Sage stated a 20% growth rate in the ERP X3 market. They have roughly 200 partners – roughly 1/3 more than when they (re)launched v6 last year on January 2010.

Note: Remember this is not a brand new product. It’s a rebadge (and subsequent update) of a product Sage bought in 2005. Prior to branding as Sage ERP X3 it was known as Adonix. They claimed 2,700+ users at last year’s January 2010 launch event for V6 — probably mostly overseas.

Laurie Schultz provided a brief overview. Focus is on new deal (growth was 20%) and upper mid-market. There’s definitely a focus on verticals (again nothing new here – every ERP publisher is moving this way).

There are over 2,000 Sage ERP resellers in North America (that’s not Sage ERP X3 but I took it to mean total partners).

I didn’t catch this slide but another person indicated that Sage announced that they have 75,000 mi-market customers. Backing out the 45,000 that they announced in the MAS90 roadmap I would extrapolate ACCPAC + MAS 500 + sundry (Platinum, etc) have about 30,000 users. No idea if this is maintenance paying or some other metric.

One week from 5/26 there will be a 6.2 release event in North America.

Sage announced a Netvibes Sage Enterprise Webtop. There was no demo other than a brief screen show. At last year’s Sage ERP X3 V6 launch they talked a LOT about NetVibes and brought techs from the company up on stage. Not sure what was new here.

Sage will be globally recruiting new VARS off a special web site – this sounded like a pitch to recruit new non-traditional integration partners,

The most interesting part of the call was that Sage will be rolling out a Sage ERP X3 Standard Edition. I don’t think this is any secret as people have been telling me that this has shown up on all sorts of public roadshow slides.

As best was described the Standard Edition will be a downmarket version priced for smaller businesses but will share the data layouts. The upgrade process was described as very quick so I’m guessing they essentially cut out some features to make it price competitive.

There are a couple bigger questions that I wasn’t able to ask:

1. Sage last year offered that 97% of their install base is under 500 users (80% of that is actually under 25 according to my notes from the 2010 ERP X3 V6 re-launch) – so this definitely seems to be a new deal product versus a lot of sales into the install base. No discussion about Sage’s migration teams or whether they may go to town converting installed base to ERP X3 standard.

2. No idea what the partner qualifications will be for the ERP X3 Standard and whether those will differ from the full ERP X3. I’ve talked to a few larger Sage partners and almost all of them reported asking Sage to be an ERP X3 partner and being denied. I don’t know and couldn’t ask if the ERP X3 Standard will fill that type of gap and allow more partners to represent ERP X3 Standard. If that is so I’d be asking what happens if a partner only authorized for Standard needs to upgrade a customer to full ERP X3 – do they lose the customer? I’d also be curious how Sage will avoid repeating the channel issues with MAS 500.

That’s about what I took away. Anyone else on the call?

You can review the full earnings release for yourself on the Sage Investor Relations Site. These appear to be unaudited earnings – so they could change when released in final form.

Along with the earnings Sage announced the retirement of Sue Swenson who was the CEO of Sage North America. You can read that full announcement here.

While Sage calls the departure of Sue Swenson a retirement – I’m thinking it’s more negotiated terminology (here’s why).

In substance I’m calling this as a reorganization for North America whether the business unit and executives admit to  it or not. It’s worth noting that Sue Swenson is the second high level North America executive to announce her departure. She follows Jodi Uecker-Rust who left unexpectedly in October 2010 and who had led the Small Business Division.

From my vantage point it appears that Sue Swenson was brought in to manage expenses and reorganize business units into standalone pieces (the better to potentially sell them off — if deemed necessary — some might say).

Now it’s on to the next stage where these pieces are tuned to produce revenue growth. Sage North America is the biggest division of Sage. It’s also the division that has been reporting the largest overall revenue declines (including a 4% decline this year).

The new man in charge is Pascal Houillon of Sage France. Here’s what I think Sage North America has to look forward to for the next 12 months.

Four Things That Were Unsaid (Yet Important) During Sage’s Earnings Release

#1 This is the best gift that the SaaS vendors could have received for Christmas – at least those vendors looking to start grow a channel. Top VARS will be reading this news and looking to diversify.

