Sage News and Discussion

Sage Transformation Guide FAQ

I think @RobertWood was first to mention this (from the FAQ): Q. What will happen if a customer who is on subscription switches to a different partner? A. It is the customer's choice to switch business partners. If the customer formally requests a change to the reseller of record (ROR), on-going commission will not be paid to the previous or the new ROR. However, the new ROR will be paid ongoing commission for all new sales that are made to the customer

Looks like if you're not certified for a product Sage sells direct - you may lose ROR and all future commission. I believe a large part of this announcement, and one Sage spent little time on, is that if you won't cross sell to your customer base that Sage most certainly will. This would seem to imply that you need to be certified in all relevant Sage products and/or warn customers not to inquire for information from Sage. This to me could be the most controversial part of the announcement - via the FAQ : Some wiggle room here - but it sounds as if this new program is also a mandate for VARS to carry every product or lose ROR if the customer buys (and I guess nobody receives commission). Another Sage partner may be aligned to the customer for this sale when the existing ROR does not meet the performance requirements for the specific product the customer is adding

The entire month of April 2012 is just about filled with webinars for people to attend and learn more... geez.

It's official, Sage is now a four letter word.

@JohnShaver has been a champion of not building a business based on any Sage margins -- and I think he's right on the mark. Assume you will receive zero ongoing commission within a few years. That appears to be the path that Sage is traveling.

Anyone remember the days when it seemed all MAS200 customers were being called by Sage to upgrade to MAS500? Then the customer would ask us what MAS500 was and if there were any changes to the features they used in MAS200? Get ready for a repeat.

Sage will soon begin engaging customers in regards to product lines where they are not aligned with a reseller of record that meets Sage's performance criteria. This will create the opportunity to work with customers to increase their satisfaction and loyalty, as well as drive incremental revenue. While uncovering these opportunities directly, Sage will work closely with active partners that meet Sage's performance criteria to increase product sales and service referrals to their business. "" Am I paranoid or does that actually say that if you miss a quarter's sales Sage is going to start yanking your customers and moving them to other VARs?

Could be -- also could be cross selling. Sage went through this many years ago calling into the customer base to try to move them to MAS500. I think that primarily Sage wants to sell Sage CRM, FAS, Sage Payments, Connected Services. The message that I see is --- cross sell or Sage will be doing it for you - and you've been warned.

OK, I had to let out the anger somehow. Anyone here in any of the bands at Summit? I have some alternative lyrics: Tin soldiers and Pascal's coming We're finally on our own This Summit we'll hear the drumming They're running us out of town Gotta get on with it, Sage is shutting us out We should've moved on long ago Even Stephen has seen the light Stock up on Sugar and go alternative for the last two: Sell a subscription and get no money at all Let's pack up our value and go

Nice Phil!

What is the ""product bundle""? I don't see what modules that covers. I see payroll and CRM are extra; what else is extra?

So what am I missing. Why wouldn't bad mouthing and unselling the benefits of 'subscription' be a full time job for 90% of var's? If you sell a regular deal, you are pretty safe except for some risk on future maintenance which for most of us is 'biggie fries' income. However, if you sell a subscription, there odds are real high you won't remotely see what you would have made with the traditional sale thanks to sage going direct. In addition, Sage will do everything in their power to force ROR situations. Hell, all they have to do is create a version not ready for primetime that get's automatically pushed and now you have a bunch of asshole customers blame you and ROR, and whala, Sage doesn't have to share squat with anybody

become...

To be honest, you can probably tell that I personally had given up on MAS90 being a viable solution for future sales about 2 years ago. This pretty much seals the fate. I'm also glad I didn't get involved with X3. Not because of the product, but because of Sage going from one of the most partner friendly to one of the biggest scumbags. I thought Epicor was a problem with their direct salesforce. They are a cakewalk compared to what Sage has just begun.

1. @MarkChinsky - they will soon streamline the tiers to make standard pricing and subscription fit the same commission % and requirements. Problem solved (for Sage). 2. Is no one else seeing the implications of the ROR / no tier? Essentially what this does is says there is no benefit to being properly tagged with an account. It is BETTER to leave the original partner tagged as ROR even if you start servicing an account unless they are going to suddenly buy a bunch of new licenses. Sage wins on all unhappy clients - no partner will ever get commissions going forward on current product sets.

Wayne, although I don't disagree with the idea of building a business without margins, a few things: We've studied this issue. The problem is without raising rates dramatically (and non-sage var's don't yet have to deal with this), there is enough gross profit in service only deals to cover, sales, marketing, administration expenses. It takes 9 hours to find one lead with telemarketing. 5 years ago, that was 3 hours. Health insurance doubles less than every 5 years. Gas prices have more than doubled in 3.5 years. Food prices are up about 35% Billing rates (or fixed fees, or whatever, in my mind, its still jiggering around cash for services) have remained fairly flat for something like 10 to 12 years. Plus, with MAS specifically, the amount of services per client needed annually are tiny compared to other products. The product is fairly stable, customers tend to be smaller cheaper minded companies, and upgrades, are remarkably painless compared to other solutions (our typical NAV upgrade is like $100k in services) The only thing that keeps Stephen's plane fueled up is all that maintenance revenue from these clients that probably on average spend less than $5,000/year with them. With support going away and a good chance at significantly reduced maintenance income, how do they...or we survive? It's not about figuring out how to survive with no software income (unless you are a one man band with no retirement worries), its about figuring out which alternative vendor is the least of all evils, or what business you can get into that isn't accounting software that you can spool up an income. Either that, or for your CPA types, getting back into the market for Controller/CFO positions, along with the other 15% or so real unemployed... Am I wrong somewhere?

