Sage goes mobile but what about pricing?

by admin on August 5, 2011

in Innovation

Post image for Sage goes mobile but what about pricing?

It’s really good to see that Sage has started to talk about mobile applications. 18 months in the making (and no surprise there), the first shot is an app that will be useful to field sales and service folk:

The mobile app communicates to the desktop software via an encrypted data feed, handled through a secure gateway operated by Sage. Mobile customers need a Sage “passport” to log in and use the app, but they don’t have to own a copy of the desktop software themselves. The mobile app users can write some data such as orders and customer details back into the database, but they cannot post transactions into accounts ledgers. These need to be handled by the desktop software user. The Sage 50 Accounts administrator can also control the data that remote users can see and enter.

The app currently supports Blackberry and iPhone. All good stuff and especially as the app itself is free. But there’s a catch.

It wasn’t clear to me how pricing would work. I asked:

It’s far from clear to me how pricing operates. The app if/when available is said to be free but how do additional users get onto the system? According to Sage’s pricing page, 50 is a single license but they do offer 2-user licenses. So presumably you have to pay for the additional license or is Sage revising that?

John says:

“…Mobile customers need a Sage “passport” to log in and use the app, but they don’t have to own a copy of the desktop software themselves.”

Confusing…

John came back with:

@dahowlett Sorry if the review didn’t make it clear – as you suggest the app is funded by extra licence income generated by selling multi-user versions of Sage 50 Accounts 2012. Each mobile user accessing the data counts as an extra user (on a concurrent basis, so you could probably support 20+ mobile users with a 10-user licence, as long as they didn’t all try to access the accounts at the same time).

According to the Sage UK shop, the basic edition of Sage 50 Accounts 2012 starts at £560+VAT and an extra user licence will cost £250+VAT. While the Accounts and Plus editions can only support 2 concurrent users, the Professional edition (£1095) can handle up to 10 – with each extra concurrent user licence costing £250.

Well – that’s still not terribly clear. Here’s the real problem.

On-premise vendors are used to customers paying full whack every time a new user is added. That cannot work in the mobile world for several reasons:

  • Mobile users generally don’t need access to everything. As Sage acknowledges, access control is an issue that needs to be managed on a role by role basis. In some cases this means the creation of a new class or classes of user.
  • Mobile users are often occasional users doing little more than accessing information as they need it, perhaps several times a day. Right now, Sage is restricting the ability to transact but says that will be fleshed out.

In those circumstances then how do you price fairly? It’s not easy. My view has consistently been that you have to work on a case by case basis but that essentially we’re talking pennies or low pounds per month access cost that can flex up and down to suit user need. Not replication of the old model. That simply won’t fly.

The SaaS/cloud vendors don’t worry about this so much. Most of the time they simply bundle and say ‘here you go – it’s free.’ They view mobile as much the same as internet access from a laptop or desktop browser. Surprising though this may sound, I disagree. It quickly becomes apparent that mobile applications have the potential to reach many more people than the on-prem app but in a different access control model to that which applies in the on-prem world. Providing access consumes resource while delivering value. Sarah Douglas, who was among the beta testers said:

I was on the user group for this and yes it is great.  Getting feedback from my clients and directors the biggest thing they want to use it for is cashflow.  At the touch of a button before you go in to a meeting with a client, you can see what they owe you.

This is going to be great with Sales may as they can easily send a copy invoice and request in a nice prior to the meeting.

For directors it gives them the chance to email client or customer from where ever they are.  Sometimes when your chasing debt and you really are getting no where the last word has to come from the director.

In this area they have got it right.

I hope to have all my clients using this.

She has woken up to the self evident fact that providing debtor information to mobile screens can lead to an immediate payback. That has a value for which I believe customers should pay. However, in opening up this argument, we then get into some very tricky issues. It is far from clear how all this will shake out but I give Sage a LOT of credit for rolling this particular ball out the door. The solution is not quite ready for prime time so there is an opportunity for Sage to address this topic. If they solve the pricing conundrum AND can make it scale, then they will win a lot of friends. That hasn’t happened in a long time.

UPDATE: In a back and forth on Twitter, Stuart Lynn from Sage says that access to the solution over mobile is free and can be concurrent with the desktop users. This leaves other problems because Sage’s licensing for its products is pretty clear. It is not for example clear to me whether there are buy in license requirements for the systems as a whole. The implications right now are ‘no.’ That has a knock on effect for those who have already licensed. Gary Turner, MD UK at Xero has jumped in and says that with their offering, it’s model is all you can eat, no user caps. Both Xero and Sage are presenting what will, in time, prove to be models they cannot sustain. There are many reasons for this, a few of which I have outlined above. More to come on this one.

Comments on this entry are closed.

Gary Turner August 10, 2011 at 1:53 pm

Dennis, as you might expect I don’t agree with your assertion that our mobile licensing model at Xero is not sustainable.

Certainly for the small business market (enterprise is different) licensing software usage by the number of concurrent users harks back to a day when software was sold on floppy disks and used physical dongles to prevent piracy. Aside from the legendary complexity that surrounds most traditional software licensing structures (and which are designed to ensure the vendors take is always maximised), charging by the user generates two negative outputs.

1. It encourages small businesses to share user logins and passwords which, aside from being unsecure, it blows any hope for audit trail integrity out of the water as you’ll never know who posted which transaction.

2. It prevents other, more casual stakeholders in the business from obtaining the relevant read-only occasional access. e.g.  investors, partners, family, non-exec directors.

The value reflected onto Xero through greater audit and security control and the notion of enabling a support network around the business are components that we think will offset the cost of lost revenue from not charging by users through greater adoption in the market.

Moreover, I suspect that the notion of separate mobile clients and full web clients will go away over the coming years as both form factors converge leaving just the simple service subscription cost.

I think it’s more of a challenge for businesses locked into traditional charging models and enterprise suppliers who will baulk at the prospect of enabling potentially thousands of light users to obtain the benefit of a single ERP instance for no extra cost. But that’s enterprise.

John Donnelly August 12, 2011 at 10:18 am

I’ve just installed and started to play with the
mobile add on for v2012 and I have to say, so far, it is really rather
impressive.

Configuration within Sage 50 is simplicity itself using the same login
that you use for the Sage website which configures a Windows Service
that runs on the PC. Downloaded the app from the Apple Store, entered
the logon details and a few seconds later I could see my Sage data on
the iPhone.

I’m only working with a small dataset at the moment but I’ve already
created a customer on the phone and then a sales order. In both cases,
the data appeared in Sage within a couple of seconds of the record
saving on the phone and that is with a crappy 3G connection for the
phone.

John

Anonymous August 19, 2011 at 8:59 am

For most small businesses Sage is too expensive, not user friendly and has customer service that is sadly lacking.

For small businesses looking to control costs – including reducing their accountants fees, retain control of the business and get a better understanding of the numbers – an on-line pay as you go package is the way to go.

I think Xero is great, I also like FreeAgent and I know others who swear by Kashflow and LiquidAccounts.

I believe the Xero model is sustainable as more businesses who may otherwise have relied on spreadsheets (there are thousands) will see the time and cost savings from moving over to a pay as you go fixed fee package.

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