SageOne: an initial assessment

by admin on January 19, 2011

in Cloud Computing/SaaS


Sage has finally released a SaaS solution – SageOne, a simple service aimed at sole traders and small businesses. What’s to like and what needs attention?

SageOne comes in three flavours: cashbook, accounts and accountants’ edition. The cashbook edition is aimed at pure cash businesses, while accounts is aimed at those who bill for products and services while the accountants’ edition is for the professional accountant who wants to manage clients who are using the system.

It appears that in developing SageOne, Sage has opted for the lowest common denominator in that the functionality in each of the solutions is much simpler than competitive offerings. For example there is no drill down from debtor and creditor reports. That is reflected in the price: £5/month for the cashbook version, £10/month for accounts and £250 pa for non-Sage Accountants Club members. You can argue that the cashbook version represents a direct replacement for those cash businesses that use a Simplex D book while having the benefit of an online system. The accounts package is of greater concern. On the one hand areas like billing and the bank account have been given comprehensive functionality, yet there are plenty of missing pieces.

Highs and lows

Sage has made a solid effort at keeping things simple and users should not experience too many problems working their way around the system. The user interface is clean and simple with plenty of inline help.

The invoicing section automatically prepares a PDF file. That’s good. That’s an extra in systems like Blinksale. But there is no means to customize for logos which many consider a necessity as invoices are a part of marketing. Products and services need to be defined before invoices can be entered into the system. That’s great as a control feature but I wonder how much education will be needed in order for people to understand the necessity of providing this information. Services can be set up as hourly, weekly, monthly, quarterly or annual but it was not clear to me whether this represents a way of setting up recurring billing. Using the inline search for ‘recurring invoices’ drew a blank. Searching for a customer is intuitive – enter the start of a customer name into the name field and you are presented with options. However there seems to be an assumption that all invoices are due 30 days unless you manually change the due date. Far better to offer a drop down that allows me to select due date periods e.g ‘due now,’ due 15 days’ etc. Recording sales receipts allows for partial settlements. Again, a good thing. Sage pre-populates what accountants will call general ledger sections like office phone but again, while the accountants end provides a way of establishing a custom chart of accounts I wonder the extent to which clients will need help.

The bank reconciliation goes a considerable distance towards getting it right but is limited. There is no automated upload of bank information and no ability to set up standing orders/direct debits. The help on standing orders says: “… the pain. And if it’s something like a direct debit or standing order, all you need to do is tell Sage One how often it comes out of your bank, …” That may be so but I could not see any way to directly estrablish these types of payment. It’s a big omission given that many businesses pay items like insurance premiums, rent and business rates in this manner. The inline help and video tutorials (see the one for the bank account above) are comprehensive. That’s a definite plus.

The professional accountants’ view

I spoke with David Gibson of Blu Sky chartered accountants. They were involved in the beta testing which apparently started last July. He said: “We had a dabble with Xero but it wasn’t as flexible as we needed. As I recall everything had to be done via the bank account. We like that it is simple. Many small businesses don’t care about their accounts. They just want to know what their tax bill is. SageOne fulfills that need and slots in nicely at the bottom end of the market. Yes, we need more functionality but we’ve been very pleased with Sage’s responsiveness.” I asked what he felt about the lack of integration to Sage’s accounts production: “Entering a 20 line trial balance isn’t a big deal. We understand it is on the list but not a high priority…at least not for us.” Finally I asked about onboarding: “We’re not going to have 500 clients on SageOne by the end of the year but we are considering suggesting that some clients who are on Line 50 move to SageOne…it is about choice and simplicity.”

Analysis

Sage took a hammering when it launched SageLive. Security was a mess. This time they’ve gone much further. As Duane Jackson at KashFlow said in his first take:

As security was the issue that caused them to abandon their last-attempt, they’ve gone overboard this time at the expense of user experience. You HAVE to set 3 security questions when you register for a trial. And if your answer to the question “What is your favourite car” is less than 5 letters, then you have to choose a different answer. Not ideal if you like BMWs or Audis!

