It’s interesting to watch how the incumbent accounts software providers wriggle and squirm, often contradicting themselves as they try and come up with a credible response to the on-demand providers who are snapping at everyone’s heels.
Today’s contender is Pegasus, that maintenance mode throwback to the early 1990s, which claims that nearly 20 per cent of its current sales are to new customers. That’s the claim of Pegasus commercial director Kevin McCallum who says:
"There are a lot of upgrade sales around for the Sage 50 base – as it is for everybody, including Sage. It’s a well established brand and product, but has certain limitations and we want to supply the next step up for those businesses."
It’s true to say that Sage has been experiencing a draining away from its Line 50 business but this usually happens when the customer needs something more. In the meantime, it is backfilling with fresh acquisitions. But let’s look at what this means for Pegasus.
First up, a lot of its sales are for its Excel XRL product. Even if we’re to be charitable and ascribe 10 per cent of its revenue to former Sage customers, that’s still a fleabite. The elephant in the room is Microsoft which has torn lumps out of every player in the last year or so, creating a $1 billion business in the process.
McCallum can’t resist having a go at what John Stokdyk refers to as:
…web-hosted "on demand" business software suppliers who are building up a significant presence, particularly among smaller companies.
Good to see John finally acknowledging what I’ve been saying for some time. But back to McCallum. He answers by asserting:
"I still believe there’s a gap between what software is purported to do for the business and what it can do if someone is there to make the system work for you…Every week there’s a new software as a service (SaaS) from Scandinavia – but they’re still coming from nothing."
Duh? So is it my imagination or is Twinfield’s 18K+ customers ‘nothing.’ Or how about Xero’s 100+ accounting partners? Or Kashflow’s 2K+ customers. OK, so those numbers pale into insignificance when comparing to Sage’s 500K customers. But Sage has had 27 years to get this far. In recent times it has adopted an acquisition strategy to fuel growth where the on-demand players have to grow organically.
Yes I know that on-demand is in its infancy and yes, most services are feature incomplete compared to bloatware. But that entirely misses the point.
The on-demand players are going after niches from day one rather than trying to be a silver bullet for any business. That’s a model for the 21st century and one that even Sage acknowledges through its recent vertical market acquisition strategy. On-demand vendors are way more agile than the incumbents, largely because they’re not saddled with outdated code and can take advantage of modern development environments that allow high speed functional deployment.
But here’s the acid test: They can only grow by continuing to delight their customers. While we don’t have long term data, I see no indication that on-demand vendors are failing at anything like the rate of the incumbents.
loading...
loading...
