Time to admit it. Bring back an annual upgrade and monthly service packs.

First some background.

Sage began issuing quarterly product updates with version 4.30 4.4 of Sage ERP MAS 90 and 200.

These updates contained feature enhancements (mostly folded in Extended Solutions which Sage used to sell but had since open sourced). Rather than increasing the version number the product update would add a corresponding Product Update version to the end of the customer’s version – for example Version 4.4 with Product Update 1 was 4.4.0.1.

Prior to version 4.30 4.4 Sage issued monthly bundles of program patches that they labeled as Service Updates. These were self-installable bundles of fixes which in turn had replaced the old method of requiring customers (or more likely their VARS) to install fixes individually.

The Service Updates rarely included additional features and instead focussed on stabilizing the existing code.

In theory these Product Updates would make customers happier as they introduced new features in each release and replaced the prior practice of annual upgrades and monthly service packs (primarily bug fixes).

Unfortunately from my vantage point quarterly Product Updates didn’t make most users’ live’s easier.

Here are my personal reasons that Sage 100 ERP (Formerly Sage ERP MAS 90 and 200) Product Updates are a flop:

1. It’s difficult to remember a dizzying array of “new” features. Especially to remember when they were added and at which product update releases.

The idea of adding features quarterly sounds great when written on a whiteboard in a conference room in Irvine. Unfortunately for most users it did not translate into extra value – primarily because (a) Sage ERP 100 upgrades aren’t generally self-installable and (b) company’s did not usually want to pay for multiple upgrades within the same year which (c) potentially interrupt their business with down time and additional training.

2. Hot Fix’s (one off program patches) are amateur hour – it’s too easy to miss one or two on a new install or upgrade. The bundle of self-install fixes need to make a return on a regular monthly basis. In the interim you can still include hot fixes.

3. Customers have shown reluctance to upgrade on any more than an annual basis. Sage has had some troubles releasing stable product updates – which means customers will sit on the upgrades during the year until such time as they are sure the bugs are largely erased.

Customers with third party enhancements such as Job Ops, Bar Coding, Warehouse Management or EDI were almost always several releases behind as their third party developers buckled under the strain of trying to keep up with the myriad of Product Update releases.

4. Sage has not focussed on the area of greatest customer value. Sure there are customers who really love using Positive Pay as an update to the Bank Reconciliation. More customers however would appreciate better control over printers, less problems installing Paperless Office in Windows 7 or migrating Paperless.

5. Most importantly – with an annual release instead of quarterly Product Updates Sage can spend extra time debugging and testing the annual release which hopefully will produce a more stable product which customers will more willingly upgrade to on a regular basis.

I realize there were companies who realized great value from some (or perhaps all of the Product Updates).  What I question is whether these companies were in the majority and whether even those companies were installing every Product Update.

Product Updates did add value. Customers enjoyed the features. My issue is that more than one Product Update per year is too many for most customers.

Join the conversation around this topic with other Sage Partners in our private Sage Partner Facebook Group (Membership limited to currently active partners only. The group is not sponsored, affiliated, monitored, approved or in any way supported by Sage).

Recently I’m noticing more top tier Sage VARS advertising SugarCRM – most recently Blytheco (Sage’s North America Partner Of The Year) , then Faye Business Solutions Group and Brainsell.

Faye and Brainsell are listed on SugarCRM’s partner site. Blytheco is not so it’s possible they’re just running a series of educational sessions though it’s difficult to believe they’re adverting a competitor for what’s supposed to be one of Sage’s bread and butter markets (CRM).

These are not lifestyle mom and poppers – but some of Sage’s up and coming VARS. In Blytheco’s case they’re “top of the food chain” and in early January hired a former Sage CRM Exec as VP Sales.

Either Blytheco’s new VP of Sales designed this as a “middle finger” salute to former employer Sage , or , as “smart money” (a former Sage insider with deep product knowledge) he knows something the rest of the channel may not.

Of course it’s also very possible that adding a third open sourced CRM package is just smart business and none of the above theories are valid.

Does this new fondness for an outside CRM solution imply Sage’s channel is destructing?

Probably not. But once you open the door a little to a competing product line – it can be difficult to shut.

And to be sure Sage’s recent changes to certifications, support and business care have provided lots of incentive for formerly loyal Sage VARS of all shapes and sizes to sit up and start making backup plans.

So why are top flight Sage VARS seeming to  take flight to third party CRM packages when Sage offers 3 of their own (Act!, SageCRM and SalesLogix)?

