Sage’s Everest: Building Mind and Market Share With A New Generation of SMBs

everestAt last week’s Sage Summit, one of the featured speakers was renowned British explorer, entrepreneur and adventurer Justin Packshaw. Among other achievements, Packshaw spoke about the challenges he and his team of 10 climbers faced to successfully reach—and then descend—the peak of Mount Everest, the highest mountain on the planet.

Watching Sage’s new (as of November 2014) CEO Steven Kelly interview Packshaw, I couldn’t help but think about the uphill battle that Sage has faced in attracting net-new customers to its accounting and ERP software solutions over the past several years. While many rivals were quick to bring innovative cloud, mobile and social capabilities into their solutions, Sage has taken a slower, more conservative approach. As a result, although Sage has done a fairly good job of retaining existing customers, it has struggled to gain mind and market share with new generation of cloud and mobile savvy SMB customers that it needs to fuel substantive growth.

Making the Case for the New Sage

Steven KellyKicking off the event, CEO  Kelly made his case for a newly energized and more engaged Sage. At the 50,000 foot level, Kelly:

  • Pledged Sage’s commitment to “being the best technology company for small businesses,” by providing small businesses with help to run their businesses, give them more control, and help them make the right choices.
  • Positioned Sage at the forefront of the “golden triangle” of accounting, payroll and payments solutions to make small businesses “100% compliant, 100% of the time.”
  • Reiterated that Sage “loves on premises, hybrid and cloud solutions” and will support all of these models to give businesses choice.
  • Vowed that “end of life” is not part of the Sage vocabulary. Sage won’t force existing customers to go to the cloud before they are ready; instead, it will provide pathways and tools that enable customers to control the pace of their migration.
  • Asserted that the term ERP (enterprise resource planning) really means “expense, regret and pain,” and that Sage will also banish this term from its vocabulary (which by the way, got a pretty big round of applause).

All of the above should be welcome news for existing Sage customers, who have stayed the course through numerous changes in Sage strategy, management and products over the past few years. But, it doesn’t offer much in the way of helping Sage attract net-new customers So how will Sage ascent its Everest? 

Sage Live: Poster Child for the New Sage

sageliveKelly’s roadmap for new growth focuses on rapid, global new solution development for next-generation business decision-makers who are already sold on a cloud and mobile first world. Sage One, Sage’s offering for sole proprietors and very small businesses from pen and paper and spreadsheets, is part of this, but Sage Live  (formerly Sage Life) is really the poster child for Sage’s new approach tailored to the “office of the future.” Notably, Sage Live was designed and developed in six months from when Kelly gave the team its marching orders.

Built as a multi-tenant cloud-based accounting solution. Sage Live is aimed  squarely at growing small businesses who need more power than entry-level accounting solutions offer, and want cloud, mobile and collaborative capabilities out-of-the-box. Pricing starts at $30/user/month for full users (such as finance and accounting users) and $15 per user/month pricing for more casual business users. Slated for U.S. release now, and for UK availability at the end of the summer, Sage Live is designed to be a global solution.

The Salesforce1 Shortcut

Sage choose to build Sage Live on Salesforce1, the largest cloud development platform in the world, to gain development and go-to-market efficiencies, including:

  • A rapid development environment and tools to design, build and bring the solution to market.
  • The ability to embed Salesforce1 mobile and collaborative functionality, such as Chatter, directly into the Sage Live solution.
  • An enormous partner ecosystem to add features and functions for specific markets. For example, Kimble PSA announced its integration with Sage Live at the event. With a partner-centric approach from the get-go, Sage Live doesn’t need to become a clunky, monolithic solution.
  • The same look and feel as Salesforce, giving Sage a natural entrée into Salesforce’s 95,000 SMB installed base customers. 

Customer-Centric Design

Salesforce1’s platform also made it easy for Sage to pull in its best small business accounting experts from around the world to collaborate on Sage Live. Sage also involved customers in its early adopter program from the beginning, seeking out non-Sage customers–both owners and those in financial roles—for input.

What Sage heard is that they are spending too much time juggling too many spreadsheets. As their businesses grow, they need better tools to budget and forecast, the ability to look at their business through different lenses, and more collaborative capabilities. They want a “one-office approach” with easy cloud and mobile access to real-time information for all users.

In response, Sage Live’s multi-dimensional accounting engine allows users tag records with geographical, product or other information. Users can then easily pull up different views and reports based on the tags. The solution can also be configured for different role-based views or “scoreboards” giving users just the information most relevant to them.

iwatchEmbedded Salesforce1 real-time social and mobile capabilities make it easy for users to collaborate and share information, ala the “business in the moment” example of Sage Live notifications on Apple iWatch.

Perspective

New and fast-growth SMBs are increasingly gravitating to the cloud for accounting and ERP. SMB Group’s 2015 SMB Routes to Market Study reveals that 29% of SMBs planning to purchase new accounting/ERP solutions are leaning toward cloud deployments. Sage Live provides Sage with a much-needed solution to tap into this market, and meet it’s elusive (to date) challenge of attracting net-new business. 

While some have questioned the wisdom of building on Salesforce1, I believe that this was a good choice for Sage. Salesforce1 has enabled Sage to skip the plumbing work and to build Sage Live much more quickly than it could have from scratch. Furthermore, Sage gains exposure to Salesforce’s large SMB customer base, and an entrée to Salesforce’s extensive developer ecosystem.