I kind of agree. The questions are arcane and a throwback to older methods of setting security. You can duplicate answers as I did on two related questions about cars and you can login simultaneously as the same user from two different machines. Sage makes a big point about security:

You can also rest assured that all of our Customer Service team have passed Criminal Record Bureau checks, so if you ask them to look at your data you know they’re honest and trustworthy. They cannot view your data without your express permission and we record something called a “user audit trail” which allows us to keep track of exactly who has done what to your data and when.

But our security isn’t just about what’s written on this page, we don’t stop at the above, it’s just a start. In fact, if we were to write down everything we do, that in itself is a security risk. Rest assured that security is our number one concern and we treat it with the respect and attention it deserves.

Ok – so where do I find the information that talks to this issue? Nowhere that’s obvious to me.

But more to the point: is that it after a year in development of which around six months were spent talking to some users about what they want in this offering? Sage will likely argue this appeals to the many micro businesses that only want to record information, know where they stand at their bank and billing while leaving everything else to their accountant. I’m not going to argue the point as it is almost impossible to say what that universe of customers looks like without asking them about alternatives. What I can say is that the competition is way ahead functionally and continuing to win business at a fast pace. Where once professionals thought that accounting was too hard for the small business we now see professionals more than happy to recommend the new crop of solutions. Small businesses seem much more enamoured of the control they have than was thought likely.

Accountants who talk to me say that they are pleasantly surprised at the improved understanding clients get from doing accounts online. That should translate into lowered error rates and higher accounts production productivity. Much of that has been achieved through hiding complexity – something that Sage has also tried hard to achieve. Viewed from that standpoint you have to ask why Sage didn’t make a much better fist of reporting – as an example. Why didn’t they do the integration to accounts production? That would have made it a much easier sell to the Accountants Club members where it is already a free add-on. Why can I not add in my accountant if I sign up while my accountant can set me up?

There are some obvious SNAFUs. Back to Duane:

I thought I’d registered for a free trial, but apparently if I don’t call them on their 0845 number and cancel then they’re going to invoice me! Good luck with that.

But the bigger question must be: how does Sage think it can make money with this service? According to a report in the Daily Telegraph:

Sage One caters for Apple Mac users – the first time Sage has served this market. Mr Black said Sage also expected some of its existing PC customers to switch to one of the new packages rather than pay for its packaged software range that require manual updates.

Mac users are generally sophisticated. They pay a premium for hardware and have a short attention span for anything that’s sub-par. Many are drawn from the IT contractor segment who are already well served with competitive offerings. Why would they switch?

In the short term this will likely be a cash and profit loss. Even if Sage is able to leverage its buying muscle at Rackspace (Sage’s hosting provider) and drop its cost of delivery to less than 5%, it is promising 24×7 telephone support. That’s not cheap to operate and I wonder whether it is necessary for a UK only solution. Then there is the question of marketing. If Blu Sky is a good example of how it is going to market then it will need to do a lot of convincing in the face of far more functionally rich alternatives. Professionals can expect to be the subject of a charm offensive.

The good news is that Sage has at last got something into the market that looks the part and which validates saas/cloud accounting. It’s past messes seem behind it and the market will forgive it. However, it must do a lot more. Talking to accountants is fine. Talking to users is fine. But when it comes to software development, vendors have to be innovative. Innovation does not come naturally to much of the profession so Sage should be looking further afield. The fact it chooses not to suggests to me that SageLive is an elementary first step. Financial analysts will be relieved but will want to know the extent to which Sage believes SageOne will cannibalise its lucrative maintenance revenue stream from Sage 50. Competitors will rub their hands with glee, happy that Sage has finally come out with a SaaS offering but equally happy that it is way behind the development curve. This is not a market where being a fast follower works. You have to demonstrate differentiated value. Simply saying this is a Simplex D replacement is not enough.