SugarCRM Demo Request

In a press release dated January 23, 2011 ,  FBSG CEO David Faye indicates that FBSG will be working on further developing an integration between Intacct and SugarCRM as well as other potential custom solutions.

Faye Business Solutions Group, Inc was formed in January 2010 as a spinoff from Southern California IT consulting firm Faye, Pollack & Associates and in addition to Intacct their website indicates support for Sage ERP MAS 90 , 200, and SugarCRM.

Interestingly the first paragraph of the press release talks about Intacct as being “significantly more partner friendly” which seems to take direct aim at the wide ranging changes Sage continues to make to their partner program including increased certifications, reductions to partner support and marketing of Sage support directly to customers.

The Intacct Business partner channel is run by former Sage Channel Chief Taylor Macdonald who has made some strides in recruiting Sage partners  - most visible so far being Sage Non-Profit specialists JMT Consulting who is noted as being a $4.9 million var on the Accounting Technology VAR 100 for 2011 and Canada’s $ 5.6 million  Equation Technologies who represents Sage Accpac and was ranked # 63 on the 2011 VAR 100.

There seems to be a steady stream of news related to ERP vendor Epicor (Full disclosure – I work exclusively as an independent consultant with a competitive ERP product). The latest lawsuit from Major Brands claims that Epicor over-promised and under-delivered on a $1,000,000+ software and services ERP engagement.

According to the lawsuit the initial cost of $500,000 in software licenses and $ 670,000 in services (to be provided by Epicor directly because “there’s only one throat to choke”) not only ran past the initial go-live date of  ”mid 2011″ but also doubled in price and according to the suit Epicor eventually admitted the software they’d recommended was ” not suitable for Major Brands’ needs and that it would not perform as previously represented”.

By the time Major Brands filed suit Epicor was indicating that their net version, ICE 3.0, would fix everything – but not until it was available in mid 2012.

 During the testing, the V9 software was so ill-suited for Major Brands’ needs, no invoicing or shipments were able to occur.

Two questions

1. What type of due diligence happens before a company spends $1 million on a software project? In this case it would seem as if the most that was done was some type of free demo and followup — “the company gave Epicor a detailed accounting of its business processes and transaction volumes, according to the complaint. The company also allowed Epicor personnel to “visually observe all aspects of its order entry process [so] it would understand Major Brands’ needs and requirements and the processed involved.”
2. Is the software publisher really best suited to deliver implementation services in this mid-market space? Here, according to the suit, Epicor represented that they were the best resource because there would be only “one throat to choke” if things went wrong. Ultimately for Major Brands it may turn out that Epicor was most favorable not because of a throat chokehold but deep pockets when the system doesn’t activate as they claim.

In an environment where software publishers are desperate for new sources of revenue it’s tempting to think that taking on the role of implementer is an easy road to high margin profits. And in some cases where the implementations are cut and dry that may be true. Increasingly the bulk of implementations , such as Major Brands which was replacing a 20 year old system, have some type of quirk that requires more than a free demonstration and conference room meeting to uncover.

Current best practices include a paid conference room pilot – or at least rolling out the software in test phases prior to jumping in with both feet. Companies who have stayed on software for 20 years (though Year 2000 scares, upgrades to Windows) almost always have some type of special needs inherent in their old software which make a migration challenging. Most experienced VARs recognize this. It doesn’t sound like in this case Epicor did.

The message for software publishers – be careful what you wish for (one throat choke) – because you may get it.

In a move that might surprise some of their business partners who haven’t been paying attention and noticed that Sage’s compensation for maintenance plan subscriptions is amongst the highest of any competitor, Sage is expected to announce today that all Sage 100, 300 and 500 customers will have access to 5 support cases as their plans renew beginning with those expiring on or after March 1, 2012.

Several partners have contacted me to confirm they’ve been informed that Sage will announce elimination of the Bronze plan for Sage 100, 300, 500 ERP (Formerly Sage ERP MAS90, 200, Accpac and 500) which previously allowed for only maintenance upgrades and no calls to Sage support. Instead of calling Sage support most customers  relied on their local Sage Business Partner for support..

Customers instead will now be enrolled in the Silver plan. Under the new plan,  effective for renewals on or after March 1, 2012,  for an annual fee of 21 % of product SLP (versus the  previous 18% that the Bronze plan had cost ) Sage ERP 100, 300 and 500 (no other product lines were impacted) customers will have access to direct Sage support.

