More Sage silliness

I was persuing past presentations made by Sage and came across this technology presentation (PDF) from July. At the time, the company was banging on about Web 2.0 and software plus services. That’s interesting because as far as I can tell, it’s still not able to fix old bugs in its software while continuing to add to its own bloat.It sure as heck doesn’t have a coherent Web 2.0 strategy and even if it did, I doubt it would know how to execute.

Reading through the notes, it seems reminiscent of Microsoft and its 2006-7 messages about software and services. Yet the other week, Microsoft seemed to be not exactly doing an about face but a sideways steer towards on-demand and cloud computing. Where is Sage in all this? Nowhere.

This year, Sage has only made small acquisition investments amounting to £35 million and we have yet to see the full year’s results. I have no bead on this but I wouldn’t be surprised to see them impacted by the general economic downturn. Given they had a sluggish first half, it would be a surprise if this year turned out to be a stellar performance. Especially as they’re still trying to sort out the mess they inherited and then messed up in the medical market business.

Sage is caught between a rock and a hard place. Like many other incumbent players, it is wedded to a business model that strangles it when trying to slide over to the on-demand world. It’s upfront license fees are virtually all profit and effectively sacrificing that to transition would give its market masters one hell of a fright. Couple that with an addiction to license fees and it is easy to see that the management DNA is nowhere near aligned with the on-demand model.

Sage is not unaware of this but right now it can do little more than stand by and watch as the minnows eat into markets it has in the past owned. Perhaps it thinks that it can offord to wait until one or other company gets to a size where it can be bought. Here’s the problem, the on-demand players I speak with have no plans to be bought and yet they are still growing nicely. They know that as long as they stick to their knitting, they can command positions in the market that collectively Sage cannot match. That’s not to say there won’t be a wave of consolidation - that’s the usual market play book. The question is whether Sage has what it takes to steer a different course.

Right now they’re not making the kind of moves they should be.

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