Sage News and Discussion

Tom Miller set to retire March 29, 2013

It's possible its the last we'll see 'VP' and 'Channel' together from Sage. Sage is promoting an open spot for 'Mid-Market ERP Director of Sales Strategy' http://sage.referrals.selectminds.com/jobs/108678?ct=1178_40_126be I believe this is a new role and it states notably ""This role will participate in all projects that change the way Sage does business in mid-market."" There is barely a mention of new product sales in the job descriptions- and the listing closes with ""Experience in a channel selling environment and in software sales is a plus"".

Sounds like this is a role charged with overseeing maintenance renewal rates. Wasn't there someone who did this who either moved up or out? I forget their name but thought there was. Perhaps not at VP level.

Another move away from the channel. A sad slow demise to a once great partnership.

From an email about the ""Customer Symposium"" in Atlanta: ""Lastly, please find attached a copy of the partner rules of engagement for the Sage Customer Symposium. Please let me know if you have any questions about this. You will note that no one should wear or show any company logo other than Sage. Any partner that does not comply with these will be asked to leave the customer event.

Joe Langner's followup email appears to take Tom's reports and divide them up among various sales VPs.

@PhilMcIntosh I think those rules of engagement make perfect sense - especially if there's going to be any near a 1:1 (or greater) partner to customer ratio. Thoughts?

I don't know if you have a Hall of Fame photo museum or not Wayne, but that one of you and Tom definitely belongs in it!!

@WayneSchulz and @PhilMcIntosh - I agree that those rules make sense. Partners would be pissed if other partners were flashing their colors around customers. Just my 2 cents.

Bigger picture here: Tom Miller was the last supporter of a Sage channel within Sage. Expect more direct selling to come fast and furious with corresponding changes (read: reduction) in tier and other channel services. I spoke to one of the people listed in the article who said to me that they wonder why Sage has been so generous for so long. Ahhh... the mentality of what have you done for me lately? This is not a great thing for channel partners.

@PeterWolf Exactly my thoughts. We have no one left to speak for us.

Agreed @PeterWolf - and when I talk to other VARS who carry competing products I'm convinced that the grass is not greener elsewhere. Sure you can take a chance on a third tier player and become a VAR but then you're betting that you will be able to attract significant enough new name deals to make a living on services and software sales. Anyone who has not gotten their customers onto a support plan with THEIR company (and not Sage) will be caught short when Sage eventually lowers the hammer on their tier. I am betting what you'll see is Sage perhaps allowing the same margin but a decent portion of that tier must go toward co-op and be used for promoting new sales of Sage products. No way no how does Sage allow partners to keep drawing upon their margin on Sage maintenance and use that to build their capabilities with a competing product.

In my experience, no company has got it 100% right. However, Sage's strategic advantage was the channel and is not the product. 100 is very long in the tooth and is not keeping up with the competition. It is or will soon be in maintenance mode and X3 is not a viable alternative for the 100 market and is still making the transition to its market in the US.

100 will still have a long tail in its cash cow phase for Sage, but I fear the company has positioned itself for a long slow painful death unless it changes course. Connected services is like watering down your whiskey. If the whiskey is not good and now the sales arm is disenchanted...

Yeah ... I agree @GaryFeldman. I get why Sage needed to make the changes and, as @WayneSchulz stated above, it's not like all the vendors aren't doing it. But why did they need to be so short-sighted about it? Why alienate their biggest source of sales (the channel)? I guess we are all fools for staying on the bus as it goes over the cliff. Personally I like being a reseller and helping clients out so I guess I will do what I can to make it a workable business model for as long as I can.

Sage's biggest problem is lack of communication with their partners. I can actually sum up what I believe their communication should be. Partners = make money on consulting and services Sage = make money on maintenance and software licenses

Consulting and services are being squezed by the market and not Sage. Just like other industries jobs perfromed by people are being leveraged to machines. ATCs have died because CBTs and web based has created greater opporrtunities for efficiency. Consulting services by the hour are being squeezed by wizards, pre-configuration and improvements in usability. These are industry and technology trends, not Sage. The channel is a form of leverage for software companies to outsource their internal fixed sales costs to a local variable sales channel cost. If they don't see this basic dynamic they will wither and die unless they have some new secret elixir. Direct sales is not why Netsuite is growing much faster. They may get through the door easier because of the perception of new and cool as compared to Sage which has no brand identity/recognition? In head to head deals a channel can win because it will go onsite and make the trust sale that is much harder over the phone. IMHO

@WayneSchulz - They can't have that discussion in an honest, healthy way. Instead they need to present it from a defensive posture because they feel guilty. So we get messages like ""the partners don't provide any value"" and ""the partners aren't doing their job"". It's complete crap. Until recently, our job was defined just as we are executing. Sage neeeds to change and adopt to survive and so does the channel. They should communicate it openly and honestly with education and not lectures and dismissals of the channel.

