The Road Ahead for Sage

Recently Dennis Howlett, self-proclaimed no-nonsense purveyor of truth in matters pertaining to enterprise IT, penned an article called “Sage on the road to nowhere.” As a long-time observer of Sage UK, Mr. Howlett makes some tough and mostly accurate assessments of the current situation and the challenges faced by Sage as they shift to addressing new customer expectations in the increasingly Cloud-based world of software applications.

Luckily for all involved, Sage leadership has seemingly woken up to these new, and growing, set of expectations and now it’s a matter of proper, disciplined execution on the road ahead. There is no doubt that this journey of transformation will continue to experience bumps in the road with some painful ramifications for many involved.

But it’s completely necessary if Sage wants to survive in the new economy.

If you don’t believe this, consider companies like Blockbuster Video, RIM, Sears, Best Buy and others that – not waking up in time to the transformations in their particular industries – have been either put out of business completely or dramatically crippled.

OUT WITH THE OLD, IN WITH THE NEW

For my own part, I believe that Sage will not only survive but come through this transformation stronger than ever. This belief is built primarily on what I see occurring in Sage North America as a Sage partner – I am not close enough to the situation in the UK to comment on Sage UK except from what I can glean from analyst discussions.

Since the arrival of Pascal Houillon, the Sage North America president and CEO, in early 2011, Sage NA has been undergoing significant changes on a path that they have dubbed their “Transformation Journey.” Some of these changes have been difficult to understand and downright impossible to reconcile with the image of the Sage of old.

Maybe that’s a good thing though. Because the old ways just aren’t working any more for software publishers.

Grasping this fundamental need to shift away from the old, Sage has steadily been developing a stronger sense of self-reliance and determination. They are increasingly showing a resistance to going “gentle into that good night.”

I applaud this new tenacity and feel that it is long overdue.

ONLY THE STRONG WILL SURVIVE

The unfortunate side-effect to this new posture has been serious alienation of the extensive Sage channel which is one of the key assets in Sage North America. My personal opinion is that this has created friction and un-productive actions and consequences that possibly could have been avoided.

The good news is that recent overtures by Sage have shown a willingness to reach out the channel and be more inclusive. Time will tell if this fence-mending is here to stay and if it will be effective.

Whether that manifests or not, in a different article, Dennis Howlett makes the following point regarding the channel:

There is a large channel of resellers who have become disillusioned in recent times. But so what? Where are they going to go if Sage turns around and says ‘game over?’ This is a problem for all software vendors that have a reseller model. Sage just happens to be the big dog in many markets.

As a partner, these are painful words to hear – particularly because they ring true. If Sage isn’t strong enough to weather the storm and emerge victorious, what happens to the channel, the customers, the employees? It would be a lose-lose-lose situation for all involved.

It’s absolutely essential that Sage makes the moves necessary to survive and thrive in the new, Internet-fueled, Cloud-based world and it’s just as essential that individual Sage partners do the same for their businesses.

For some partners, the road ahead will include combining forces with other resellers – either through mergers and acquisitions or through formalized partnerships. For other partners, the path will include diversifying their product portfolios and taking on other vendor solutions – a huge expense and undertaking that may prove that the grass is not greener on the other side of the fence.

At the end of the day, the age-old adage, “only the strong survive,” will play out for all involved – Sage and partner alike.

CORE VS NON-CORE

Regardless, for all involved, Sage has laid down a clear shift in policy with their recent pronouncement of separating product and business lines into “core” vs “non-core” categories. While the specifics of what these designations means is unclear to many at this point, my gut and my brain tell me this move makes sense.

By applying these designations, Sage effectively helps individual employees – management and rank-and-file alike – identify which products should receive which amount of attention. It helps define organizational structure and focus throughout the organization.

There is some unfortunate confusion from the use of “core” and “non-core”.

For many people, ”non-core” might signify products and business lines that are ready for sale or sunsetting (essentially a starvation of research and development dollars in a planned march to obsolescence). Sage executives have said that this is not the intent and, given the customer base, value and revenue for many of the “non-core” products, I will take them at face value.