Additionally, two tiers of Sage’s top partners – Diamond and Platinum will have tier margin on maintenance renewals reduced effective April 1, 2012.

Tom Miller, Sage’s VP of Channel Management, explained that customers on Sage support have shown higher net promoter scores and Sage’s reason for changing the support options was to create happier customers who stay with Sage, continue renewing maintenance, etc.

In addition certain changes were also implemented where Sage partners must actively participate in renewing customers who have fallen 90 days or more off plan or they lose any compensation for the reinstatement order.

When questioned about how Sage will monitor some of these changes such as channel conflict with Sage’s own renewal teams and  how to make sure partners and consultants don’t usurp customer cases without customer consent Sage indicated that they’re still working on the details.

The subscription margin reductions had been widely anticipated (I’d expected them as early as my December 2009 predictions post)  in recent months by some Sage partners. In Sage’s own earnings reports such as this 2010 summary of North America, Sage repeatedly talks about premium support sales as a goal.

In short, Sage partners surprised by these announcements should be paying closer attention to the surrounding environment (what other software companies pay for similar renewals) and even Sage’s own earnings releases which are often full of hints about their future direction.

I’ve spoken at length about how Sage Business Partners need to get local with their customers and develop their own special sauce to clearly differentiate and add value to their firm’s own services. Sage themselves over the last two corporate earnings calls have indicated that adding premium support subscribers was one of their top goals.

What remains to be seen is the level of impact that changes will have on customers.  Will customers subscribing to a partner support plan abandon that plan in favor of the modified Sage offering?

If Sage continuously advertises the availability of support cases then partners might see drop off of 10% or more from their lower end customer base who could switch to Sage support.

A long time Sage partner who has been offering  their own agreements for years  indicates that even before these changes  they’d been heavily promoting Sage Silver plans as as backup option for their customers and would continue to do so since it gives customers a great help desk resource for simple questions and the difference in price was immaterial for larger customers.

Partners can continue to offer similar support agreements though it’s probably best to start labeling them as other than support (one successful Sage VAR labels theirs as Knowledge Transfer Agreements) . Modify your agreements by shoring up existing plans to include local (note the use of this word loca) on-site upgrades as a component of  the agreement .

Following in the footsteps of Sage I recommend enrollment in your company’s own plan be a requirement for you to perform any work for a customer. If a customer balks at maintaining two plans there’s no reason you cannot have a separate fee schedule for customers off-plan.

Where I expect to see the biggest impact of these changes is with what we in the industry term “orphan” users which are companies who have left their prior VAR for any number of reasons and in turn search the Internet for a replacement. It’s difficult to tell what percent of this business might disappear but provided the user is active on a Sage maintenance plan they may chose to migrate directly to Sage for future support instead of another partner as they  may have done in the past before support cases were included in their plan.

It’s important to note that support cases will only be added as customers renew their plans starting on or after March 1, 2012. There is no change to a pre-existing plan until the renewal.

What’s unusual about this mailing  is I’ve yet to see a press release that these two competitors (Intuit and Intacct) are working together.

The promotion also states “we have a new way” which may indicate this is a test or perhaps as yet unannounced partnership.

UPDATE: Intacct PR replies “..I would certainly not characterize intacct and intuit as competitors…”.

Most software companies tightly guard their installed user list and only as a deep last resort would they consider referring an existing customer to a competitor.

Relevant information from the email is below (emphasis is mine):

“Some of our larger customers in the software business have told us that they love the ease and flexibility of QuickBooks, but now require more advanced functionality as they have grown.

If your needs are stretching beyond QuickBooks, we want you to know that we have teamed with Intacct, a leading mid-market financial applications company, to address your more sophisticated financial management requirements.

Intacct has put together a Best Practices Financial Management Kit for QuickBooks customers that we recommend you review. Click here to download it now.”

It’s quite unusual to see one company cross market their customer base in an effort to get them to upgrade to a competitor’s product. Yet that’s exactly what appears to be happening here.

The small print of this offer does seem to specifically address the needs of software companies whose revenue recognition needs may be more appropriately met by Intacct’s revenue recognition capabilities.

UPDATE: Intacct PR just issued a no comment regarding the promotion and indicated  ”I would certainly not characterize Intacct and Intuit as competitors…”.

Here’s a copy of the info request form:

I have an email into multiple people at Intuit Public Relations department and have yet to hear anything back.