In addition, while Salesforce customers have many choices when it comes to accounting solutions, Sage Live is the only small business accounting solution native to the Salesforce1 platform (FinancialForce is native as well, but aimed more at the midmarket).

Finally, armed with a true “net-native” cloud solution, Sage can apply its extensive expertise as a volume SMB marketer to the cloud and mobile first SMB segment. Sage is even opening a new Customer Business Center, exclusively dedicated to digital marketing and sales for the Sage Live solution.

However, this is not enough to ensure success. I see a few areas in which Sage will need to double down, including:

  • Creating a clear, constant drumbeat to articulate why Sage Live is different from other Sage and its competitors’ offerings. Getting on SMB radar is hard in a market where so many vendors are vying for customers that have outgrown QuickBooks and other entry-level accounting solutions. And, since SMBs rank “Figuring out how different technology solutions can help my business” as one of their top three technology challenges in SMB Group’s SMB Routes to Market surveys. Sage will also need to provide in-depth education to make it to SMB short lists.
  • Persuade Salesforce to more actively promote Sage Live. From what I gathered at Sage Summit, Salesforce sales reps will refer customers to Sage Live if they want to integrate accounting and CRM. This is a start, but fairly passive. Sage Live needs Salesforce to play a more active role to kick-start consideration and adoption. Sage will be a Platinum sponsor at Dreamforce, and it will be interesting to see how Salesforce reciprocates.
  • Prove that it can expand traction with developer partners. To further validate its cloud direction and ambitions, and to fill in key gaps for critical customer segments, Sage must quickly recruit high-profile Salesforce developers to the Sage Live fold.

Prior to Kelly’s appointment, Sage had been investing in new technologies to modernize its existing accounting payroll and payments solutions for quite some time. But progress seemed to be slow, and it was clear that simply moving existing solutions would not be enough to fuel significant  growth. With Sage Live, Steven Kelly is already operating at a bolder, faster and more aggressive pace than his predecessors to pursue this growth. Now, having proved it can get on the fast track with product development, Sage’s next—and bigger challenge—is to get on the fast track with marketing and sales.

The Cloud Comes Full Circle: Sage and Salesforce Team Up For Sage Life

White Clouds in Blue SkyIf you had any doubt that the cloud has become mainstream, yesterday’s announcement that Sage and Salesforce have inked a global partnership to bring Sage small business accounting and payroll solutions onto the Salesforce 1 Platform should erase them.

The partnership brings together opposite ends of the software universe. It pairs Salesforce, pioneer and poster child for the cloud, with Sage, which has arguably been one of the slowest software vendors to embrace cloud computing. While Marc Benioff’s Salesforce posted 26% revenue growth in it’s recently close fourth quarter, Sage posted growth of 6.2%. Not to mention the rumors of Salesforce potential value as a $50B to $60B acquisition target to a still unidentified bidder.

Sage Life is aptly named, as the partnership offers Sage the potential to breath new life into a its product lineup with a cloud solution better tuned to the needs of today’s small businesses. Sage Life provides unified accounting, financials and payroll in a cloud based, customizable solution. The solution is mobile ready, and can be used on any device, from smartphones to smart watches and from tablets to the desktop. The real time, unified data view and social functionality enable collaboration between employees, customers, partners and other constituents.

Coupled with Sage’s strong understanding of small businesses, the partnership infuses Sage with a credible foundation to attract new customers to its fold, which has been a notoriously difficult feat for the vendor to achieve over the past several years. By providing a modern, integrated small business solution that also integrates with Salesforce CRM, Sage is aiming to solve the integration challenges that so many small businesses struggle with (Figure 1). As indicated, roughly 40% of small busnesses (1-100 employees) have not done any business application integration. And, among those who have, 71% use unwieldly, unscalable custom coding or manual methods to accomplish the task.

Figure 1: Level and Type of Business Application Integration Used By Small BusinessesSlide1

The relationship is complementary to Salesforce’s investment in and partnership with FinancialForce, which is also built on the Salesforce 1 Platform, but is geared towards midsize businesses. Sage provides Salesforce with a similar, integrated front and back office story for small buisnesses—and perhaps a possible investment opportunity as well.

Already a leader in corporate philanthropy, Sage has also joined Pledge 1%, perhaps cementing a stronger bond. Based on a Salesforce’s 1-1-1 model, Pledge 1% encourages individuals and companies to pledge 1% of equity, product, and employee time to their communities.

Perspective

In the tech world, the initial announcement is all too often the climax of the partnership. While it’s too early to tell if this one will blossom beyond the honeymoon phase, it’s certainly in Sage’s best interest to make the relationship work, as it’s future growth will be heavily dependent on this new offering. Meanwhile, Salesforce, which has arguably become less in tune with small business as it has moved up into the large enterprise space, stands to benefit from Sage’s small business knowledge and customer base.

Sage Summit 2013: That Was Then, This Is Now

logoI’m a bit behind in getting my wrap up and thoughts on Sage Summit–Sage’s annual event for business partners and customers–together. But better late than never! As you can see in the related links at the end of this post, I’ve attended these events for many years. During this time, Sage North America has gone through many significant changes to bring sharper focus to its mission and more value to its customers. At this year’s event, I saw promising signs that these efforts are beginning to pay off.

