hold June Sales unless it will put me to a new tier level so I can get the growth multiplier.

with new passwords for it, maybe? ;<)

I would say the margins are fairly competitive and give growth accelerators which is always a good thing for sales motivation.

I think @GaryFeldman question is whether Sage is incenting you heavily to sell legacy product nobody is buying

As far as single-product partners, Sage really, really wants them add HRMS, etc.

There is no Fixed Assets division."" But you have to call different people in Virginia still.

I believe my statement of a week ago is as relevant as ever: Although I don't know what this announcement holds I think it's pretty easy to predict the long term play: Sage would like to compensate you for selling new products, not so much for taking a maintenance renewal order. Just ignore that over 70% of Sage's revenues are maintenance, virtually all their R&D appears to go into connected applications aimed at Sage 50 or Sage One. Virtually all new marketing appears aimed at ERP X3 (which you don't sell) and existing users of Sage mid-market products are very reluctant to upgrade unless it's to install PU 23 for Sage 100 ERP v4.3 so that paperless continues working on Windows 7. Oh, and most mid-market users need to be on 2013 or 2014 in order for you to sell them an add-on or connected doo-dad. Good selling.

Did they say when this goes live? i.e., if i acquired a var tomorrow, would I get the benefit of their maintenance because it happened before the go live date?

June 1 - disaster! It's all on the Portal.

and . . . ""It's as simple as that.

Sage just invented a new Small VAR Repellent program.

Will we get t-shirts for this?

Well, we are one of those small vars. Been on Bronze for many years. Small amount of sales each year with about 50 clients on M&S. We've been getting 25% on new sales and 10% on M&S. We've always passed on the margin to our clients and have stayed in a trusted advisor role. It's worked quite well for us and our clients. I've actually been expecting this for a while. Not sure where we go from here?

How do you feel that this changes things for you Ron?

(From a tier perspective, I mean, since you passed on the margin to clients.)

I guess the folks at companies like Acumatica now have some fertile ground to sign up new partners... Sage's only interest in var's is to help cross sell other sage products built on different technologies, databases, UI's and support teams and in many cases are really 3rd party companies (i.e. Sage Inventory Adviser) They no longer need to give margin on maintenance and that's where the VAST majority of their revenue comes from. If you don't like it, too bad, plenty of other partners will be happy to take your clients, wait 2 years and get their cut...until sage makes it 4 years, or never... But yea, value pricing will fix all this because most customers will pay you hefty bucks for the privilege of doing business with you and getting support from you even though Sage forces them to pay 22% a year for support from them. I'm sure it will even make up for the average 20% Obamacare healhcare increases (our bill just went up 21%). Folks, Sage just moved the cheese and has been doing so for about 5 years. You can either blame the market and assume there are no other options other than living with a slow 'frog in the pot' like death, or you can do something to find better alternatives... At least if Sage actually put R&D in to MAS90 (instead of new names), you could have a shot of selling to new customers. Right now, the ability to sell this product to net new customers who aren't past users of MAS is pretty damned low unless your prospects are living in a cave watching Magnum PI from the 80's

I didn't hear that they aren't giving margin on M&S for people that make the lowest tier in sales. What was that threshold?

I would agree with Jerry. Yes, it's confusing as all get out. But if you sell $25k in product each year, you still get M&S. And if you have a bang up month or even a single sale, you can actually make more money, faster.

To start with for many small partners they removed the ability to merge with a larger partner. I'd say that's a pretty big deal.

Yea, but Ron, you are essentially a CPA firm. You really are a 'trusted business advisor' role that most of the rest of us can't be. The fact that most of your clients are locked on a beautiful island with you and can't jump to 5 other resellers that are within a 9 irons shot of you doesn't hurt either :)

I'll be contrarian here: I don't think this was bad at all. - They didn't make it significantly harder for small guys to do business with Sage than it is now. - If you're small guy that also deal with HRMS and Sage CRM, the mechanics and tracking are easier. - They want us to cross sell to existing customers, and now that work adds to the base selling. - I don't see why installed base sales shouldn't have lower margins than new sales; if margin is roughly match selling marketing effort, that tracks. - They have the same rules for making margin on renewals as now; I had expected reductions. - As a vendor, they recognized that the better partners no longer qualify for Sage Select. So they replaced with growth bonus. I think it embraces reality. - They know they must milk Sage 100 for more than a couple more years. This comp plan dovetails with their push to cross-sell and add the connected services. I don't think this changes the long-term prospects at all: something closer to the current salesforce model is inevitable 10 yrs from now. But for the interim, I don't find this onerous at all. What am I missing?

