The new Sage - does it know its onions?

The herb Sage has a Latin name of Salvia Officinalis – Salvia coming from the Latin for ‘well’ or ‘unharmed’. 

Sage, the UK-based company famous for its accounting software, seems to have been living up to its name.  Even with a raft of new on-line competitors, Sage’s revenues have been relatively steady, as have profits (barring 2013, where a swathe of non-core assets were disposed of, including Interact – Sage’s bad incursion into full customer relationship management (CRM) software of ACT! and SalesLogix).

However, Sage has got itself a name for being rather conservative in product development, and also for pretty bad customer service.  The time has come for Sage to stop sitting on its laurels, counting on its dominance in accountancy practices for maintaining revenues and to face up to a changing world.

So, what can Sage do?

I was at Sage’s recent Sage Summit in New Orleans, where new (as of November 2014) CEO Stephen Kelly promised that Sage would from now on be putting the customer at the centre of everything.  He even went so far as to state that the company’s share price was something he didn’t pay much attention to (close to an illegal statement for a CEO). His belief is that happy customers lead to a vibrant company that will drive shareholder value – rather than focusing on shareholder value and finding that you have an unhappy and failing business underneath it.

Sage has been relatively slow to the software as a service (SaaS) model. Others, such as Xero and Zoho, have fully embraced the SaaS model – indeed to the exclusion of an on-premise capability.  Sage has realised that although a large portion of its own customers are conservative and want to stay with an on-premise capability, others are looking to SaaS – and Sage has had to be discounted as an option.

Sure, in 2013, Sage launched Sage One as a SaaS offering – but this was for very small companies.  This could compete with bookkeeping SaaS offerings, but was not really up to competing with the more functional accounting SaaS products.  Now, Kelly is changing Sage’s approach.

Alongside Sage 100 and 300 come 100C and 300C – cloud versions of the standard systems, which have themselves been updated to use HTML5 interfaces to provide commonality between the on-premise and SaaS versions along with greater mobile device support.  Customers can therefore choose when to move to the cloud at their own speed, with the same underlying accounting engine meaning that data transfer is seamless.  Sage 50 remains as a small business, desktop option for those who are happy with a native PC application.

Alongside this comes Sage Live (renamed, somewhat confusingly, from Sage Life) – a SaaS only offering that is based on the Salesforce1 cloud platform.  Launched in the US, Sage Live will be arriving in the UK in the coming weeks and will then roll out elsewhere, starting with other English-speaking countries.  There is no need to be a Salesforce user to subscribe to Sage Live – but if you are, then full integration is possible, so that Sage users have access to the Salesforce data from within Sage, and Salesforce users have access to the Sage data within Salesforce.

Sage has also had an ERP offering – Sage ERP X3.  Kelly made a bold statement – he is declaring the end of ERP.  Not the product – just the term.  His view is that ERP has become a constraint within businesses: most ERP packages have become too big and unwieldy to help a dynamic organisation.  The newly named SaaS-based Sage X3 aims to support such dynamic organisations – it is far more of a process engine than an ERP system – and includes much of the accountancy capabilities that you would get in Sage Live.

This is all fine – but it does lead to some problems around where does each product position itself?  The stated aim of giving customers the choice between on-premise and SaaS works for Sage 100 and 200 – it doesn’t work with Sage One, Sage 50, Sage Live, or Sage X3.  Sage Live will grow to include a degree of the functionality that Sage X3 has – the functional differences will need to be messaged succinctly and solidly to ensure that users go for the right product.  Sage Live and Sage X3 are, by the nature of the platforms they are written for, completely different beasts at a code level – porting over ‘goodness’ from one platform to the other is not easy – nor will data transfer be easy should a customer need to move over from one platform to another.

One other point is that Sage wants to become the voice for small businesses.  Starting in the UK, it has started a petition (https://www.change.org/p/small-business-owners-big-businesses-anyone-who-believe-businesses-should-be-paid-on-time-pay-your-suppliers-within-30-days?recruiter=325706554&utm_source=share_petition&utm_medium=copylink&rp_sharecordion_checklist=control) to try and get large organisations to pay smaller organisation’s invoices within 30 days.  This is all well and good, but the UK already has the Institute of Directors, the Chambers of Commerce, the Federation of Small Businesses along with many more groups nominally lobbying for the ‘small guy’. Sage may be seen as more of a company with a commercial agenda, rather than an independent voice in this area.

Similarly, if it wants to be a major voice and provider to the small and medium business sector, then along with getting rid of the term ERP, maybe it needs to downplay the use of Accounting as well.  If Sage moves to being far more of a process-based vendor, then it can focus on providing a financial ‘engine’ to SMBs.  Here, it can be a solid system of record for everything financially related, and through effective technical partnerships, can make sure that other business functions (for example, information management, business analytics and intelligence) all access and utilise the Sage engine.

In reality, this seems to be where Sage is heading: partnerships are being put in place, and Sage has created several sets of APIs (in itself, a problem – the API sets need to be brought down to a single set) so that different systems of engagement (user interfaces) can plug directly into Sage’s system of record.

It is, as yet, too early to say if Sage is biting off more than it can chew: this will only become apparent in 12-18 months’ time.  However, it is good to see that under Kelly’s leadership, Sage is ceasing to be such a conservative company.  Maybe it will come out of this new direction, ‘well’. Salvia, Sage!

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