That Was Then

Sage North America has been on a transformational journey since 2009, when Sue Swenson took over as CEO, made some tough choices, and began setting the wheels in motion to change the company’s downward trajectory. In the four years since, the company hired another new CEO, Pascal Houillon, in 2011. Under his leadership, Sage made some controversial (at the time) moves to unify the Sage brand and product names and divest Sage of seven non-core businesses, including ACT! and SalesLogix, which had large installed bases. To help streamline the company’s focus on its core business and on improving customers’ experience with Sage, Houillon also brought some fresh talent into the executive ranks.

This Is Now

The result of all this is a more focused, purposeful Sage. Gone are the days of trying (unsuccessfully) to rationalize an unfathomable number of overlapping products. On Houillon’s watch, it is unacceptable for Sage executives to position the Sage portfolio in different ways. At Sage Summit 2013, the executive team was singing from the same hymnal regarding Sage’s core positioning and messages:

  • Continue to focus on its core businesses (accounting, payroll, payment processing, ERP, etc) for very small businesses, SMBs and the midmarketSlide1. Key to executing on this is the company’s move to centralize R&D Centers of Excellence for cloud, mobility, customer experience. In the past, each individual product brand would undertake separate development efforts for new functionality. Now, Sage R&D develops new features, extensions and add-ons once (for mobility or analytics, for instance) that individual product groups can replicate across their solutions. Sage is also in the process (though not yet there) of standardizing service and support offerings. It launched Sage City, a new centralized online community for customers, business partners and employees, last month. And, Sage will make new acquisitions when needed to supplement its core solution focus.
  • Expand its connected services strategy and offerings. Sage is building more cloud services, such as SageExchange.com, Sage Mobile Sales, and Sage CRM, that connect to core financials and ERP solutions, as well as for partners to build and sell add-on connected services. The company’s big picture vision is to “liberate” data and services that had been locked into ERP so that customers can use them in the cloud, anywhere, anytime, and from any device. Sage is building a data cloud on Microsoft’s Azure platform with common connectors, bi-directional synch, multi-tenant storage and disaster recovery. This means that Sage connected services will work the same way regardless of the backend ERP/financials Sage customers use. This will all come together in the Sage Marketplace, slated to launch in FY14.
  • Going all-in on the subscription pricing and the cloud. Sage now offers subscription-based pricing for all of its solutions, and comps partners on a percentage of subscription sales over the life of a contract. It has also committed to developing cloud versions for its solutions, including a cloud version of Sage ERP X3, which will feature a user pure web experience when available in 2014.

Taking the Marketing Road Less Travelled

sage lisltensThe Sage commitment to putting customer experience first underpins these initiatives. Sage has several initiatives underway to up its listening game, such as the Sage Listens RV Relay, which is allowing Sage to also kick off a “Shop Local” campaign to encourage people to shop with local businesses.

In contrast to the “build it and they will come” tack that most tech companies take, Sage is taking its cue from the Proctors and Gambles of the world. It is getting customer input upfront before developing new products and functionality. Sage is hearing that customers want easy to use, flexible solutions, mobile capabilities and a low-cost of entry, and is concentrating resources on these areas. In fact, in one of the breakouts, when an analyst asked a Sage executive about social and big data plans, the exec said that customers are not calling these out as priorities. He added that while Sage isn’t ignoring these areas, it is prioritizing development and marketing based on customer input.

For instance, Sage recently launched Sage Healthcare Advisory Services , which includes a new “My Workforce Analyzer” tool to help SMBs understand plan for the Affordable Care Act. Analytics are under the covers, of course, to help SMBs develop what-if scenarios and optimize planning. But Sage isn’t calling it a big data solution.

Sage has often been knocked about for not keeping pace with the generational shift in the North American workforce. But it is now facing the facts–specifically that people born before 1968 will comprise less than 20% of the workforce by 2015. Sage is recalibrating its strategy to align more closely with different generational expectations. As Brad Smith, EVP of Customer Experience stated in his keynote, “We have to over-service the pre-PC guys but we also have to find ways to reach the ‘digital natives.’”

To that end, Sage demoed a voice-to-text initiative in which users can use voice-activated mobile technology to interface with ERP systems on mobile devices. It’s sort of like Siri, but within the context of the business and business workflows, so it appears to do a better job of handling user queries and requests. While the voice command initiative is in its infancy, it could be a key differentiator in the future.

Finally, Sage is putting its money where its mouth is, by tying Sage metrics and compensation for all Sage execs to Sage Net Promoter scores (NPS). The company’s previously shrinking North America business has grown 4% year-over-year.

Channeling The Channel

6a00d8345177fc69e20192ac233035970dSMB Group research shows that accountants/CPAs and technology business partners represent 2 of the top 3 influencer channels for SMBs selecting financials and related business solutions, with peers in other businesses rounding out the list. Sage has a large channel in both areas–with over 25,000 accountants in North America and more than 26,000 technology reseller partners worldwide. But over the past few years, cloud competitors have been trying to poach these very valuable resources.

Accordingly, Sage has several new initiatives underway to re-focus partners back on Sage. In addition to committing to provide cloud-based offerings across the portfolio to give partners a Sage cloud offering, Sage is:

  • Partnering with the Business Learning Institute to develop a curriculum for accountants to help them provide more competitive services to their SMB clients.
  • Planning to launch a new certification program for accountants focused on startup market, with a collaborative version of Sage One, Sage’s solution for very small businesses, to make it easier for them to automate tasks and take care of clients.
  • Introducing the Sage Advisor Partner Dashboard, which uses current customer data to help Sage reseller and accountant partners more readily identify new opportunities in the installed base, and provide a more personalized, consultative sales experience.