Expect to be hearing a lot from one of the three channel executives pictured below Netsuite (Craig West – cwest@netsuite.com ) , SAP (Geoffrey Ashley – ) and Intacct (Taylor Macdonald – tmacdonald@intacct.com ). Of the three Taylor Macdonald, Sage’s former Channel Chief, has the fattest rolodex and will undoubtedly be able to persuade many Sage partners to at least take a look at representing Intacct’s SaaS offerings.  (Read my wrap-up of the SaaS session at the recent IT Alliance conference in Salt Lake City Utah).

because

Just think that now Sage North America VARS (and employees)  potentially  have yet another year of allowing yet another new leader to study and review the North American business landscape before making any changes.

Do these new leaders ever come in without making change? Not usually. More commonly they ask for a period of time to study the existing company, visit branches, gather strategy for going forward. This all seems to take – about a year  …..

This market may be moving too fast for many VARS to feel comfortable that they should let the North American leader study the “lay of the land” for a year before making any changes.

Maybe Pascal will jump right in and begin leading without any need to study the North America operations – but I wouldn’t bet on it.

# 2 – The effect on channel and employees of Sage. This potential one year let-me-study-the-landscape grace period also doesn’t consider the very real possibility that the new leadership brings on at least some of his own team — and potentially diversifies troublesome segments — causing potential further unease in the channel and internally with Sage incumbent executives.

# 3 – Potential Product Line Sales Juggling. How likely is it that all product management teams survive? Don’t know the answer to that but I have to believe, as one VAR pointed out, that most of the un-named products that aren’t driving organic growth (Sage singled out ERP X3 and Payments) are slated for labeling as some variation of “Value” – in other words let the R&D decline begin.

# 4 Back On The Acquisition Trail? I think you may see some SaaS acquisitions. Is it  too late for Sage to build their own? My guess is yes.  My money in North America would be on purchasing Intacct or Accumatica .

These are only guesses based on how things have progressed during prior re-organizations (and, yes, this is likely leading to a reorganization). One things for sure – Sage is waking up to the reality of the web, the reality that pre-packaged software sales in North America are slumping (maybe due to economy and maybe not) and that there’s a need for change.

Sage ERP X3 was acquired by Sage in 2005. Prior to branding as Sage ERP X3 it was known as Adonix. They claim 2,700+ users — probably mostly overseas (As I’m in Glastonbury CT that would be non – USA customers – though I believe there are a several in the USA) and 150 partners. The US launch of V6 is scheduled for Q2 2010.

The overall theme of the launch today was that Sage ERP X3 is easy, simple, fast to implement, users like it.  Sage indicates that in competitive selling situations they  win about 1/3 of the time ( I’m unsure if that means globally or only in a region — it was hard to tell from responses because I was remotely connected and couldn’t see which Sage person answered).

Sage ERP X3 is one of two ERP accounting products  Sage has designated as a global offering. That means it’s intended to be used in all regions where Sage operates. The other ERP is Sage Accpac.

According to Sage they sell Sage ERP X3 50% direct and 50% through VARS. Sage further said that as of now they have no rules of engagement (????) for when to sell direct and when to sell through a VAR. This seemed really odd for me and a recipe for conflict.

DISCLOSURE: I am a Sage Business Partner at Schulz Consulting LLC. Since 1986 I’ve specialized in Sage MAS90 and MAS200 accounting software.  While I am not a Sage employee, I do derive most of my income from consulting on Sage MAS 90/200. Therefore I’m not independent in my views of Sage or their competitors. Though I believe this summary is a fair portrayal of what was discussed (sprinkled with my personal thoughts) I recommend you form your own conclusions based on your own research. What follows are my raw notes and observations of the Sage ERP X3 launch event and follow-up press conference. I welcome you to use these observations together with (but not in place of) your own good judgment and research.

Himanshu Palsule, Executive VP, Product Strategy/Marketing, Sage Business Solutions, followed up to clarify that he sees sales of ERP X3 as channel driven in the USA. He thinks that initially Sage will have to be involved in the North American sales process  if only to make sure the implementation goes well (Note: This sounds a lot like how Sage MAS500 started too).

According to Himanshu’s talk Sage ERP X3 is filling a space at Sage for customers requiring globalization with muli-company processes. This includes the need to be multi-lingual, international currency support, tax law needs, etc.

There are some new technologies built into (or around) Sage ERP X3. One of them is the SAFE X3 (Sage Application Framework for the Enterprise) platform can support a variety of databases and operating systems enabling customers to move to Sage easily and without massive investment as they will not need to switch all of their supporting systems

I asked during the Q&A whether there are other Sage products  sold direct (aside from the low end stuff) and was not able to get an answer. (I believe that qualifies as a no.)  Another hint that Sage doesn’t do a lot of direct selling on their larger products is the lack of any type of policy as to who sells the deal (direct vs VAR) — or at least if they have a policy they aren’t sharing it (and a few people asked about it).