Was anybody surprised by Tom's departure? After all the turnover 2H11 and the channel policy changes of early 2012, I was surprised Tom stuck around then. By Spring I'd concluded he was biding his time to leave. Wayne's constant drumbeat of ""margin is going away"" has been right for some time. His 2-part equation summary is precisely correct, and has been for awhile. That said, I don't think Sage will be particularly smart about how it comes to dealing with hybrid channels. ""Clumsy"" is part of its DNA now. If you haven't read ""Consumption Economics,"" you definitely must -- it paints an interesting picture of how buying will be done over the next decade. But it's a little too black and white sometimes. Monetizing the skills we have is going to continue to get harder.

Go forward strategy has to be that as consultants we make money on consulting -- and margins will go away or be very thin. I continue to point to the Novell Network firms of the 1980-1990's -- they've all largely gone away in the mid-market and been replaced by smaller independents who are very open about making their money almost exclusively on consulting. Most fo the customers I've seen quoted are given the option to buy their own hardware or buy through the consulting firm. Margins are thin because it's so easy to go online and compare pricing for servers, etc. (Note: Not all do this but enough do that it's changed the marketplace). What is difficult about the consulting market is we have a glut of consulting talent willing to continue with a business model built on break-fix which allows the customer to only pay for the consultant when needed and in hourly increments consumed. I think that business practice of consulting pay-as-you-go misses the mark widely because no matter how Sage and other software companies express the 'customer only pays for what they want' -- that mantra is largely bullshit because the customer is essentially locked into a solution due to it being very difficult / time consuming to extract data. With consulting firms most customers aren't all that locked in if they are not enrolled in the consultant's own support plan and have been trained that they can call at 4:30pm on a Friday and buy an hour of someone's time. If one consulting firm won't do it - there's a desperate one across the country that probably will. And many customers freely play this game. It's not that the customer is wrong for trying or the consultant is wrong for playing -- the danger here is the consultant mistakes this game for a viable market. It's not a viable market because there's no customer lock in and no predictable recurring revenue. On the consulting side the consultant has to incur ongoing expenses in terms of training and staffing and invariably their rates are low because they're desperately chasing these one-off customers in the mistaken belief that it's the new way of doing business. But it's not. It's really the end of their business.

@JerryNorman - No one should be surprised by the departure of grandpa. He is well past retirement age. Nor should we be surprised by the myopic nature of Sage's lack of vision. @PeterWolf - I am actually bullish on being a VALUE ADDED PARTNER. I just view the model changing. As you have put together packs of preconfigurations for Sage CRM, the partner must add value by packaging their service to enhance the value of the service they provide. I see a lot more in the SAP channel such as Orchestrated Beer which is a preconfiguration for MicroBreweries using SAP B1. The model is changing, but not going away!!!

@WayneSchulz is echoing my own sentiment. Yet oddly, even though VAR's won't go away until they go out in a pine box, we can't find consultants (NAV) to save our lives. I don't think its because crushing demand, but more because it's no secret this is a dead end industry to go into and thus 'kids' aren't coming aboard and the products have gotten so complicated you can't afford to hire a kid out of college and train them.

@MarkChinsky - It it is a dead industry, why don't you leave? We hired 2 kids out of school last year and both are very productive members of our staff! Are people still buying ERP systems? Are they self implementing? I couldn't disagree more with your sentiment!

@MarkChinsky - I can understand your frustrations with hiring but I agree with @GaryFeldman that there are people out there to be hired. Not all the kids are going to Starbucks for jobs after College. It does raise an interesting question ... what degrees are kids getting in college these days?

I get the sense that you are comparing different business models. I think the one that both Mark and I are discussing is the pure play VAR where they're not doing much other than ERP and probably a few add-ons. The vibrant market - which I will agree with you - is the market where ERP is NOT the end product but mostly an accessory to other services. In @GaryFeldman case it might be hosting or virtualization (both of which are probably orders of magnitudes more exciting to college kids) and in @PeterWolf case it's CRM with a lot of extra services to tailor to a particular industry. The pure ERP - ""hey we are going to answer your questions when something breaks"" is the model that is going away quickly. In part it's going away because many consultants did not secure a recurring revenue stream by requiring customers to be on some type of annual support with the consultant. So instead you're left with the consultant having been dependent on margin (maintenance and add-ons/new sales) from a software publisher. Take that margin away and there's less wiggle room for those types of firms to make a living.

