Sage in the Cloud Ireland: fur coat and no knickers?

by admin on February 21, 2012

in Cloud Computing/SaaS

Oh dear. Sage has managed to do it again. Another cock up only this time in Ireland.

Back story: Sage pulled a stunt (in its words not mine) to launch Sage in the cloud Cloud in Ireland:

Ireland’s leading business management software company, Sage Ireland, launches Sage in the Cloud with a stunt on South King St, Dublin 2 at 11am [9th Feb]. The launch will bring the concept of the cloud to life through a quirky and innovative device, which will create floating cloud shapes using a foam printer – a first for Ireland!…

…Sage identified the potential of cloud from an early stage. And recently, it launched Sage One Accounts, a light and agile cloud based system for start-ups, small and micro business. Sage One Payroll followed and is the only cloud based payroll solution developed in Ireland.

I won’t point out the irony of the above statements but heh ho. Fast forward to today. From Denis Breen:

Checking out Sage’s new online products. 40 minutes on phone to sage trying to find someone who knows they even exist.

and…

Success: Errrrr that’s supported by the UK we think. We’ll get them to give you a call. Jaaaaaaaysuuuuuuus

Mr Breen is self proclaimed as: “Ireland’s leading Xero Accounting Partner.” I’m sure he has far better things to do than test out Sage in the Cloud as a stunt.

As I pointed out earlier, I fully expect (and am starting to see) professional firms take up more than one cloud based solution. But if the service is less than exemplary then it won’t be me that kills the service. It will be the potential users out there ranting on Twitter, in their blogs, comments made on LinkedIn and goodness knows where else that will do the job for everyone else. Sage doesn’t seem to understand this and once again it comes back to the problem they’ve had all along – a lack of cloud DNA.

OK – hands up: how many times has Sage tried to launch a credible cloud service? I’ve lost count but I’m sure someone in the peanut gallery knows.

Bonus points: Cooking Sage 

Comments on this entry are closed.

Will Parker February 21, 2012 at 3:33 pm

With regards to Sage One’s launch in Dublin earlier this month I missed the cloud shapes over South King St. but I’d not be so hasty in writing off their efforts in the cloud quite yet.

Sage haven’t become the second biggest software company in Europe behind SAP by being slow to learn from their mistakes! Indeed they did get a bit of shake up when Duane Jackson pointed out the security problems in their original cloud offering a couple of years ago and they’ve definitely done something about it.

I think Sage One sounds quite a lot more promising as an entry level solution and I’d say that the number of sign ups in the UK is growing fast.

My main point, though, is to agree with one that Denis makes, which is that accountancy practices are increasingly taking on more than one cloud accounting solution because this absolutely is borne out by our experience too (I work at accountsIQ, an Irish cloud accounting provider).

The reality is that in the cloud, just as on the desktop, there is no one product that suits all types and sizes of business. Sage One and Netsuite are both cloud accounting solutions but that does not mean one is better than the other in all circumstances. If a client wants to record simple transactions then I daresay Sage One will work very well but if they want to manage their end to end manufacturing processes online and consolidate the accounting data from 5 international subsidiaries then Kashflow, Xero, Sage One and others simply won’t meet those requirements and a product like Netsuite will be required.

dahowlett February 21, 2012 at 3:47 pm

@Will Parker OK Will I’m gong to come right back at you:

1. Sage’s reported organic growth is little more than price adjustments upwards.

2. All the data I have gathered heavily suggests that the real organic growth and green field customers in the SME/VSB space are going with the other SaaS providers. Trust me – I’ve done the math and i track this very closely. I can find no evidence of genuine growth in Sage solutions and that is true at every level. For example, X3 is a trainwreck sales wise in the UK.

3. SageOne got 1,500 sign ups in ONE YEAR. Thats’ what they reported. The players I know do that in 3-4 weeks EACH.

4. Be careful of not falling into the trap of comparing apples and oranges. When I am looking at RFPs for mid-range (as UK&I defined) businesses, then SaaS is not the only choice and that is as it should be because as history teaches time and again, innovation comes from the edge – in this case from the SME suppliers. NetSuite, SAP BusinessByDesign, OpenERP, OpenBravo, FinancialForce, Twinfield, Wordkday, Plex Systems, BrightPearl and a slew of others may look a good fit but that isn’t always the case.

The problem Sage faces is that its business model doesn’t allow it to properly ring fence its SaaS efforts with sufficient funding to make the same go of SaaS as others. Until it can overcome that problem – which by the way will cost them millions they don’t have, then this is going to be a ‘death by a thousand cuts’ scenario.

garyturner February 22, 2012 at 9:40 am

Great example of how traditional software vendors can’t just rely on marketing or spinning their way back into relevancy.

Doing this stuff is hard, and genuine outcomes can’t be supplemented with the output an internal PR brainstorm meeting.

garyturner February 22, 2012 at 9:41 am

Great example of how traditional software vendors can’t just rely on marketing or spinning their way back into relevancy.

Doing this stuff is hard, and genuine outcomes can’t be supplemented with the output of an internal PR brainstorm meeting.

breenandcowaterford February 22, 2012 at 11:13 am

@garyturner @dahowlett

As for using multiple cloud solutions, we are happy to look at other saas offerings including sage, however they need to be the best in their field and we feel Xero is light years ahead of the competition both desktop and saas at the moment. So from an Accounting for SME’s, Xero is the way forward for us.