The petition appears to have been created by Peter Ribeiro of Impac Solutions Toronto, Ontario – a Sage Accpac and Microsoft reseller.

The petition largely asks that Sage rescind their recent plans to measure the tier move-down calculation quarterly instead of bi-annually as was previously done. Some believe that this calculation may result in more VARS losing some tier commission.

Whether this approach will be successful remains to be seen. Increasingly Sage seems to be guided by the overseas corporate parent and is facing a huge branding project expected to take the better part of the next year.

The question of more tier is only one small part of what most VARS should be worrying about. The more pressing problem is fast movement of technology and the shifting tastes of the technical buyer.

I think you can make great arguments both ways– the first from Sage’s standpoint is “sell more” and this problem goes away.

The second from the partner perspective is ” you’re taking money out of VAR pockets to show improved North American results”. Note: The Sage earnings reports are not detailed enough to know if this is accurate or not.

Sage Software: Sage Mid-Market Partner group ask that Sage Inc. rescind tier calculation change.org/petitions/sage… via @change

— Peter Ribeiro (@peterribeiro) December 10, 2011

In neither case is the best route totally clear to me.

I’m more of the opinion that the era of VARS making money off software / maintenance commission is winding down. We’ll likely see it chipped away each year.

SaaS vendors sit and claim you’re going to earn x % recurring revenue each and every year for the life of that customer contract…

BAWHAHAHAHA – yeah ok. I think we’ll have to agree to disagree on this (as I’ve often done during these presentations at ITA).

From the SaaS side of the fence, Dan Druker, SVP Marketing and Business Development for Intacct has this argument to make about how the economics of cloud/SaaS favor the SaaS vendors.

In my opinion we can either fight change– or adapt our businesses so that the sale of software / maintenance is less of a driver of our revenues.

I’ve recently said that the VAR opportunity is:

1. All about local
2. An increasingly tough argument to tell customers that every upgrade has to be a “spreadsheet quote” with a hefty budget.
3. SaaS is not a cure all since the cost is often prohibitive, lock-in can be steep and many features are missing that present customers expect.
4. In my opinion no vendor/publisher is going to pay a lifetime guaranteed residual. Wake up and smell the coffee.

From The Petition Site:

On October 20th, 2011 Sage announced new Tier Level movement changes, effective April 1, 2012, that will make it more difficult to maintain tier levels. Whereas, with the current tier calculation method, a partner’s tier level could increase four times a year but decrease only twice a year, the new policy would increase the chance of a decrease to four times a year. This change will result in some partners losing 10% margin on sales and 5% margin on Customer Care commissions. This new policy comes on the heels of other changes introduced by Sage to its partners over the last 5 years such as:

· Introduction of “new license” revenue as a requirement to keep tier levels, introduced during the biggest downturn in the North American economy since the great depression

· Reduction of Software Assurance margins for most partners from 35% to 20% since margins were based on renewal revenue and now it’s changed effectively to “new license” revenue

· Offering of low or no cost training directly to clients – taking away parts of this revenue stream

· Offering of low or no cost support– taking away parts of this revenue stream

· Changing from yearly to semi-annual tier down calculations

During these tough economic times, it would be in everyone’s best interests to make it easier, and not harder, for partners to maintain their tier levels. Therefore, it is incumbent on all Sage mid-market partners to request that Sage reconsiders this proposed change to the Tier Level Calculation.

So far there appear to be 11 users who’ve signed the petition which may be viewed at Change.org.

This morning I read a post by Bob Scott that Microsoft is supplementing some of it’s Business Solutions IT team located in Fargo ND to a Dynamics VAR.

I’ve no idea what Bob’s getting at here – and whether this is only IT resources or also development, support. In any instance it’s hard to believe that Microsoft is doubling down on ERP when this report of outsourcing appears.

Hasn’t the boogey man shifted anyway?

It used to be we feared Microsoft, Epicor, Macola/Exact.

Now the fear is the unknown, whether our product technology meets some ever changing definition of “true cloud” and the murkiness of the definition of true cloud.

Prediction: The definition of  ”True Cloud”  will become the greatest ERP holy war ever.

Record attendance of 260 technology members was announced. Most IT Alliance members provide mid-market ERP or related services. The conference is marketed as a collaborative and is heavy on member to member sharing of experiences.