Sage was not available to comment at the time of writing this assessment.

UPDATE:

Sage’s Simon Black came back to me about 5 minutes after I pressed the go button. He confirmed the company has concentrated on simplicity and believes there is a lot of opportunity going forward. Sage spoke with some 100 businesses in the beta period and had ‘a number’ of professional firms involved in the discussion. That doesn’t change anything I have said above. One point of confusion that Simon was able to clear up: if I set myself up as a SageOne customer it is single user only. If my accountant sets me up then they also have access. The accountant also has additional reporting available to him/her plus journaling capability. Sage says the design allows for multi-user login. I also asked about the availability of Sage’s security policies. These are not in the public domain. Simon suggested that we are to trust Sage in this regard. Quite frankly I want a lot more than bland assurances.

UPDATE 2:

AccountingWeb says:

According to Black and Sage’s CEO for Northern Eruope Paul Stobart, the combination of a simple product, 24/7 support and the power of the Sage brand will re-establish Sage’s presence in this crucial competitive sector.

Sage is betting the brand angle for growth. While I agree the brand will take Sage a certain distance it will not be enough to bring it to profitability. It may get a few thousand users this way but brand is a tiny part of the equation. Sage should know this given that its organic growth for its mainstream solutions has been in decline for several years. Elsewhere, providers with no brand recognition are succeeding. Why? They do SaaS accounting well and serve their markets in a distinctive fashion.

Comments on this entry are closed.

Jason Holden January 20, 2011 at 1:33 pm

I have not had time to look at SageOne yet, but hopefully next month.

I think it is fair to say the name Sage will help, like them or not Sage does have a brand name that business owners know.

The wider implications have to be that by entering the SaaS arena (finally) Sage are giving the nod that it is credible and the future direction for bookkeeping software, this I feel with be of great benefit to the existing players, and rather than existing players being ‘out done’ by Sage I think the reverse will happen, the giants like Sage can not innovate quick enough for the SaaS market and I think that is what will be seen, but it will also mean the smaller players will need to up their game now and show their target market that big is not always better and if you want innovation the big boys just cant cut it.

It will be an interesting 12 months now Sage has thrown their hat into the ring.

Jason Holden January 20, 2011 at 1:33 pm

I have not had time to look at SageOne yet, but hopefully next month.

I think it is fair to say the name Sage will help, like them or not Sage does have a brand name that business owners know.

The wider implications have to be that by entering the SaaS arena (finally) Sage are giving the nod that it is credible and the future direction for bookkeeping software, this I feel with be of great benefit to the existing players, and rather than existing players being ‘out done’ by Sage I think the reverse will happen, the giants like Sage can not innovate quick enough for the SaaS market and I think that is what will be seen, but it will also mean the smaller players will need to up their game now and show their target market that big is not always better and if you want innovation the big boys just cant cut it.

It will be an interesting 12 months now Sage has thrown their hat into the ring.

Alexsmith January 22, 2011 at 1:48 pm

Good article – I agree that the fact the product looks/feels the part is a giant leap forward in terms of validating clound accounting.

Talking in terms of the basic flavour “cashbook”, I’m really pleased this ultra simple version – there are loads of really small businesses out there that need / want nothing more. For me, as an accountant with small biz clients, if I get presented with a set of Sage CashBook Records rather than a manual book likely to contain errors, then I’m happier as my recovery will be greater. £5 a month for this and the basic profit report fills a gap so I think it will do well.

Alexsmith January 22, 2011 at 1:48 pm

Good article – I agree that the fact the product looks/feels the part is a giant leap forward in terms of validating clound accounting.

Talking in terms of the basic flavour “cashbook”, I’m really pleased this ultra simple version – there are loads of really small businesses out there that need / want nothing more. For me, as an accountant with small biz clients, if I get presented with a set of Sage CashBook Records rather than a manual book likely to contain errors, then I’m happier as my recovery will be greater. £5 a month for this and the basic profit report fills a gap so I think it will do well.

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