Perhaps better designations would have been “core” and “select” or even ”strategic” and “specialized”? My opinion wasn’t asked during the naming so I will leave it at that.

EXPANDING SOLUTIONS TO MEET CUSTOMER NEEDS

With a stronger focus on their core mission – providing excellent software solutions to help small and medium-sized businesses (SMB’s) reach their goals - Sage is delivering much-needed additive solutions to customers’ ERP application. This presents opportunities for current partners and customers alike.

These solutions include – but are not limited to – a wide variety of software applications including: CRM (Sage CRM), credit card processing (Sage Payment Solutions), business intelligence (Sage Intelligence formerly Alchemix) and other products designed to deliver key functionality required by the typical SMB.

The prevailing thought goes “why not stick with good products from a proven vendor”? If you are happy with your Sage 100 ERP (aka MAS) or your Sage 300 ERP (aka Accpac), why not take a look at one of the Sage family products that deliver additional functionality that you most likely need (even if you haven’t quite yet identified that need yet)?

THE NEW OPPORTUNITY

As part of their new, more self-determined approach, Sage is no longer content to sit back and hope customers get the message about the expanded family of products. They are implementing plans to spread the word directly to uncover existing needs, build awareness and drive demand.

Before Sage takes the reins on this, Sage partners are being given the opportunity to participate by either becoming certified on individual products and conducting their own campaigns to introduce the products (and increase the attach rate among their existing customers) or by formally establishing an official affiliation with another partner that specializes with the selected product.

Partners can also choose to opt-out of introducing any of these add-on products and Sage will perform the necessary work. If Sage identifies interested customers, they reserve the right to align those customers with partners that represent the product filling the particular need.

As previously mentioned, the Sage channel is strong and brimming with extremely loyal customers. Many of these customers will look to their chosen partner for guidance on selecting those specific solutions so it will be telling if the channel and Sage re-align in common interest to assist the customers in evaluating their choices.

INITIAL (ADMITTEDLY ANECDOTAL) EVIDENCE IS ENCOURAGING

From my own perspective as a dedicated reseller of Sage CRM, I have already begun to see activity in the channel embracing the new opportunities. In the scant two weeks since the Sage announcement of the new drive to introduce Sage CRM to existing customers, I have been approached by close to a dozen partners looking to work together to help spread the gospel of the power of Sage CRM.

I imagine that this will continue to grow over time as partners evaluate their options. A huge driver of this will be the newly instated Sage Regional Growth Managers who are dedicated to working with channel partners to help them engage in the process.

Given the choice of controlling their own destinies and directly advising their customers – either independently or via a partnership – or deferring to Sage to spread the word, most partners will naturally prefer to remain involved. Again, time will tell.

WHERE TO FROM HERE?

While all of the moves described above are long-term positive for customer, partner and Sage alike, they don’t directly answers the growing demands for Cloud-based solutions. Regarding this need, there are plans in the works that offer viable choices – some already in place (such as Sage CRM Cloud, Sage 100 Online and Sage 300 Online) and others to be unveiled over the near-term.

While it’s understandable to be wary of traditional software vendors’ attempts to transition existing product sets successfully to the Cloud, I recently met with several key Sage executives and was reminded of the talent in the Sage management team. This is particularly true on the product side and I came away with a deep respect for the talents of Alok Tyagi, Senior VP of R&D, and new Sage addition, Doug LaBahn, Senior VP, Mid-Market ERP and CRM Solutions, Product Management and Marketing (where do they think up these titles?).

Both of these gentlemen displayed great insight, strong vision and solid understanding of the marketplace and customer needs. I was suitably impressed – and that takes a lot of doing.

Of course, we’ll see if the execution can match the vision over the coming months and years. I, for one, am in the hopeful optimistic camp.

In two weeks time, I imagine all of these topics will be fodder for conversations – formally and informally between sessions and in-the-halls – at Sage Summit 2012 and I am looking forward to it. If you are a partner or customer (I don’t think prospects are invited but they should be) and haven’t already signed up for Summit, I encourage you to do so immediately.

If you are going already, stop by the Azamba booth and share your thoughts!