One of the hottest topics at this year’s event was cloud computing. Each conference day spotlighted sessions on creating, adapting and how to change a VAR practice to market SaaS offerings which typically charge customers a lower initial price which means VARS have had to retool their thinking about how to market and provide SaaS services.

During last year’s ITA Fall 2010 collaborative I noted that most IT Alliance member VARS who had adopted SaaS as a business offering were in the early stages of ramping up and offering services. This meant there was not much live feedback about actual results of converting from an on premises to SaaS VAR.

This year’s conference was different and one session about SaaS business best practices featured a prominent Sage partner – Jackie Tiso of JMT Consulting - who is  a 9 year Sage President’s Circle winner and one of their top Non-Profit VARs. Jackie and her firm have been providing a SaaS solution since October 2010.  Here are some notable results that Jackie shared during her session.

Observations: JMT Consulting and Intacct

JMT Consulting has been offering non-profit services for 20+ years. They’ve serviced over 2,000 organizations – primarily with Sage MIP Fund Accounting. According to Jackie, aside from customer and market demand,  their incentive for moving to the SaaS model was that it evened out their revenue stream. Rather than chasing a quarterly sales goal they’ve found the recurring revenue evens out cash flows as well as increases business valuations for the practice.

Craig West, VP of Channels for Netsuite, pointed out that SaaS offering produce much higher recurring revenues for partners than on premises. The common misconception is that SaaS offerings are small (Netsuite’s average sale is $40,000+ which recurs each year) and that they’re collected monthly (both Intacct and Netsuite bill annually).

One thing that promotes renewals? The service for SaaS can be shut off. While this tactic sounds harsh it’s not entirely different than some on premises offerings which can issue expiring license keys that also effectively close down a software solution if maintenance isn’t paid.

Taylor Macdonald, VP of Channels for Intacct , remarked that most customers defecting from SaaS are involuntary churn – typically either because the company goes out of business or is acquired.

One question I offered to Jackie was whether offering SaaS meant that the portion of consulting services – long the bread and butter of most consulting firms – trended downward. According to Jackie they’re still selling similar consulting volumes though the consulting services switch to focus on value added offerings such as reporting or work flow versus prior services which may have required more “break fix” type services to configure workstations and servers and potentially wrestle operating system conflicts.

Typical Lead To Close Times

Both Taylor and Craig indicated that typical lead to close times for new users to purchase SaaS offerings is anywhere from 30-90 days. This lead Craig West to remark “This isn’t a hope and a prayer” – companies are adopting SaaS.

Ramp up times for new VARS to feel as if they’re true experts in SaaS was pegged at 12-18 months by Taylor Macdonald. This is similar to the times other VARS have found when working with more traditional on premises solutions.

Why is it so much faster to close SaaS offerings? According to Taylor it’s because :

• There are so few offerings in on-premises and most of those customers have already seen/used
• Customers are looking at a limited number of cloud options (most likely Intacct, Netsuite, SAP)

According to Jackie:

• Technology sales (customer requires SaaS) are the fastest
• Nobody wants to deal with their IT Department – SaaS is their off-ramp

SaaS Business Model of JMT Consulting

When creating a new SaaS “division” within JMT Consulting Jackie indicated they setup a separate sales division for SaaS. There’s no cross selling of their on -premises customers to migrate to SaaS (which although not mentioned might create serious issues with the on premises software publisher and has reportedly lead to revocation of authorizations for other partners trying similar tactics).

Salespeople at JMT either sell on premises or SaaS. They don’t offer both. Leads are filtered through a central sales area where JMT Consulting sends out a form that is completed by the prospective customer. Once the form is returned JMT determines which solution potentially fits the prospective customer’s needs.

Commission structure for sales people was determined from within a meeting of the group at JMT Consulting. The sales team opted to receive a stream of payments that matched the revenue stream of SaaS as opposed to lump sum commission payouts that would have more closely mirrored the on premises solution sales commissions they were accustomed to.

The Renewal Is Critical

I’ve long believed that the primary measure of customer satisfaction is the annual renewal of software maintenance / subscription. Craig West reiterated that the most important thing is the renewal and continued long term satisfaction of the customer. SaaS business models based on renewal of ongoing subscription will quickly weed out the “Quick Hit” artists who might gear up to sell a lot of new licenses and reap a quick commission.

Under the SaaS model long term customer satisfaction is rewarded with a steady stream of renewal commission payments. Without these renewal payments the VAR also loses access to consulting revenues because the customer cannot elect to stop paying on SaaS and continue using the software as they presently are often able to do with more traditional on-premises offerings.

