The Possible Sage Problem Behind SugarCRM (and other) Integrations

Bob Scott confirmed with Blytheco that they’ve picked up SugarCRM.

This is not really a story about Blytheco (several other VARS have also picked up SugarCRM).

Rather this is about the future of the Sage Connected Service revenues and how Sage may in their short term thinking about channel policies (drastically increasing costs for many partners) be creating long term revenue problems.

Think about this scenario.

a. Sage has said that for the next few years Connected Services ARE their primary Sage 100 ERP (formerly Sage ERP MAS 90 and 200) roadmap. If you look on the MAS roadmaps you’re seeing mostly integrations (Connected Services) or improvements to allow integrations – versus significant feature upgrades.

Connected Services are integrations between Sage’s products and third party solutions.

Sage makes money (presumably) from agreements with “official” Connected Services that are provided through the channel. The revenue may be a percent of annual renewal or perhaps for more transaction heavy integration Sage could earn a stronger per transaction recurring revenue stream (think payments, EDI , sales tax).

Sage presumably makes no money from Connected Services (aka integrations) that are NOT provided officially through Sage but rather are picked up independently (as SugarCRM is and others will be) by partners.

b. When the Connected Service is offered outside the official Sage ‘approved’ list — Sage earns nothing

c. In the near future some important Connected Services are going to become more prominent. I’m thinking primarily of the PC Charge integration to MAS which Sage have announced they are pulling in v5.0 of MAS.

If you haven’t heard – PC Charge integration is planned to go away in v5 of Sage 100 ERP (MAS90/200). This will be replaced by Sage Exchange which will only integrate to (wait for it)(wait for it) — Sage Payments….

Which will potentially create a huge problem — customers on PC Charge may be forced to change to Sage Payments which could be problematic if the customer can’t get approved for SPS.

It can’t be too long before third party solutions will be offered for credit card processing through MAS.

How will this impact Sage’s revenue projections if suddenly it’s not a relatively low profit third party SugarCRM integration that partners are independently offering but a more lucrative (by Sage’s own repeated discussions) third party payments integration?

I’m sure Sage is thinking about this – and the main solution to this seems to be to somehow close down direct integrations to MAS without obtaining some type of license from Sage.

If Sage doesn’t have a way to limit who can integrate to their product – then there’s potential that their Connected Service strategy cold unravel as partners follow the lead of Blytheco and others by taking on unofficial third party solutions and integrating them to Sage.

Blytheco and SugarCRM Join Forces to Meet Growing CRM Market Demand for Flexible, Affordable Solutions

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Comments

  1. Wayne,

    All last year we saw this delima with Sage while we tried to work with them to become a SyncApps member for many of our subscribers using Sage CRM and other Sage financial software solutions.

    Our key lead at Sage finally gave up and joined Blytheco to pursue his career, as although he thought SyncApps were a great idea for Sage subscribers, your sentiments posted here were all to real to move forward with it.

    Great Monday morning read Wayne:) & BTW our SugarCRM Sync is one of the top choices today at SyncApps.

    ~Clint
    @cazoomi

  2. Accounting Systems Inc. in South Carolina has been offering credit card processing with MAS90/200 through Mercury Payments for at least two years now. Their rates for customers are better, and the margins for business partners are better than SPS. The application process is ridiculously simple and setup is easy. I wonder how long until Sage shuts them down.