Sage is also recruiting new partners for midmarket Sage ERP X3, and new accountant partners to help it build traction among very small businesses for the Sage One solution.

Summary and Perspective

Minus ACT! and SalesLogix customers and partners, this year’s Sage Summit was smaller than in 2012. But, the energy level was much higher. Sage executives were more confident and relaxed, and the messages they delivered were consistent and crisp. Sage demos were more engaging, and even at times, entertaining.

Key metrics, including rising NPS scores, modest growth in its North America business, and a stock price that recently reached its highest point in 13 years are also good signs for Sage. As important, conversations with customers at the event led me to conclude that “Sage Listens” has moved beyond a slogan to put the programs in place to proactively engage customers.

However, there are a few areas in which I believe Sage needs to double down:

  • Sage One marketing. Worldwide, Sage has about 10,000 customers using this very small business management solution today. But most of the millions of very small businesses have never heard of it. Sage needs to significantly enhance awareness and demand gen campaigns to become more than a blip on the radar.
  • Third-party connected services . Sage has a big installed base, which should make it an attractive partner for third-party developers–especially now that developers can write just one connector and reuse it for all of Sage’s core products. But Sage has only about 20 endorsed connected partner services today. Again, many developers don’t know about this opportunity. Sage must raise its overall visibility in the developer community and launch a targeted recruitment program to get developers to build the apps that its customers need.
  • Clarity around CRM. After divesting ACT! and SalesLogix, the company’s sole solution here is Sage CRM. But other than discussing integration and a cloud version of Sage CRM that is in the works, CRM was very low profile at the event. Given Sage’s focus on core financials/ERP it leads me to wonder how committed is Sage to Sage CRM, and if will make the investments required to provide a truly first-rate CRM solution.
  • Innovation. Sage made a good case for its direction in the cloud, mobile and integration areas. However, analysts and press did and will continue to hound it on social and big data/analytics. While Sage customers may not have put these areas at the top of their priority lists yet, it’s only a matter of time before they do. Sage needs to get out in front in these areas.

That said, it’s challenging to do everything at once. The Sage leadership team has made the decision to move forward instead of standing still. All in all, I get the impression that Sage as a company has a better sense of who it is, where it’s going and how it will serve SMBs.

Related posts:

Sage Streamlining Takes a Major Turn With the Sale of ACT! and SalesLogix

Sage Turns a New Leaf: Top Takeaways from Sage Summit 2012

Sage’s Rebranding: More than a Name Change

Sage Summit 2011: Tackling the Sage NA Branding Challenge

Impressions from Sage Insights 2009

Sage Streamlining Takes a Major Turn With the Sale of ACT! and SalesLogix

sage imagesLast week, The Sage Group announced that it is selling its Sage Act! contact manager and SalesLogix CRM to Swiftpage. Swiftpage is a U.S. based digital marketing software vendor and has been a Sage partner supplying Sage E-Marketing as a connected service for three-plus years. The move is part of Sage’s strategy to streamline its business software portfolio and focus on its core application areas, accounting, ERP and payroll. Sage is also selling Sage Nonprofit Solutions to Accel-KKR, a private equity firm.

In addition, Sage is unloading four solutions sold in Europe. Combined, these sales amount to about $145 million, and result in a loss to Sage. Accel-KKR and Sage provided Swiftpage with significant capital to help finance Swiftpage’s SalesLogix and ACT! purchases. Sage will retain 16.1% ownership in this deal.

The sale affects about 1,000 of Sage’s 13,000 employees, with about 250 people from Sage ACT! and SalesLogix moving to Swiftpage. In my conversation with Himanshu Palsule, Sage’s North American support group is working with Swiftpage to put an escalation process in place for customers.

Sage isn’t exiting the CRM market, however. It is retaining Sage CRM (which it acquired as part of its purchase of ACCPAC several years ago) as its core CRM product.

Following Through On a Strategy to Streamline

Sage’s announcement doesn’t come as a big surprise. At Sage Summit 2012 last August, Sage North America management revealed its strategy to concentrate development on what Sage termed core solutions areas–namely financials, ERP, and payroll, as discussed in my post, Sage Turns a New Leaf: Top Takeaways from Sage Summit 2012.

At the event, Sage North America CEO Pascal Houillon set forth Sage’s strategy to move from a heavily decentralized product management and marketing approach to one that is more centralized and focused—and to put the company on a stronger growth trajectory. By streamlining its offerings, Sage intends to provide customers and partners with a more integrated experience and more flexibility to take advantage of new cloud-based connected services.

Shedding CRM Solutions That Weren’t Keeping Pace with Market Trends

Over the years, Sage has been very acquisitive. But many of its acquisitions haven’t really paid off. This has been particularly true for Sage ACT! and SalesLogix, both of which Sage acquired in 2001 when it bought Interact Commerce. Sage bought these products when desktop and client-server computing were at their peak–but about to wane. Since then, of course, the likes of Salesforce.com, Zoho CRM, Nimble and many other CRM cloud offerings have come to the forefront. Meanwhile, Sage has struggled to make the cloud transition with its CRM products. In addition, Sage hasn’t been able to keep pace with developing the new social capabilities that customers want in CRM solutions. These limitations have made it difficult to sell these products to new customers.

While Sage did develop integrations for ACT! and SalesLogix with its financials solutions, its attempts to cross-sell CRM to its installed base of financials and ERP customers met with limited success. The partner channel and end-user decision-makers for CRM and financials solutions are very different, and Sage was unable to develop an effective method to bridge the gap. As a result, there is very little customer overlap between the two.