Ultimately I think the only home these pure play consulting firms will have is with CPA firms. The CPA is the only one with any money to make an acquisition (assuming they want to get back into the business). The pace of national VAR acquisitions seems to be slowing quite a bit - maybe because most fo the ""easy"" mergers/acquisitions have already occurred.

I disagree about the mergers / acquisitions @WayneSchulz. I think they will speed up. A growing majority of resellers are nearing retirement AND are feeling the pains of change and the destruction of their business models. These two factors will combine to create a situation where a lot more partners fold into Blytheco, Net@Work, SWK, ADSS, etc. for next to nothing except a place to hang their hats for the next few years and get health insurance. For most of us, that's an ok way to go out as the money we made through the years was good and we could sock some away. Maybe I'm just rationalizing the fact that reseller businesses have little inherent value?

Possibly but what's the value of your business once maintenance margin goes away? Assuming that this event occurs - -most acquisitions are acqui-hires - work away for 5 years for a decent salary and at the end your customers are transitioned to a bigger partner. And I would be willing to bet that the larger partners are wise enough to sense that margin is going away so if you're trying to merge in a practice and don't have sizable recurring support contracts with your customers I have a hard time believing that you'll be paid much more than a percent of collections as a premium. At best.

Re-read what I said. I agree with you. I think the partners will merge for health insurance and a place to hang their hat.

@WayneSchulz You identified exactly where the channel must go where ERP is not the end product. We are one of the few CPA firms that did not jettison the consulting function, but we have always stressed the consulting. I have made it clear to Sage that our mission is consulting that complements the traditional CPA functions. If we happen to make sales and move up in the tiers, those are just numbers, but there is no specific plan for those results. We have many clients who are unrelated to Sage products and never will be. Sage seems to respect this, so hopefully they see the value of our connection to them as postive PR. At the point where they fail to see the value and support our model, we will then choose to represent nothing, so they may lose out in what clients select as their ERP.

And to be clear - if you go to SaaS -- it has to be the same model (ERP is not the end product). The SaaS providers touting recurring (and high) margin payouts know in their hearts that their fate is probably going to be similar to Sage (et al) where once the market matures or the company is public and needs to show revenue growth each year then the margin to partners will be first to be cut/go away. Plan for this and don't get caught up in chasing margin. That's one reason that when I get calls from Accountmate etc all promising steady high margins - I laugh. I just don't think that anyone can consistently deliver a promised margin to the partner unless the market for new deals stays unusually robust.

@WayneSchulz - I agree, the questions and answers vary based upon your business model. Some people will not change their business model, and manufacturing buggy whips is not a good business to start. Whether you lead with or if you user ERP as part of an overall practice, the models of the 80's and 90's will not work in 2010's. This is not unique to our industry. With regards to ERP and margins. There will always be system replacements as companies grow and contract, new entrants, etc. Will margins be as rich? Is that really the question to ask. I can handle lower GROSS margins if my cost of sales is lower or other factors change. I am amazed at how our industry is extremely intelligent and creative when solving problems for our customers, yet rigid and pigheaded about their own business. No offense intended to pig lovers.

I can have somebody up to speed on B1 in 6-8 weeks. Takes a good 18-24 months for Dynamics NAV or Epicor. Huge difference in depth, breadth, complexity and visualization ability needed for proper implementation

Does loving pork chops count?

@PhilMcIntosh - glad to see that Sage is publishing a dos/don'ts list for these customer/partner events. At the Dec. 2012 Sage Roadshow (a customer/partner event), not once but twice, a Blytheco rep approached me and asked if we were ror with them, with a business card twitching in their hands! Sorry to be late to comment on this thread - but Tom will be missed. Without him, Pascal has lost a voice to deliver all the bad news and smooth conflicts. Didn't always agree with Tom, but I appreciated his qualities of approachability and friendliness. In the 80s we had the start of PC networks emerge and small companies had an opportunity to have some big system features that had previously required main/mini-mainframe systems. We kept getting more from less as improvements leap-frogged (and prices dropped), breaking open a new market that had never existed before for all of us. We've seen the power of a desktop now held in our hand and look where we're going now? Hosted, SaaS, cloud moving the once smaller networks back to a big computer that holds all we could imagine and is available from anywhere. We do need to refresh, evolve, and innovate again. I don't think that the channel may exist too much longer, since those once small, fast, innovative ERP firms we aligned with are now large, clunky, stock-holder sensitive corporations. However, that's our edge. We're still agile, inventive, and curious. We can respond faster, with greater depth of knowledge of our products, services and the client's needs and business processes. Our nimbleness is our advantage, our deep concern for our customer's success our principles, our breadth of experience our resource to tap into and profit by.