Practices are certainly going to evolve whereby in time the client might start dictating the product but the route to market currently for cloud solutions is via the accountant so the various company’s offering cloud solutions have to be able to simultaneously offer a practice solution and a client solution. The practice solution has to enable you and motivate you to move as many clients onto the same system as possible, Xero does this with its Accountants layer umbrella. The client solution has to enable the client to easily prepare accurate monthly financials.

So we will offer multiple cloud solutions but we’ll try to keep it to one in each space. Xero for SME Accounts, Capsule for CRM, Workflowmax for Time and Job Billing, and we will happily use SageOne payroll if it works well and I can actually contact people from sage with ease. The problem with SageOne at the moment is that it feels like they are looking for reason not to go into the cloud space rather than the other way around. They seem to be simply dipping the toe, not sure that’s a strategy for success.

dahowlett February 22, 2012 at 10:05 pm

@breenandcowaterford@garyturner I’m sceptical on this one. If you have a highly mixed practice then sooner of later you have to deal with different systems. Remember that it was the end users that decided in the first place. Remember also there is evidence that end users are selecting their advisors in part based upon the solution they support.

breenandcowaterford February 23, 2012 at 10:47 am

@dahowlett@garyturner I don’t think the end user does decide at the sme level at the moment, I think we’re still in the stage where the accountant can dictate the system because we are converting purely from Desktop to Cloud. This will create many Xero or Kashflow etc Accounting Firms. Once prospective clients already have a cloud system then the accounting firm will absolutely have to be multi-disciplined but at the moment everyone we meet is still a cloud virgin so we have the influence.

Will Parker February 22, 2012 at 3:15 pm

Hi Dennis, fair enough, I have no doubt that your knowledge of Sage’s numbers are far better than mine! Also I daresay that other SaaS vendors selling in the Sage One space are signing up customers at a far faster rate than Sage as you say.

However, there is a bigger question, which is that you have to sell a lot of £20 per month solutions to be profitable. In this regard at accountsIQ we’ve moved ourselves from just selling at the microbusiness level (because it is so hard to make money there) more up into the standard SME space where the average order value is higher because customers require more functionality (e.g. inventory and group consolidations) as well as professional services to implement a solution.

Another thing we’ve found in the current market is that people are to some extent following the “if it ain’t broke don’t change it” mentality so from Sage’s perspective they have a lot of customers in this category and consequently they are not necessarily under huge pressure to move them off their current desktop product to a SaaS one.

A lot of the traction by numbers of companies signed up in the cloud accounting arena is at the microbusiness level where there are many small start ups who need a nimble and effective solution. I agree with you that Sage is not taking such a slice of these businesses as some of the other SaaS providers but the question is whether Sage will be able to migrate them to their own SaaS offering when that group of customers want to move. They certainly have the resources but we haven’t really seen the products yet.

dahowlett February 22, 2012 at 5:05 pm

@Will Parker Sage doesn’t have the resources. That sounds counter intuitive given its size but R&D is such a slender part of the overall cost makeup that there is comparatively little available for their SaaS efforts. By my reckoning, I don’t think they can devote much more than £4 million all in and that is barely table stakes in this day and age. It also has the effect of keeping anything they do in that space marginalised inside the company. I’ve seen how that corrodes efforts to do something useful. They have tried to ring fence but I’m not sure that is working as it should.

garyturner February 22, 2012 at 8:04 pm

@Will Parker Whatever you do, if you push farther upstream into the larger SME space to grow deal values, don’t use intermediaries (accountants or resellers) as your goto market strategy. If you do, then my bet is that you’ll not see much if any of the services revenue, and your delivery partners and intermediaries will be content to acquire new customers and implementations at a pedestrian rate, happy to live off a modest slice of services pie that aligns with their capacity.

The only way pushing upstream will work for you is if you own the entire billing and delivery relationship.

dahowlett February 22, 2012 at 10:03 pm

@garyturner@Will Parker I’ll endorse what Gary says (and he knows better than I from being in the trenches) but I also know from speaking with FinancialForce and Workday that the model Gary is talking about is critical. Even the mighty SAP is partially retrenching in that direction.

breenandcowaterford February 22, 2012 at 7:38 pm

@Will Parker @dahowlett@garyturner I don’t know exactly how much sage have for R&D but I think dennis two n’s is right. They act like a company with a huge marketing budget but no R&D budget. They’re could be another side in that they simply don’t want to cannibalise their existing products or revenue streams, which makes sense and will no doubt be used as the stick all new entrants to the cloud arena will beat them with. They actually might be better off waiting until a clear leader emerges and try to buy them.

Will is definitely correct when he says it’s very hard to make money at the micro level and I fully understand accountsIQ’s reason for going up the value and functionality chain.

My experience of current desktop accounting systems for SME’s is that they’re all broken and SME’s will gladly move to the cloud if someone does it for them. All you have to do is ask SME’s how they get information into their desktop accounts system and what management reports they produce out of them and most will tell you, manually and nothing, that’s broken.

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