With ACT! and SalesLogix off the plate, Sage intends to increase its focus on its core financials and ERP products, including Sage 50 (formerly Peachtree), Sage 1oo ERP (formerly Sage ERP MAS 90 & 200), Sage 300 ERP (formerly ACCPAC), and Sage ERP X3, and provide a richer set of connected services for these solutions.

Moving Forward

For a very long time, Sage has looked to acquisitions as a way to fuel growth, acquiring scores of business software products over the years. Sage has had a hard time rationalizing its strategy, sparking much criticism for having a cluttered portfolio, too many products and not enough focus.

Now, Sage is taking a 180-degree turn to sell off surplus solutions, freeing up development and marketing resources to create cleaner, more integrated solutions and messaging. While it’s too early to tell if this new strategy will result in the growth Sage is looking for, the move does give the company more bandwidth to concentrate on its core financial solutions, and give its remaining Sage CRM product the types of cloud, social  and mobile capabilities that it needs to be competitive. In addition, Sage no longer has to contend with the politics of competing product lines and partner channels.

While the move may be a bit emotionally jarring for current ACT!  and SalesLogix customers, they shouldn’t experience too much change in the short term. Over time, they may in fact see an upside, if Swiftpage, which has a strong focus in the digital marketing space,  can infuse the former Sage solutions with the updated cloud, social and mobile capabilities that they will need to attract new customers.

Sage’s Rebranding: More than a Name Change

Love it or hate it, the first results of Sage North America’s brand transformation strategy have started rolling out in North America. Sage North America CEO Pascal Houilon announced the rebranding initiative last year, which aims to strengthen Sage’s brand–especially in North America. The initiative is designed to address the fact that while many individual Sage products (think ACT!, Peachtree, etc.) enjoy strong brand recognition, the overall Sage brand must be stronger to optimize cross-sell, upsell and connected services opportunities between its products.

Sage reasons that a stronger Sage brand will both increase the odds that existing Sage customers will turn first to other Sage products when they need new solutions, and elevate consideration among small and medium businesses (SMBs) who don’t currently use Sage products. Under Sage’s new naming convention, most products will have a number and descriptor (as Sage has been doing in Europe for a while). So for instance, Peachtree is becoming Sage 50 Accounting–U.S. Edition.

When initially announced, many derided the strategy on the grounds that the numbers were boring, Sage would lose much of the hard-won equity of the individual brands, and partners would need to shell out to support the rebranding. Last but not least, would the rebranding go beyond name changes to encompass significant product and services transformation as well?

This past week, Sage launched its new website for its North American business, www.na.sage.com, and kicked off a new integrated ad campaign to highlight how it can deliver value to small and medium businesses. The campaign will run on national print, radio and online outlets (including The Wall Street Journal, The New York Times, The Business Journals, BusinessWeek, Inc., Entrepreneur, Fortune and others) and will expand to television (CNN, CNBC, Bloomberg Television and others) in the summer.

Along with this, we can also see some initial results of the transformation in the new Sage 50 Accounting (aka Peachtree) and Sage One, a new offering. Prior to the launch, Sage provided us with briefings and demos of both. Here are my first impressions of how Sage’s strategy is playing out in the early going.

Peachtree Becomes Sage 50 Accounting, the New Era of Peachtree (add photo)

Although Peachtree, with its 34 year history, has been one of the biggest brands in Sage’s portfolio, it has also led the rebranding charge in North America, so it’s tempting to view it as a bellwether for how well Sage can execute on it’s transformational strategy.

Sage has given the product a fresh new look and added “the New Era of Peachtree” to the Sage 50 Accounting label to help preserve Peachtree equity. The little American flag on the box denotes that this is Sage 50 Accounting for the U.S. (Sage Simply Accounting, its Canadian counterpart, will also get the new Sage 50 Accounting handle, but the Canadian maple leaf will fly on its box instead). Sage is messaging the change to current customers through its newsletter, resources in the product, its channel partners and social media.

There’s ample evidence that the change is more than skin deep. In addition to doing a painstaking review of in-product taxonomy and labeling, Sage has put the new version through its paces in its usability labs, and made some significant changes to make it easier to use and get value from, including:

  • Sage Advisor Technology. Sage continues to improve this service, which provides real-time, in-context guidance within the solution. For instance, if you’re working in Sage 50 Accounting, and you manually enter your banking information several times, a message will pop up and offer you advice for an automated feed. You can choose to look at the advice or save it for later, and see a historical list of all the messages you’ve gotten when you have time, and change the rules determining when you get these messages. According to Sage, the service has a very high opt-in rate, and Sage can also use it to inform customers when a Sage Connected Service–such as Sage Payments–may be of interest.
  • Sage 50 Business Intelligence (BI). Sage had been partnering with Alchemex to provide customers with a connected cloud BI service. Sage liked it so much they bought the company. Sage 50 BI is integrated into Sage 50 Accounting, giving customers the ability to run what-if scenarios, standard and custom reports. The solution is Excel-based, so it has the familiar look and feel that bookkeepers and accountants love. But once you create your report template, you can re-run and update reports with new information from Sage 50 Accounting with the click of a button.
  • Connected Services Strategy. Sage says that most of its customers aren’t ready to put accounting in the cloud. This jives with SMB Group data, which indicates that while plans for cloud-based accounting are rising, this area is moving much more slowly than areas like sales, marketing and customer service (Figure 1). Sage’s Connected Services for Sage 50 Accounting include direct deposit, 401K administration, payment services, tax filing, document management and online backup, and with this release, Sage is adding integrated e-marketing via partner Swift Page (who has been offering this as a connected service for Sage ACT! for a couple of years).