The product will run on Oracle or Microsoft SQL and both companies had managers that appeared on stage to thank Sage for their partnership and give a little more background on their products. There’s no planned support for open sourced databases like MySQL (Sage says this could be added in the future but would have to be based on customer demand).

Himanshu Palsule addressed the question of when to sell Sage Accpac VS Sage ERP X3 (the two global accounting offerings) with a somewhat general reply. He said that the more complex deals are Sage ERP X3 candidates while the other smaller deals are Sage Accpac.

Sage does not see a demand for Sage ERP X3 in the cloud as of today. Some business partners are doing cloud hosting (I’m assuming meaning hosting it on a server and providing some type of remote access). It doesn’t seem like Sage ERP X3 is designed to be a true SaaS where you’d have multiple different customers logging into one code based product.

Curiously Sage declines to share any goals for sales or market share. I’m sure they have them.  On this webcast they declined to name any. The closest they got was when one of the Sage people mentioned they seem to win 1/3 of deals.

I asked Sage whether they’d be globally adopting Sage ERP X3 internally since I’d just sat through nearly two hours of discussion about how fast and easy the implementation was. Sage ducked the question saying “I don’t think that was on the announcement agenda today”….  and promptly ended the press conference while inviting journalists downstairs for drinks. I’ll take that as a no answer.

I asked Sage what their target market was as defined by a customer’s  # of employees. They gave a somewhat vague-ish answer at first of 20 to 20,000 but seemed to finally narrow it down to a range of 100 to 2,000 employees. It’s worth reviewing figures from Sage’s own 2009 annual report that shows the size of their current customer base (as listed below).

Only 17% of current customers are 25-500 employees. My take-away is that based on their own figures this (100 to 2,000 employees) market is not one that Sage knows exceptionally well — though I’m sure they’d like to play here.

Upper mid-market: 3% of our customer base – < 5,000 employees
Lower mid-market: 17% of our customer base – 500
Entry-level: 80% of our customer base – 25

They announced integration with Netvibes who is a desktop information delivery service specializing in creating custom web based desktops where you can add widgets to display snippets of information. Sage Enterprise Webtop  is a widget capable of taking data from Sage ERP X3 and pulling it onto the Netvibes desktop.

Nothing said about remote access via platforms like iPhone, Android or BlackBerry.

Sage will be (or has) developing an international team for consistent marketing and support of Sage ERP X3.

Two channel partners were mentioned at the outset (though I know there are more). Blytheco was one. The other was Datel (sp?). A representative from Logica (a global consulting firm) was brought on stage to explain their reasons for choosing Sage ERP X3 as a product to represent. Among other reasons Logica seemed eager to take on smaller clients as well as happy that Sage ERP X3 is going to be sold at least partly through a channel. UPDATE: Bob Scott (http://www.bobscottsinsights.com) notes this link which displays the current North American Sage ERP X3 Partners .

There was a very limited demo – all of it centered around the Netvibes widget capabilities.

Update 3-31-2010: Datel, a UK Sage ERP X3 partner, have just updated their web site with the news that since the October 2009 introduction and January 2010 launch event of ERP X3 that they’ve sold the first package. While the wording is a bit unclear as to whether this is the first sale only for Datel or whether it’s the first sale at all since the October 2009 launch event.

Datel achieves the first Sage ERP X3 sale following UK launch
Following the launch in October 2009 of Sage ERP X3 by Sage to the UK market, Sage’s largest UK Business Partner Datel is pleased to announce that they have achieved the first sale. Sage ERP X3 is an international, highly scalable business management solution deployed in 38 countries around the world and is the ideal platform for growing global organisations to improve business processes and increase efficiency.

Since the product launch Datel has refocused some of their key software specialists into a Sage ERP X3 Division. The team have spent the time since the release building understanding of the product to be ready for the first implementation.

Datel is now pleased to confirm that the first order has been placed with Sage and they are due to begin the client’s implementation in the coming weeks.

David Preston, Managing Director at Sage reseller Datel, is delighted to have made the first Sage ERP X3 sale, “Datel were very excited about the release of Sage ERP X3 and its potential for businesses looking for a truly scalable and easy to deploy enterprise system. We have made sure that the Datel teams are prepared for the release and our experience of working with Sage products for over 20 years stands us in good stead to successfully implement this new product.”

Link: Sage ERP X3