The Sage Summit 2012 partner and customer conference wraps up today and here are the things I have not read from any analyst who was in the briefing room with me for the past three days (here’s a good summary of what the typical analysts are writing – from Bruce Guptill of Saugatuck ) – and Bob Scott and Seth Fineberg both write great analytical summaries.
Joe Langner, Executive Vice President of Mid-Market Solutions at Sage – explaining that part of Sage Advisor’s utility may be to mine anonymous customer data for providing feedback to other customers (average days receivables, etc). I don’t sense any privacy concerns – rather that this could be an entirely new business for Sage. Perhaps I mis-interpreted the briefing but I also get the feeling that should the opportunity present itself Sage may use this data either to resell (all anonymous) statistical information or to suggest new products for the customer (which is something Intuit is also planning to expand upon).
We’ve probably only heard a very minor portion of what Sage Advisor CAN do – I believe that if Sage is adopting this technology globally that there are bigger plans for it than just to advise a customer when it’s time to upgrade.
Sage One and the fact that it’s really only suitable for the very small (5 employee or less) businesses. That’s fine but there’s so little reach to other Sage products. I asked the team how they could design an all new system and leave out migration to existing Sage products. I’m fine with them picking just one ERP to migrate – but at least have one. I never got a suitable answer (aside from promises that additional enhancements are being worked on) – just a lot of tap dancing. My opinion: This is largely designed overseas and ported to other regions. Intuit would likely kill to have a migration path to a higher level system — and has had to partner up with Intacct to offer that migration (presumably giving away customer and margin) – while Sage had (has?) a chance to build a migration path into their product from the ground floor with Sage One and so far (there is likely integration coming that they are not talking about) there’s no visible migration to any higher end Sage product (Sage 100, 300 , ERPX3).
In my opinion the future of Sage product portfolio (assuming all executives stay in place and technology conditions are relatively steady) is Sage One -> Sage 300 -> Sage ERP X3.
The explanation of Core v Non-Core is one of the most unfortunate choices of words by a software technology company that I have ever heard. They should let this wording completely fade away by next year. North America was most heavily impacted ( Non-Profit, Construction, Non-Integrated CRM all listed as Non-Core) by this poor phrasing and in my opinion it shows the lack of true control North America has in the overall (big picture) global strategy. UK is driving the strategy. Americas are implementing it. Sage NA Pascal Houillon has a seat at the UK Executive table but it’s only one seat. Sage is working hard to spin Core v Non-Core as no big deal and not indicative of any phaseout of their Non-Core lines. Time will tell.
I remain impressed by Pascal Houillon. The rest of the executive team as well. Many partners are unsettled by the accent and prior all-hands webcast that ended abruptly. I think partners must look past the surface to see whether the strategy is sound and it’s very hard to argue that pruning of product lines (which is what is being done) and management re-organization is something that’s not long overdue. Way overdue.
Houillon is not making any friends of partners by weeding back the low hanging fruit of partner support and upgrades. From a customer perspective these are both LOW value expenses that should be eliminated in whatever way possible. Good for Sage if they eliminate the need for a customer to spend time and money on support or upgrade tasks. In my opinion that is one thing ALL customer want. It’s not Sage’s job to protect old-line services like break-fix consulting (support and upgrades). Partners need to reinvent themselves by getting into programs like Firm of The Future and collaborating around other like-minded partners in more than a sales environment. The future is in developing specialized skills not stringing customers along for $7,500 annual painful three day upgrades. Don’t look know but Houillon is remaking the Sage portfolio so the customer experience is as close as possible to the one they would get with a cloud based solution (Something he told me he would do when meeting him before he even officially started at Sage).
The grass is NOT greener on the SaaS side of the fence. I spoke with one partner leaving a SaaS product after not having much success. I think SaaS is the future but it’s not an automatic road to riches and will involve partners making a jump into marketing complimentary SaaS services like business management along with the realization that with SaaS the customer has less of a requirement that the partner be local (long a strategic advantage to many lazy under-performing partners).
No new partner programs announced by VP Channels Tom Miller. Expect quarterly Firm of The Future programs and more of the same existing programs. I’m not quite sure that there’s a lot more that Sage could add to the mix to help partners. It’s time for the channel to wake up and adopt some of these programs or wither. Here’s a great video that Jeff Pedras from CDN did with Tom which elaborates a little more on the channel.
Alliances vs Collaboration — the most important 5 year trend will be collaboration where partners collaborate to improve the customer experience. Alliances where partners collaborate to sell product are a distant second. The days of the free initial assessment, proposal and quick close are going away fast. Partners still wringing their hands over bygone days of 50% margins and how to make money while still offering up unlimited free advance consulting during the sales cycle will probably keep wringing their hands right up until the day they go out of business.
Cloud Strategy will be three pronged: (1) Sage One (Ruby on Rails) for the micro-business, (2) Hybrid Cloud – Microsoft Azure for the SMB and (3) Sage ERP X3 (Sage Safe) for the Mid-Market. New to me was the announcement that Sage ERP X3 won’t be multi-tenant any time soon unless Sage sees market demand. I’m fairly certain this is a strategy change and on a prior earnings or technology call that Sage UK mentioned ERP X3 was on the way to multi-tenant. This announced cloud strategy is probably fine for customers who care less about what’s “behind the curtain” than they do about the overall experience. If Sage cannot use their cloud strategy to drive away customer pain points around the annual upgrade (business interruption, cost, bugs) and implementation and ongoing use then their strategy will quickly collapse via ongoing competitive attack from SaaS vendors.
The biggest danger that I see in Sage’s just announced cloud strategy – and I asked Sage execs only to get mostly shoulder shrugs – is whether the above three types of cloud are enough to meet the requirements of technical RFPS for new customers. The announced cloud strategy seems primarily aimed at the installed base of customers – which is logical because that’s Sage’s biggest opportunity. However existing customers are somewhat locked in by reluctance to change systems – so pleasing them is not all that difficult. if Sage’s cloud strategy fails to impress new buyers (meet RFP and IT department requirements) it will be a long term problem for the company which potentially could result in a need to dispose of additional product lines.
Sage looks to be evolving a cloud strategy that attempts to deliver the benefits of cloud without substantially re-architecting their legacy product lines. The proof will be in the delivery and execution. Sounds great on Powerpoint. Lets see how it works in the field.
Sage also announced some product discontinuations – most importantly that Sage 500 ERP support and updates will only be guaranteed for another 5 years. This is a long time (in technology years) and as one top 500 partner told me in the hallway – lots of things can change – including Sage. For Sage 500 ERP partners there’s probably some serious soul searching on the agenda as future new sales of the product will be even tougher now that Sage has surrounded it with uncertainty. As best we know based upon two separate comments at Sage Summit the total population of Sage ERP MAS 500 users is likely 2,000 (unknown if this is lifetime sold or customers on a Sage maintenance plan).
Sage’s messages to the channel from the conference:
1. Are you ready to change?
2. Sage is already changing
3. We know what our true North is