Figure 1: The Cloud Becomes the New Normal–But Accounting, ERP Lag

  • Sage Business Care. This provides customers with upgrades, updates, unlimited support, a dedicated account manager, online training, and an HR resource center. Up until now, this had been a premium service except for top-of-the-line Peachtree Quantum customers. But with Net Promoter scores for Business Care customers are 3 times higher than for those not using the service, Sage has decided to bundle it into all Sage 50 Accounting offerings.

Sage One

Sage One U.S. Edition, is Sage’s new online business management system designed to help the smallest of small businesses (less than 10 employees) manage money, time and projects. Many of these businesses currently manage their businesses with shoeboxes, pencil and paper and/or a jumble of personal productivity tools.

As part of product development, Sage spent a lot of time watching micro-businesses work and getting their feedback. The Sage team went to their sites, brought them into Sage’s usability lab to test prototypes, and ran focus groups for input. Not surprisingly, it found that most entrepreneurs and sole proprietors don’t get into business to do accounting–they want to teach karate, style hair, or install lighting–basically to do more of whatever it is they love and that makes them money.

Sage also found that these customers want workflow consistency–the ability to create proposals, track projects, assign and mange work, create and send invoices, record payments, and manage expenses. In a nutshell, they want to simplify business management and streamline collaboration. But they have very little time to learn new things: in a Sage survey among businesses with 0 to 9 employees, 66 percent said they use three or more software applications to manage their day-to-day operations–which leads to wasted time, inefficiencies and errors.

Sage One U.S. tackles this problem by bringing money management, invoicing, project tracking, task assignment, messaging and reporting into a single integrated web-based application. Accounting is at the core, and connected to other management functions to reduce data entry time. The solution provides collaboration capabilities to help businesses with distributed teams of employees, contract workers, partners, clients, etc., share and communicate, so no one works in isolation. Automatic notifications, reminders and tracking of in-progress or completed tasks are built-in to keep everyone on the same page. Pricing is $29 per month, which includes two administrative users, unlimited collaborative users (who can share projects, files, etc.), and five gigabytes of storage–as well as online and phone support. Sage is offering a special deal for the Sage One debut–customers can subscribe for just $1 per month for the first three months.

Sage is working with organizations such as the Future of Entrepreneurship and the Community College Association of Entrepreneurship, and plans to also leverage its Sage Accountant Network. These initiatives should help get Sage One onto the radar of very small businesses.

An Early Assessment

The paint is barely dry on these first steps in Sage’s brand transformation, and it’s much too early to tell if Sage will be able to truly reinvigorate its brand and its customers. But the early steps bode well.

With Sage 50, Sage is providing significant new benefits through additional services for BI, and raising the support bar by bundling Sage Business Care across the product line. And, Connected Services give customers a clear path to consume additional connected services in an incremental, yet integrated way (which is how most SMBs need to deploy them). I think that Sage’s existing customers will get over the name change (and eventually, so will partners). But, product differentiation isn’t enough–Sage will need to double down to reach and penetrate more of the non-Sage base in order for Sage 50 to really spread its wings and grow.

Meanwhile, Sage One is a good start at giving micro-businesses an all-in-one solution. The pricing model–which includes unlimited collaborative internal and external users–should appeal to small businesses that need flexibility and are wary of per user, per month pricing. Some of the things that I think it will need to add to really cover the bases for these businesses are email integration, some light document management, and some tools to automate basic marketing functions (such as email marketing and social media marketing). But the solution is built on Ruby on Rails, and should have ample flexibility to evolve–the question will be how quickly.

Finally, Sage’s new ad campaign seems significant and should also help it get on the radar with the new prospects that it needs to reinvigorate growth. However, Sage will also need to make sure that it has a solid social media plan in place so that it can engage with new customers and re-engage with those who have dated perceptions of Sage.

Sage Summit 2011: Tackling the Sage NA Branding Challenge

A couple of weeks ago, I attended Sage Summit 2011, Sage’s first combination partner and customer event. I’ve been attending Sage partner, customer and analyst events for several years, observing and commenting on its ongoing attempts to unify it’s corporate brand across multiple small and medium business (SMB) solutions. Earlier this year, following Sue Swenson’s retirement, Pascal Houillon took over the reins as CEO of Sage North America.  I was interested to find out how Houillon plans to deal with what has seemed like an age-old dilemma at Sage North America: having many strong individual SMB brands (think Peachtree, ACT!, Timberline, etc.), but a relatively weak Sage corporate brand.

The Sage North America Branding Challenge

Over the years, Sage North America has added a myriad of SMB-oriented accounting, ERP, CRM, HR, payments and industry-specific solutions to it’s portfolio. In most cases, these solutions brought large groups of loyal customers with them. Sage has undergone many identity-building initiatives in the past, including co-branding all of it’s individual solutions with the Sage master brand in 2009, developing capabilities to seamlessly integrate Sage CRM, ERP, HR and other applications, and a concerted corporate-wide initiative to make customer experience it’s top priority. But, for the most part, Sage customers have continued to identify more with their individual brands, ala Abra or MAS, instead of the Sage moniker.