I'm not sure I understand the changes clearly. One thing that is clear is that this will mean a price increase for all our clients. Getting them to renew M&S has already been a challenge and this will make it more difficult. New product will also be more expensive. Bad news that consolidating with a larger var will not solve the problem. Main thing for me is whether we'll be allowed to continue doing what we do now regarding certifcations and serving our clients.

@JerryNorman Call around to see what you are offered as a merger partner today. Then after July 1 call around when the big VARS cannot benefit from your M&S for 2 years. That's what you are tangibly missing.

They didn't remove the ability to merge with a larger partner. They just took the short-term element out of play. Strategic mergers will be more in play vs gobbling up small partners just to eke out a bit more in M&S dollars.

When you look at it as a whole, now that Sage has basically given up on Sage 100/mas90 R&D, none of their products are 'best in class' or are perceived as 'best in class' relative to competitors. Peter might argue, but non-sage customers aren't beating our doors down asking for Sage CRM vs. Salesforce or Microsoft CRM. Few companies think of MAS90/sage 100 as a new ERP solution unless the controller/cfo came from using the product. And if they do consider it, it looks pathetic compared to similar priced competitors now days such as B1 or some of the newer saas products. HR is still basically a clipper product scraped over to sql Sage inventory is a 3rd product product sold with a Sage logo Really the only product that is reasonably competitive in net new deals is X3... Whats the reason a var should stay loyal to sage?

@PeterWolf ""if my baseline for trailing 12 is $100k and I have a $75k deal coming in"" - then you better have another one each year or you're screwed. Base margin on first $75k deal, then tier goes up, then while that $75k deal is in your baseline you will be stuck at base margin...

@MarkChinsky Actually the largest reseller here is a VAR in Texas who bought out a local VAR.

FYI - Acumatica requires 1 new customer per year to get Silver margin. Even as a registered partner you get 5% maintenance margin...

- Yes, the payout for selling a small practice is less. I suspect it's been declining for a couple years for other reasons. I also think most of the partners who had want out did so over the past 3-5 years. If your practice is mostly Sage 100, your value is already down largely due to Mark's market analysis. - If you were serious about building a practice for selling, incorporate Wayne's strategy of annual agreements independent of Sage. - @MarkChinsky Your product analysis is probably close (although Sage is still claiming to sell much more Sage 100 now than last year). I don't see why different partner margin/tier program should change a partner's strategic decision as to whether to sell Sage 100 or not. If they think it's a crappy product that doesn't fit a customer's needs, then they shouldn't sell it anyway. But I do think this program makes it easier for partners who currently offer Sage 100 as part of a portfolio to continue to pay attention to it.

Overall I have to say I'm relieved. I thought it could be much worst. Even though there are some take aways and despite all of their flaws, Sage is still good to partners relatively speaking. Our Sage 100 practices continues to grow including back to back record new sales years in 2012 and 2013. (2014 not so good) I've been looking for 3 years for the right product to add to our offering that offers a significant improvement over what Sage 100 does filling a similar market space, and I simply haven't found the product inside or outside of Sage that fits this space while offering it's ease of use, breadth and customization. Only exceptions are industry specific apps for a given market and we are not ready to go that route yet. Granted Sage is not currently investing the R & D we'd like to see, but I am hopeful at some point they will come back and make another round of investment in the core Sage 100 produce, once they find that X3, Sage 300 online and certainly Sage One are not the magic answers for the Sage 100 space. But, maybe I'm just a dreamer. Or maybe I've just been hanging around the mayor of Toronto too much.

Bob, tell me about how some of those new sales went down? Reasons for choosing 100 and what the competition was. Thanks

@MarkChinsky It's really been a wide variety, BW Migration, Sage 50 migration upwards and some downwards from the likes of Infor. Competition has often include Dynamics GP, SAP, Epicor and occasionally NetSuite. Integration with CRM is become more of a factor, but I think the biggest factor we've been told by prospects is ease of use and the ease in which to can customize the system (even at a user level) and our sales approach. On several occasions we've been told the products seems to all be similar but the reason they chose us was our honesty and approach. They just felt more comfortable working with us as a partner. It's truly not all about product. Many in 90minds would cringe at the amount of time we spend up front doing needs analysis for free. But the result is trust building and a sale more often than not.

The personal contact and trust factor are becoming more important. Yes, Bob and I are both part of large CPA firms, but that's our culture. Bottom line is: it works.

Sage M&A policy takes effect April 17, 2014 - so there's no room for last minute mergers to beat the new rules.