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During Sage’s earnings call, Paul Walker, CEO Sage made some astonishing claims about the saas market as the platform from which he explained Sage’s strategy. In my commentary on the recorded remarks I said:
…it demonstrates a horrific lack of market understanding.
The previous day at ZDNet I said:
I have long held the view that Sage is utterly clueless on SaaS. When Mr [Duane] Jackson recently claimed Sage is about to release Son of Sage Live I called up the company and was categorically told that is untrue. Sage’s last attempts at getting SaaS into the world were doomed and to assume that 3-4 months on things have changed would be fanciful in the extreme. I am equally mindful that Sage’s internal organization is so chaotic that if and when it does get a SaaS offering out then it will be below par. In my call as a follow up to Mr Jackson’s assertions, I was told that Sage is consulting with customers. To the best of my knowledge, it is not consulting with a single consultant who understands this market. And that despite Sage and I have met to discuss SaaS influencers.
Duane Jackson, CEO Kashflow obtained a transcript of Mr Walker’s remarks and turned that into a post on the AccountingWeb cloud forum. The early part of what he says is astonishing:
“Well, many of the people who’ve launched SaaS products in the last four/five years and that industry analysts get very excited about, even though most of them have got less than 5,000 customers, is that what those solutions are is actually desktop solutions online. Very few of them, if any, have taken advantage of being a pure SaaS play. And what we’ve done is wait. We’ve listened to our customers, and we’ve looked at what the advantages of SaaS can bring to them.”
He then added:
I’m sure that like me you had to read that more than once to believe he actually said that. That’s a direct lift from the transcript Sage have sent out.
This was a prepared statement from him, not an off the cuff remark. Didn’t anyone there sanity check it? None of the analysts present on the conference call picked him up on it because they don’t understand SaaS yet…
Duane is well known for his love of having a marketing led pop at Sage but on this occasion he’s making valid points. I don’t know how Sage defines ‘pure SaaS play’ so it is hard to tell whether Mr Walker understands this himself. When we met at the X3 launch, I got the distinct impression that while Sage does have some sort of strategy, it is not something in which Paul Walker has a deeply held belief.When the leadership is not four square behind strategically important projects then trouble is bound to ensue.
In fairness to Sage, they DO have a raft of services dotted about around the world they describe as SaaS. For example, I’ve talked about BillingBoss in the past. It’s a nice wee product.
What is much more interesting are the back channel discussions I’ve been having with other observers and certain senior people within Sage. At this point it is worth noting that it is not unusual for staffers to contact me on condition of anonymity, either to put colour on what I’ve said or to help me understand something if I’ve gone off base. One person in the company wonders whether I believe nothing is happening. Of course not. That would be facile. But for reasons known best to Sage it never shares or seeks opinion. Contrast that with for example SAP and Business ByDesign. For all the criticism it has received, that company has regularly updated myself and colleagues on progress and solicited feedback. It was as a direct result of feedback that SAP made important changes to the UI and realized it had to undertake significant re-engineering of the core. Most of the main SaaS players come to me with briefings and an exchange of views. Recently IRIS shared a little of their plans going forward with FreeAgent Central. Xero has shared plans concerning reporting for accountants and we’ve discussed various merits and demerits of their approach. Today I took a briefing from Epicor on its upcoming Express solution. Yesterday, NetSuite discussed with me their IBM partnership. Earlier in the week, FinancialForce contacted me concerning new developments. Next week Intuit has a UK announcement. Unfortunately we can’t organize a pre-briefing in time for my departure on a round of travels in the US. The list goes on. They all want to talk, share, exchange views. Except Sage. The best I can usually get out of Sage goes something like: “When we’ve got something to TELL you, we’ll be in touch.” Is it any wonder then that critics such as myself are so harsh?
The most telling internal comments go something like this: “Your concerns are shared.” Other comments indicate that Sage intends moving its professional services applications to SaaS. No-one expects this to happen any time soon. Is IRIS listening? In other words, the mixture of services here and there, repeated failed attempts in the UK and now confusing assessments of the market aimed at pretending the market doesn’t exist add up to one thing: no coherent strategy.
Last July, I said of Sage’s problems with SaaS:
The crazy part about this is that if Sage could get its development act together, it would signal a new direction from which potential and existing customers could benefit. It would help put to bed the idea that Sage has become dumb, fat and happy and that the only way it can grow is through acquisitions, which in themselves help create the problem with which Sage is faced. But I don’t hold out too much hope. At least not in the short term. The current management has been incumbent for many years and has a certain entitlement mentality about it. That will destroy creativity in a heartbeat.
Following the debacle over Sage Live I discovered that internal to the company, the project got off to a decent start but infighting left the project confused and lacking direction.
Taking all this together, it has to paint a frightening picture for Sage sales people, its customers and ultimately the financial analysts it has so assiduously courted over the years. When the CEO of the UK’s largest accounting solutions provider and one of the world’s most recognized software brands can make such an obvious error in understanding the market, then probing questions have to be raised. Any vendor wrestling with technology shifts is going to experience pain. We have not heard the last of Sage’s problems. At least not under Paul Walker’s watch.
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Do I need to say more? For companies like ours there is much work to do educating accountancy practices how to use and deliver online services to its full extend. Mr Walker is right when he says that accountants are not taking all benefits out of online accounting solutions, but once they discover they don’t want to step back. So what he is basically saying that he limits their customers to deliver state of the art online services to the SME market based on for instance iXBRL. Online preparation of dynamic reports that gives SME much more grip on their financials.
I wish he was saying something as sophisticated as your interpretation. I agree with what you say in reply, but I don’t think that’s what he meant. He’s been poorly advised. Game on for the companies that can explain the value proposition of the new way of working.
When Paul Walker says of the current UK SaaS players “Very few of them, if any, have taken advantage of being a pure SaaS play”, the “if any” in particular demonstrates a completely appalling lack of understanding of the market. There have been pure SaaS players in the UK accounting market since at least 2005, and arguably longer. I am constantly surprized with Sage’s false starts and lack of progress in this area. This just highlights the incredibly poor advice they must be getting, both on the current players, and the current demand in the market. A lot of us will be replaying this quote on a regular basis for the next few months as we attack the Sage 50 user base.
Do I need to say more? For companies like ours there is much work to do educating accountancy practices how to use and deliver online services to its full extend. Mr Walker is right when he says that accountants are not taking all benefits out of online accounting solutions, but once they discover they don't want to step back. So what he is basically saying that he limits their customers to deliver state of the art online services to the SME market based on for instance iXBRL. Online preparation of dynamic reports that gives SME much more grip on their financials.
I wish he was saying something as sophisticated as your interpretation. I agree with what you say in reply, but I don't think that's what he meant. He's been poorly advised. Game on for the companies that can explain the value proposition of the new way of working.
When Paul Walker says of the current UK SaaS players “Very few of them, if any, have taken advantage of being a pure SaaS play”, the “if any” in particular demonstrates a completely appalling lack of understanding of the market. There have been pure SaaS players in the UK accounting market since at least 2005, and arguably longer. I am constantly surprized with Sage's false starts and lack of progress in this area. This just highlights the incredibly poor advice they must be getting, both on the current players, and the current demand in the market. A lot of us will be replaying this quote on a regular basis for the next few months as we attack the Sage 50 user base.
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