This has not only hampered Sage’s traditional cross-selling efforts, but it also threatens Sage’s Connected Services strategy, which provides Sage customers with online, connected services (both from Sage and Sage partners) that integrate with on-premise Sage solutions to provide additional functionality.

Clearly, for Connected Services to achieve it’s goals, Sage needs to make sure that, for instance, Sage Integrated Payments Solutions are the first stop for Peachtree or ACCPAC customers looking for payments solutions that integrate with their accounting software.  In addition, without a strong corporate brand, Sage is at a disadvantage when going up against competitors such as Intuit, Microsoft or SAP.

Tackling the Branding Dilemma Head-On

Houillon wasted no time addressing the elephant in the room. At the opening keynote of the partner session, his first announcement was that Sage NA would embark on a phased approach to drop individual product brand names (again, think ACT!, MAS, Peachtree, etc.) in favor of the Sage brand. So for instance, Sage Peachtree Pro, Complete, Premium and Quantum would become Sage 50 Pro, Complete, Premium and Quantum.

Note the word “phased.” This re-branding won’t happen overnight, but take place over the next 12 to 18 months. Sage has lots of products and in many cases, product overlaps. It will most likely start with entry-level solutions, such as Peachtree and ACT!, and those products that have a well-defined space within the Sage line-up.

As important, along with the re-branding, Sage will ramp up existing efforts to create a more consistent user interface and experience among its products, and make it easier to integrate them. For instance, Sage will be incorporating Sage Advisor (first available in Peachtree), which provides in-product assistance to help guide users through tasks, resolve error messages and find functionality as needed, into more of its products.

Needless to say, all of this re-branding talk caused quite a stir among partners, press and analysts. In many cases, partners have invested a lot of passion in an individual brand–in many cases, partners had been selling the individual brand long before Sage acquired it. They have legitimate concerns about making the brand switch, and the new investments they’ll have to make in marketing collateral, web sites, etc. However, in subsequent sessions, Tom Miller, Sage NA’s channel chief, noted several programs already underway at Sage to help ease partners through the transition.

We (press and analysts) also raised a lot of questions about the risk of eroding brand equity that they’ve built up over the years for the individual brands. Several analysts also worried about the blandness of using a numbering system for product names (as noted in both Denis Pombriant’s and Paul Greenberg’s posts on the topic)–which I’m not crazy about either. And of course, there’s the problem that some products overlap with others–such MAS and ACCPAC.

But, after listening to the Q&As and debates, querying Sage execs one-on-one, and talking to Sage customers (most of whom told me they had no problem with rebranding), I think Houillon has made the right decision.

Short-term Pain, Long Term Gain

No doubt that Houillon’s decision will produce some short-term pain, probably most acutely felt by channel partners. But what’s the alternative? Former CEO Sue Swenson stepped in to stop the bleeding, but major surgery is still necessary for Sage to make a full recovery. In the long run, Sage needs to reset, refocus and re-energize the company for growth–something it hasn’t seen much of recently, for these key reasons:

  1. Although all Sage execs appear on board with the change, I’m sure that there are at least a few that have resisted the corporate call. This is just human nature–either inertia, the fact that an individual brand is doing fine as is, or that some people like to run their own little empire without a lot of corporate oversight. The rebranding and what’s underneath it–common look, feel and experience–should help shake out execs that are idling, and foster a more innovative and collaborative environment.  Ultimately, this should yield more value for customers and partners.
  2. A strong corporate brand is key to the success of Sage Connected Services.  Connected Services enable existing Sage customer to easily tap into add-on online services that give them additional functionality. Sage has about 50 connected services already available and coming soon, spanning HR, payments, payroll, tax, sales and marketing functions. For example, Sage offers a dozen Sage Payments Solutions as connected services to Sage ERP and accounting solutions, and several sales and marketing connected services for Sage CRM solutions, such an e-marketing service, as well as business information services via Hoover’s. But, if customers don’t self-identify as Sage customers, they may not even look at Sage Connected Services when needs arise.
  3. Sage needs a strong corporate brand to help its cloud offerings take off. Sage already offers SageCRM.com, ACCPAC Online, SalesLogix Cloud, Sage Payments Solutions and Sage Intergy on Demand (for healthcare) and Sage Billing Boss as cloud solutions, and several more are on the way. As more companies look to the cloud to deploy new solutions, on demand offerings will increasingly erode the sales of packaged software. Sage needs a strong brand to compete in this space and capture new customers as they turn to the cloud.

Or, as Benjamin Franklin said, “When you’re finished changing, you’re finished.”

What Sage Must Do to Pull It Off

That said, Sage will face many challenges along the way. Here’s my take on what Sage must do to increase the odds that it will be successful:

  1. Facilitate the branding change for partners. The biggest concern I heard partners voice was about the money and time they would need to spend to accomplish re-branding. Sage needs to make it fast, easy and low- or no-cost for partners to re-brand their web sites, marketing collateral, etc. at every step of the re-branding process. Given Sage’s history of providing partners with innovative tools and programs, I’m confident that it will be able to develop and roll out do the same here.
  2. Put more emphasis and resources to make sure that changes beyond product name changes are achieved. Develop and provide Sage employees, partners, customers, press and analysts with a clear vision and solid plan for what the Sage portfolio of the future will look like. Sage has already made good inroads on integration across product lines, and needs to continue investing here. But other areas are fuzzy. For instance, when and how will it bring a common interface to different solutions?  What’s the roadmap to roll out Sage Advisor technology into different solutions? In cases where there is product overlap, how will it rationalize this?
  3. Make the Sage brand stand for something and stand out. Simply using the Sage name to brand all of its products won’t be enough to get new customers in the door. What can the Sage brand represent? IMHO, Sage should piggyback on the Firm of the Future education it’s offering partners. This workshop helps partners analyze their existing business models, understand and navigate change, and build a plan to create a new business model to succeed in a changing world.  Why not take this a step further and help its SMB customers become Firms of the Future? In almost every industry, SMBs are grappling with changes wrought by a global economy, increasing volatility and new technology. Everyone sees the change coming, but few even know where to start to get ahead of the curve and position to capitalize on it.