Interesting Metrics from JMT

Several interesting metrics were shared during this session.

JMT Consulting has approximately 20% of their on-premises customers subscribed to a JMT Consulting support plan. With their SaaS offering JMT has 100% of customers signed up on a recurring support plan — and this is all offered by JMT Consulting and not by the SaaS vendor.

I was not able to followup with Jackie on this metric however I believe the 20% vs 100% difference is probably due more to the difficulty of turning a “time and materials” legacy customer into a prepaid annual support customer. I’d be willing to bet that when JMT went to market with their SaaS offering they removed the ability for customers to pay “time and materials” for support and therefore have a 100% subscription to their own support plan primarily because no other option is offered.

I was curious about the deal level that JMT Consulting observed with respect to sales of on-premises vs SaaS. Jackie indicated that as of now they were seeing about 10 sales of on-premises for every one sale of SaaS.

On the sales lead side of the business it was mentioned that for some webcasts offered by JMT’s SaaS partner there were upwards of 400 people attending. Jackie also indicated that several of their marketing seminars about cloud services had been standing room only.

The SaaS Market and IT Alliance

At the ITA Fall 2010 collaborative there was more of a tone during this same session (summary here) of why should a VAR practice adopt SaaS / Cloud offerings. During the 2011 Fall Collaborative a year later the tone had shifted to not why but “how do we get started”.

Netsuite had 9 firms were staying over after the end of the conference to attend an introductory meeting and learn about becoming affiliated with Netsuite.

Netsuite and SAP have in the past provided VARS to talk about their experiences though this year’s meeting was the first time when members were able to get a first hand look at another member who reported tangible results of their year long marketing effort.

For most VARS SaaS and Cloud offerings are no longer why – but how.

The recurring bright spots in the US appear to be payments where Sage is reporting 15% growth (over 40% growth in cross selling payments into existing customers).

Selling software and related services is the low spot for North America– 3% contraction.

After touting the opportunities for Healthcare in their 2010 annual report ( well positioned to take advantage of stimulus) – Sage announces “Sage Healthcare business in North America is no longer core to our strategy”. Of course Sage Healthcare sale was completed in November 2011.

Sage One appears as if it’s going to the a low end (think Peachtree) common SaaS offering across many of the Sage offerings. While there’s no timeline for launch in the US (it’s already available in Ireland and UK) Sage have already been publicly calling for accountant’s to take a look — so my guess is you’ll see something pretty soon.

Specifically called out in the earnings were Accpac and Simply products. Also I was very surprised to Sage indicate in North America “the market for certain other products, such as construction and CRM, remain challenging in the year”.

I am not so surprised at construction – as North America is in the mother of all real estate slumps – as I am by CRM.

After hearing for years that CRM is the “way to the light” – I’m a little surprised that strategically Sage doesn’t have a “front and center” commanding CRM offering to tout. My guess is that if there’s one place that the move to SaaS is kicking Sage’s revenues – that it’s in CRM. I’d also look for M&A activity in the CRM area with possible divestiture of weaker performing CRM assets.

Weakness: Did Sage North America Lose 65,000 Support Customers From 2010?

One item that caught my attention in the North America results is the reported number of support contracts. Unfortunately Sage doesn’t provide sufficient detail around this number to know exactly what makes up the change – or whether it actually represents a decrease worth worrying about.

Assuming that Total Support Contracts is the count of customers on maintenance, by reviewing the 2011 financial report slide deck with 568,000 total North America support contracts against 2010′s reported 633,000 it would appear that around 65,000 support customers were lost.

During 2011 the Sage Healthcare practice was sold. I’m unsure whether Sage backed out those support numbers though I’m assuming they didn’t since the transaction only closed during subsequent FYE 2011. If they have backed out Healthcare numbers then the drop is certainly more explainable.

Also notice that in 2011 Sage reported that in North America they added 11,000 new support contracts while in 2010 they added 32,000 new support contracts. This reduction of 21,000 customers seems abnormally high. I’m asking Sage for comment on whether there’s some other change in how they are computing these on contract customers.

Here’s the recorded earnings call which you can listen to by clicking below:

Here’s the slide decks for your comparison:

FYE 2011 Sage North America Support Contracts

FYE 2010 Sage North America Support Contracts

Sage Earnings Slide Deck – 2011 (PDF)

Sage Earnings 2011 – Press Release (PDF)