NEW ORLEANS: When Sage chief executive Stephen Kelly took to the stage at the company's Sage Summit 2015 he said the firm will abandon the term enterprise resource planning (ERP), claiming it is an outdated concept and irrelevant to modern businesses.
It was technically more marketing spiel than a complete company shake-up, but Kelly's declaration outlined a new Sage, one aimed at developing products that benefit the needs of its small and medium business target market.
Sage will look to achieve this with products such as the newly announced Sage Live that can be used by a company's accounts department and other areas of the business to make use of financial data and compare it with sales data, for example.
This mission statement may be in line with Sage's ambitions to win "customers for life", but Clive Longbottom, founder of analyst house Quocirca, told V3 this approach could see Sage trying to be 'everything to all companies' by delivering complex and often customised services in a packaged form.
"I think the biggest problem for Sage is deciding exactly what it is. Sage is saying that it is not ERP, but is still saying that it is accountancy. But accountancy can't be shrink wrapped in the same way that ERP can't be shrink wrapped," he said.
Longbottom likened Sage's ambitions to piecing together a large jigsaw, saying that Sage wants to fit its products into many different parts of a business but has yet to decide how it will do this.
He added that if Sage wants to create products to be used across a company's line of business it will need to reimagine its software portfolio and business far more than it is doing already.
But if Sage wants simply to expand its reach into other business areas, the company will need to find partners to help integrate its products into systems used for specific business processes, according to Longbottom.
Part of Sage's mission involves providing companies with cloud services, but also offering on-premise software if customers do not wish to make the migration to the cloud.
Every Sage executive V3 spoke to at the conference was adamant that, while Sage rivals such as NetSuite are adopting a cloud-only approach to their businesses, Sage will not leave cloud-shy customers behind.
Himanshu Palsule, chief technology officer and head of strategy at Sage, told V3 that the company does not want to rush into offering only cloud products as the market is not yet mature enough.
"The lesson most companies learn is you can't force evolution, you can help accelerate evolution," he said, noting that cloud will be the eventual destination of Sage's customers and that the firm is adding cloud functionality in preparation.
But Sage will not doggedly pursue the ‘cloud first' mentality of other software vendors: "It's our job to help [companies] along, but you can't leave them behind and expect them to award you repeat business," added Palsule.
"So knowing that the eventual destination is going to be the cloud, whether it's in five years' or 25 years' time, we are building functionality into our products that lead to that destination."
Longbottom agreed with this approach, saying that, while cloud has much to offer businesses that adopt services delivered on such a platform, many companies are still not comfortable pushing critical systems and software into the cloud and out of their direct control.
"It makes a lot of sense, but don't confuse sense with reality. A lot of people are still ‘server-huggers', and it's a case of ‘I'm not buying cloud. I prefer to know all of my data is on [an in-house server],'" he said.
"You've got to deal with that reality, and Sage has to be able to say: ‘Yes, you can do it on-premise or you can do it in the cloud'."
Education, not revolution
Lee Perkins, managing director of Sage UK and Ireland, suggested to V3 that building cloud products is Sage's plan and the company will try to educate customers into considering the cloud without pressuring them to make the leap.
"People don't just adopt [the cloud]. They don't wake up one day and think: ‘Oh, I know what I'll do I'll adopt this new thing,' so it's all about the interaction and ongoing conversation with them," he said.
Again, Longbottom agreed with this approach, but said Sage will need to find a way to fully support customers who do move to the cloud, rather than offering cloud-powered additional services alongside supporting on-premise software systems.
"I have absolutely no problem with [the strategy] at all. I think that's a sensible way of doing it, but what you don't want to do is play Sage Live and X3 so heavily that [companies] on its 100c and 300c accounting tools look at it and say: ‘Hang on, we're being left behind and we're not getting the help to move from what we've got over to those platforms,'" he said.
"If 100c and 300c don't cut the mustard and aren't as good as Live, [Sage] has got to start offering proper migrations from those over to Live, but they haven't got that yet."
While Sage's cloud strategy has merit, and will no doubt be welcomed by many businesses still wary of using the cloud for key business processes, it seems the company is focused on delivering produces that fit a business's needs today, rather than building products for the future.
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