I've just spent a week in a swelteringly hot New Orleans at Sage's annual conference. (Disclosure: Sage covered my travel and expenses to attend the event.) It's actually the first time I've had any interaction with Sage, and it is also the first summit for its new CEO, Stephen Kelly. These two facts are likely related, and Kelly has been quick to make changes within the company, not least of which is the enhanced media and analyst outreach Sage is now making.
Sage is a strange beast. I chuckled at the summit when various people used the statistic about how many of the world's Fortune 500 companies have ceased to be on the list in the past 10 years or so. Sage is a software monster, and has also been in existence longer than many of its customers — Sage was founded back in 1981. Is Sage on the way down like so many other old-world companies, or has it found the secret to continued success?
Sage has also been a company that had an organizational DNA of mergers and acquisitions. Sage has long been known as a voracious devourer of companies. It's table of acquisitions is ridiculously long and has resulted in a company that has a product suite that shares very little other than names. Sage products may have the same names across different geographies, but they often reside on completely different code bases. Not unlike other software vendors, Sage has created a rod for its own back that the new CEO is having to deal with.
Sage is also a company that has been historically dismissive of the cloud. In this respect it feels much like Oracle (and, as an aside, Kelly is an Oracle alum). Who could forget Oracle CEO Larry Ellison pouring scorn on the notion of the cloud a few years ago? Sage has had a frankly embarrassing time of it in the cloud. Its first cloud product, aimed at micro businesses, was hastily pulled after a competing company's CEO discovered that it had massive security flaws and was built upon an archaic and unsupported platform.
Given that one of the things Kelly seems to have done is to greatly expand the marketing budget within Sage (interestingly, there were roughly four times as many media and analysts at this summit as previously, an indication that Kelly is on a mission to win the "hearts and minds"), there was pressure on the big man to deliver something grand in his keynote.
Kelly spent what little time remained after his keynote interview with Colin Powell and Deepak Chopra to reaffirm his personal love, and Sage's corporate laser focus, on small and midsized businesses. Accompanied by a bewildering array of grand arm gestures, Kelly was quick to point out (repeatedly) that he loves small businesses, that Sage loves small businesses, and that the company is humbled with the trust that small businesses put in it. All grist for the marketing mill and designed to, if nothing else, send a feel-good message.
But it was important for Sage to really deliver something. The face of the accounting software industry is changing. Intuit, always dominant in the U.S. market, has expressed an intent to become far more global. Upstart Xero has taken significant market share in Sage's home market of the U.K., as well as dominating the Australasian market. In the mid-market, Intacct, NetSuite and FinancialForce are all growing like weeds. On top of that, a plethora of smaller vendors is vying for the micro-business opportunity.
All of these vendors have something in common: They have all embraced the cloud as the way forward. Even Intuit, a formerly die-hard desktop software vendor, is "all in" with the cloud and actively pushing customers from its in-premises version to its cloud ones. Many of the other vendors are cloud-native — Xero, Intacct, NetSuite and FinancialForce were all born in, and on, the cloud.
So it was perhaps a little worrying to hear a message from Kelly which, frankly, harked back to the sort of messages we heard from Oracle and Microsoft close to a decade ago. Kelly was quick to differentiate Sage from all the other vendors in that Sage has "too much respect for customers to force them onto the cloud." Clearly Kelly was making a loose reference to Intuit, which has pretty much put a line in the sand about its QuickBooks desktop product and put all its weight into migrating customers to the online version. Kelly, on the one hand, talked about the benefits of the cloud, but then introduced concerns — security, migration issues and compliance.
Kelly drew his own line in the sand, promising that Sage was not going to force customers to move. No end-of-life of existing products, no forced migrations. As Kelly said (several times):
Sage loves on-premise. Sage loves hybrid. Sage loves the cloud. What this means to us is that we are absolutely happy for you to run your business from your own offices, with your own data. We are also absolutely happy for you to run your business from your offices, but unleash the power of mobility for viewing information on the go. And we are also really, really happy for you to run your business in the cloud.
You run your business the way you want to run a business. And Sage is there for you. The question I put to the team when I joined, the question you want to ask too, is: How do we build a road map that allows each of you to control the pace of migration to the cloud, should you choose to? Because it’s all about you controlling the pace of migration. Sage will not force you to migrate, you will decide and we will be there to help you. End of life and forced migration are painful words that cause you business disruption and needless cost.
What this means in real terms is that Sage is going to provide ongoing support for all versions of software where a maintenance contract is in place. Customers who are prepared to stump up the fee (and, as an aside, Sage has significant leverage here, it can ratchet up maintenance fees as a kind of migration-forcing function) will have support for their products.
It struck me that Sage was creating a rod for its own back, having to employ people to support age-old software, in a follow up conversation, Kelly told me that have a handful of developers supporting a legacy platform isn't a big impact and it is Sage's way to confirm its commitment to its customers.
All of which provided for a degree of incongruity at the event. On the one hand, Kelly came out declaring his undying love and respect for small businesses and his total commitment to not forcing them to change. This exhortation was, on the other hand, followed by beamed in interviews with Salesforce president Keith Block and Microsoft CEO Satya Nadella, who both waxed poetic about the amazing benefits that the cloud can bring. It seems that Sage is walking a fine line between helping its customers stay in the dark ages and encouraging them into a new world.
All of this tension was also displayed in the various product announcements made at the show. In a follow-up post, I will delve into what we saw from a product perspective.
All in all, the Sage Summit was an eye-opener. I came away feeling a little like I'd just stepped back a decade or more. The language, the positioning and, frankly, the dose of fear, uncertainty and doubt that we were all given was a little jarring. Sage is running an experiment, not unlike that which was determined a failure for others who previously tried it. Time will tell how it works for Sage.