@MoiraGoggin - I agree that it's actually a good thing that Sage is doing something to stop the poaching. It's a shit practice anyway and is somewhat self-screening. Any partner deserves what they get when a bad customer jumps ship to them. Really though ... how many of our good customers would jump ship just because someone says hi or presents a cheap quote? I feel bad for the megapartners when Sage ratchets down M&S margins yet again and there is ZERO value in carrying bad customers. Regarding Tom, you are right on the money. Who is Pascal going to use to sell bad policies as if they were great news? That's a very good question. Joe Langner? Sophie? Kevin? Maybe they will just start changing policies and simply not tell us? Problem solved.

@PeterWolf ""Any partner deserves what they get when a bad customer jumps ship.."" Agree!

Bad customers should not be allowed to jump ship. We should have fired them long before that. Unfortunately we hesitate to do that because we appear to make some money from them. The problem is that we could make much more money from good customers or new prospects if we redeployed our efforts and resources to those that appreciate us.

Ed Kless is weeping with joy right now, @JohnHoyt! HSD for him (high satisfaction day). For what it's worth, I recommend my bad customers would find a better fit with my former, hated business partner. Match made in heaven.

And I would extend this concept to bad prospects. That would be any prospect who starts the conversation with the words: bid, interviewing, searching the web. My experience is that these keywords are strong indicators that the match won't be strong.

Do you really think that Ed Kless is happy to report to Joo Sohn now @PeterWolf?

@MoiraGoggin Formally, Ed reports to Joo, but we all know Ed is an entity unto himself, and I'm sure Joo knows that. I'm sure it will be a pleasant relationship via e-mail and phone with no real substance and until Sage decides his function is no longer relevant to what they are doing, Ed will continue to do what he has.

@JohnHoyt , Ed is less dangerous inside of Sage's walls than he is outside of them.

Joo visited his FOTF session I attended last year and it seemed there was mutual respect.

@MoiraGoggin - regarding my comment about Ed weeping with joy ... it was directed at @JohnHoyt comment right above mine talking about getting rid of bad customers and it has nothing to do with Tom Miller's retirement.

Sorry @PeterWolf

No worries ... I just didn't want to make it seem like Ed didn't like Tom. That's not my understanding at all. If anything, I think Ed really appreciate(d) Tom giving him free reign.

@PeterWolf Yes, in Ed's case it has indeed been free reign!

I don't know if you saw Accounting Technology's article on Tom leaving but they verified there's no planned replacement and Joe Langner is looking to become more of a channel champion. I'm not sure if that's a good or bad thing. I've been in meetings where he has been unusually candid on information. I for one would welcome some straightforward channel talk - even if it's perceived as negative at first. Once concern I heard about Tom is that there was always a spin that said ""everyone else thinks this policy is wonderful"". If Langner can lay out a no bull path of how things are going to be then at least we can plan accordingly rather than live on hope and dreams.

Having talked with Joe at Summit and a couple of times recently when I was at the Irvine office, I do get the sense that Joe is no nonsense type of person and is going to tell it like it is, whether it is good or bad news for the channel. I prefer that.

I completely agree on all your points, @WayneSchulz. Joe is a straight-shooter (whether this is intentional or just a lack of tact, I'm not sure). I would prefer to hear honest, no bullshit information so we can all plan accordingly. From my conversations with Joe, I can pre-emptively tell you what the message will be: Sage can no longer exist by selling the same old way like the internet never came along. We will be selling direct. We would also love to sell through channel partners but partners need to do their share of lead generation. We all have a form of myopia in these collaborative groups. We only interact with the good, active partners. From Sage's point of view, there are a lot of dead weight that aren't taking care of their customers. I only wish Sage could get past their own myopia and see that - in spite of the dead weight - there are a lot of GREAT partners. The contributors found in 90 Minds, the ones going to Summit year after year, the ones on LinkedIn, the ones that have great satisfaction scores with their customers, etc.