A conversation with Paul Walker: CEO Sage

At the Paris launch of Sage X3 v.6, I had the opportunity to meet with Paul Walker, CEO Sage. It was our first time of meeting. In attendance were Christophe Letellier, GM Sage ERP X3 worldwide and Stuart Lynn, head of Sage mid-market R&D. I didn’t take the formal Q&A route but rather wanted to have a semi-informal conversation with Paul. I wanted to sense test what his company is saying about the mid-market and X3, get some feel for what Sage really thinks about SaaS and cloud and to get a feel for the man behind the company. While he didn’t reveal too much, several of his observations were interesting.

On the question of coyness about growing X3 aggressively, Christophe alluded to the bloody nose SAP got when it touted reaching 100,000 Business ByDesign customers by 2010. No vendor I have spoke with since who mentions that topic wants to go there. Understandably. The closest I got to a definitive answer was when Christophe said that while the company has aggressive growth targets for X3, it didn’t want to set expectations that subsequently proved unattainable. Paul also argued that as he has responsibilities to investors, plus upcoming analyst briefing meetings, he could not say more at this time. My argument is it is better to set some expectations than none, otherwise you appear to lack confidence in what you’re saying.

Christophe’s entree quickly led us to a SaaS/cloud discussion. That was almost inevitable given the fact I have dinged the company on numerous occasions about the number of false starts they’ve had in this area. When pressed, Paul said that Sage realizes that a move to the cloud is ‘inevitable’ but that it doesn’t have enough data against which to determine when that will happen. I then asked whether Sage is prepared to make substantial investments in SaaS to which the answer was a firm “Yes and we are.” That’s interesting because there is very little visibility of that happening. In a later discussion, Stuart told me the company is looking at many kinds of cloud technologies. He committed to showing me a roadmap at some point in the future. I look forward to that.

During our discussion about SaaS/cloud, Paul made the observation that one potential competitor had never made a profit whereas Sage has an unbroken track record in that regard. I dispute that assertion as it relates to the competition but as Paul correctly pointed out: “It all depends on which number you’re reading.” True – and something of which I could equally accuse Sage – to which he smiled wryly. It seemed to me that Paul was using the argument as a stick with which to beat up the SaaS players. At one level it is a fair point. Profit matters. But then growing a market matters as well. Today’s market is very different from those when Sage was growing. At that time, you invested profits not revenue, capital was much harder to come by and therre were way fewer competitors. Today when you’re new, you need to market like crazy if you want to become a dominant player. That inevitably means putting the spend emphasis into marketing. As long as there’s plenty of capital behind the company and growth occurs, it doesn’t matter. That’s what both NetSuite and Xero have done over the years.

On the question of customer choice, I argued that while that’s great for features and functions, shouldn’t a company that espouses innovation be leading the charge? Paul didn’t have a clear answer for that but that’s understandable. If you’re inside a successful company you don’t necessarily want to rip up a well thumbed but successful playbook. However, Paul did confirm that the company is investing heavily in SaaS. What that means given Sage’s meagre commitment to R&D is another matter.

Paul revealed this was the first occasion he has attended a product launch. Some might be stunned to hear that but given Sage is a market led business I’m not surprised. In one sense it confirmed my view that in recent years, Sage has been more concerned with keeping investors happy rather than paying attention to its customers. It is a tightrope that can be walked but not everyone does it successfully. My hope is that he will take away insights from ‘our’ side of the house and recognize the importance of innovative development as the powerhouse for top line growth.

Reflecting upon our short meeting, I was glad of the opportunity to meet Paul and in many ways he confirmed what I have long thought. I was perhaps surprised as to how cautious he is about the future. But then I’ve been exposed to plenty of aggressive US CEO’s so perhaps my expectations are different. He agreed to meet again in the future at which time I’d like to get him on video to discuss some of the issues outlined above. We’re both accountants by trade so there is some affinity there!

Disclosure: Sage met most of my travel expenses. I wore a suit.

Tagged as: ERP, netsuite, Paul Walker, Sage Software, Software as a service