I have been expecting this announcement for a long time but it still came as a surprise when Keith Block, vice chairman Salesforce, made an off the cuff remark in Boston at the Salesforce World Tour event last week. In February Sage and Salesforce announced that they’d work together with Sage moving some of its undisclosed ERP applications to the Salesforce Cloud. But the word didn’t seem to spread and it remained off my radar for nearly two months.
No matter. Sage has been a mainstay of the SMB market for business apps for a long time. With global reach and customers that push the envelope for what an SMB is, the company enjoyed great success in prior decades. But lately, the company’s legacy has been a drag. The apps have needed refreshing for a while with some of them still operating on flat file system back-ends rather than relational databases.
The major culprit, from my perspective, has always been the Sage resellers. The partners have built great businesses on delivering services for customizing and training for Sage products and were reluctant to change their cash cow businesses. A succession of weak CEOs didn’t help much either. Several thought they could ignore the problem of modernization or cajole partners into adapting with the backfiring result that the forward thinkers abandoned ship leaving the more conservative partners with increasing influence.
This is my analysis and you should look for confirmation but my point is that we have arrived at a time when Sage is getting off the dime by getting onto the Salesforce1 Platform and with it joining the ecosystem. This is great news but it also has its own issues for competitiveness.
Although Salesforce CEO and co-founder Marc Benioff long ago disavowed any interest in building an ERP product, the availability of the platform has been more than inducement enough to get others to do so. Companies like FinancialForce, Intact, and Kenandy and others all have products on the AppExchange that will compete in one way or another with anything that Sage brings to the party. Also, there’s no shortage of non-Salesforce oriented ERP in the cloud happy to do battle with NetSuite being the 800-pound gorilla.
But Sage still has a big user community around the world, products that reach smaller users than those that other ERP/accounting vendors target, not to mention a partner base that can still deliver so it will be Sage’s relationships, I think, that either make or break this move. Also, being able to show up with the world’s number one CRM in tow and a slew of modern business apps to boot, should make a powerful combination. Just ask the other ERP players.
It is still unclear which Sage products will be converted or which ones first. I hope that the company will see this as an opportunity to move everything so that for the first time, the product lines that grew by acquisition, will have a common platform.
This is a big test both for Salesforce and for Sage. For Salesforce it’s a great way to grow share and gain influence in more parts of the world. For Sage, it represents a chance at redemption and a new start as a more integrated software company with deep expertise in the back office and multiple verticals such as real estate.
In my mind this doesn’t leave much room for a Sage CRM product though. They had three CRM solutions at one point including ACT! And SalesLogix that they sold off. Sage is now left with a cloud product that by all accounts is good but Sage has always been a company by and for accountants and front office automation was never something the company put its back into. I can name other vendors that were in the same situation but who for multiple reasons became CRM oriented enough to talk the talk, so can you.
Sage Summit happens this summer and it should offer some very interesting keynotes. Will a Salesforce executive attend to welcome the company to the cloud? To be continued.
(Cross-posted @ Beagle Research Group)