But Peter, they may take away traditional license sales maintenance after year one if you don't maintain the 90%/1 per quarter thing, but there aren't taking away your initial margin on the initial sale. With subscription, your initial margin percentage and NLR amount is much lower so its way to your disadvantage to ever sell subscription. Has anybody figured out with current leasing rates, how the subscription pricing compares to leasing the equivelent software with a $1 buyout and taking into account 21% maintenance? If you can show how much more expensive subscription is and that combined with the risk of being locked out of your software, I think should pretty much kill it for Sage. Plus sage's own slide (which you should darn well use) shows how much more money sage and the partner (ha, if the partner makes quota every quarter) makes vs. traditional license

This is confusing...So if sage uncovers, say a Sage CRM sale at your client, and you are meeting the quarter/90% gig for MAS90, you don't get commission unless you are selling another sage product per quarter...wow: Q. What are the performance criteria that partners must meet to receive margin when Sage uncovers an opportunity in their customer base? A. As Sage uncovers sales opportunities in the customer base of a partner listed as reseller of record (ROR), the partner must actively engage with Sage and the client in the sales process while maintaining the following performance criteria: Certification at the solution level, i.e. Sage CRM, Sage FAS, etc. o 'Solution level' is defined as the cross-sell product offering being sold to the customer 90% renewal rate at the product line level, i.e., Sage 100 ERP or Sage 300 ERP o Renewal rate is defined as a rolling 12-month fully mature unit renewal rate which includes renewals up to 90-days late in the equation. At least one new installed base customer purchase at the solution level per Sage fiscal quarter, i.e., Sage CRM, Sage FAS o One new installed base customer purchase is defined as the initial customer purchase of the add- on product i.e. Sage CRM, Sage FAS, etc.

It does sound like the X3 guys like SWK are safe. If they sell 2 X3's every 12 months but another 2 mas90's, if it falls quarterly they are safe. Meaning you can combine sales of ERP products for the quarterly goal. (i..e mas, accpac or X3)

I think it's been discussed that Sage's plan is essentially to farm out CRM leads to CRM VARS unless the VAR they're marketing into is CRM certified. This is basically forced cross-marketing. With rules and warnings that partners can either get on board or hit the road. I think we have some history with this type of cross selling and I remember that the initial sales took a lot of ""low hanging"" fruit and after that tended to fizzle.

I am expecting that Sage will adopt the same 90%/1 sale a quarter across all their products and that ROR will also no longer transfer commission. I am just not sure how quickly we will see that. A lot depends on whether revenues go up enough to keep UK happy.

@MarkChinsky I think the requiremetns are per product - not per product group. If you sell MAS90, you need to sell 1 per quarter, right? You can't sell MAS90, Accpac, MAS90 and X3 to meet your obligations.

@WayneSchulz - That's exactly it. As the customer base churns, Sage will slowly and steadiliy abosrb all revenue from subscriptions and maintenance. Nothing but downside to filling out RORs in this era.

@PeterWolf I think there is upside to this -- we just need to figure it out. Clearly there's no upside if you are planning a business based on margin from recurring maintenance. However it's a good time to step back and think about chapter 2 of most VARS businesses. Chapter 1 was the last 26 years Chapter 2 has to be about developing a service or product add-on not easily duplicated by another publisher. Sage is just the messenger.

@WayneSchulz - Agreed on that. My biggest beef is that the current management at Sage doesn't have the balls to just come out and say it like it is. The shit tactics being used to slowly backdoor us is dis-ingenuous and shows a lack of character. I would have to guess that folks like me and @JohnShaver are least impacted by these changes. Neither of us depend that much on Sage margins. My product to service ratio is close to 1:10 right now and I had already planned on it being 1:15 this year (by growth of services not loss of product sales).

@PeterWolf . I think you wrong. This is copied straight from the FAQ: Notice how they say ""includes any"" ----- Q. What are the minimum requirements to receive margin after year one? A. Partners must be active and engaged with the product which the customer purchased. This is defined as: Certification at the product level Minimum one new ERP customer add per quarter (includes any Sage 100 ERP, Sage 300 ERP, Sage 500 ERP, and Sage ERP X3 customer add) Minimum requirements must be met quarterly in order to earn margins without interruption Partners will be offered a 'cure period', one quarter (three months) to meet minimum performance requirements, when a partner fails to meet minimum performance requirements

@MarkChinsky - Yes - re-reading the materials, it seems that you are right. For some reason I had it in my head that it was by product but they are using the confusing terminology of ""Product Level"". So the definitive answer is found by figuring out what they mean by ""Product Level"". Does anyone know what that means? I wouldn't think X3 would be on the same level as MAS???