No one ever said change is easy. But change is inevitable and for Sage, essential if it is to thrive and grow. Sage has taken a big first step is in the right direction, now it just needs to keep moving ahead.

What Are Integrated Payment Solutions and Why Should You Care?

(Originally published January 30, 2011 in Small Business Computing)

What are Integrated Payments Solutions?

Integrated payment solutions are tools that your business can use to integrate accounting, customer relationship management (CRM) and other business applications with payments processing. By integrating payments processing with business applications, you can save time and money, reduce errors and get a better view of your business.

Why Should You Care?

Every business wants to get paid — and get paid faster. But if you are manually entering and reconciling payments with accounting, CRM or other solutions, you are wasting time with redundant data entry, and increasing the likelihood of human error. At the end of the day, you’ll probably need to spend even more time reconciling these errors so that the information is correct in both systems.

When you integrate payment processing with your business solutions, you can achieve the following:

  • Save time and reduce errors, by reducing time spent on redundant data entry and credit card verification, reconciliation and so on.
  • Save money. Time is money! In smaller companies, where one employee often wears several hats, you can re-allocate time spent on re-entering data or re-verifying credit card information to more important tasks that can help your business get ahead.
  • Gain more financial visibility and control. When you integrate payment processing information with accounting or another business solution, it’s automatically recorded in that solution, providing you with better visibility and the capability to create more up-to-date and accurate reports.
  • Improve cash flow. By closely monitoring payments, you can reduce days’ sales outstanding (DSO), and speed up the process to post receivables and improve cash flow.

When you process credit and debit card processing, there are also important security benefits. Using an integrated payments solution from a PA-DSS (Payment Application Data Security Standard) certified vendor ensures that all exchanges of payment data are secure and PCI compliant with PCI security standards, which mandate that businesses safely encrypt and store PIN numbers, CVV2 numbers and magnetic stripe data.

What to Consider

While the benefits of integrated payments solutions are clear, payments processing is often a confusing topic, for several reasons. Vendors offer solutions that tackle different pieces of the payments pie, and integrate with different software solutions and brands. Some require that you use their merchant service provider (which allows businesses to accept debit or credit card payments), while others let you choose.

Ideally, you’d might want a payments processing service that integrates everything — your accounting and CRM software, every form and method of payment you process today, and any you might conceivably want to process in the future—such as accepting payments on a mobile device. Oh, and you’d also want it be affordable on a small business budget.

A few vendors are working to develop comprehensive payment platforms for small business, but most integrated payment solutions available today tend to be point solutions. These solutions integrate a particular form or forms of payment — such as a check or credit card—using a specific device, such as a virtual terminal or a check scanner.

With that in mind, here are some recommendations as to what you’ll want to consider when considering integrated payment options:

  • Where are your highest transaction volumes coming from — credit card, paper checks, PayPal? For many small businesses, checks and/or credit cards make up the bulk of transactions. Wherever this is in your business, this is also where you probably are spending the most time verifying, re-entering and reconciling data back and forth with accounting and/or CRM. Automating and integrating the process here will provide the biggest payback.
  • What business application(s) do you most need to integrate with payments? Most companies start with accounting, because the controller or treasurer wants to not only take time out of the process, but also reduce errors and time spent reconciling payments received with invoices. But many companies also want to provide sales with a secure way to take orders, generate invoices, and accept, verify and track payments within CRM. In both cases, it makes sense to start solution evaluation with the business solutions vendors you already work with. Almost all of the major accounting and CRM vendors in the SMB market, such as Intuit, Microsoft, Salesforce, Sage, etc. have their own and/or partner to provide integrated payments solutions for their business software.
  • What level of integration and automation does the solution provide? This varies among integrated payments solutions offerings. For instance, does the solution pre-authorize, automatically accept or decline payments? Does it securely encrypt and store credit card info so that you don’t need to spend time re-entering for repeat customers? Does it print receipts, send email notifications to customers, and post back to accounting, CRM or an order fulfillment system? You may need some, all or even additional functionality.
  • Is the solution PA-DSS certified? PA-DSS (Payment Application Data Security Standard) certification means that all exchanges of payment data are secure and PCI compliant–particularly important for processing credit or debit card transactions.
  • Can you choose your merchant service provider, or do you have to use theirs? Since credit card processing rates differ, and really add up if you process a lot of transactions, it’s important to find out if the integrated payments solution vendor requires that you use their merchant services, or if you can choose your own. Either way, you’ll want to make sure that you get a fair rate.

You should also think about our future business needs, and if you will need to process payment types that you currently aren’t dealing with — such as mobile payments. Look for solutions that already have these capabilities, or have them on their roadmaps so that they’re ready when you are. Integrated payments processing can help you reduce costs and improve efficiency. It’s worth it to research the options and select a solution that will help you reach these goals.

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