Sage

Leaders Rule with Sage Intacct

Sage Plus Sage Intacct “Lead The Future”

Sage Intacct describes itself as a “best in class cloud financial management software company, 100% invested in meeting the needs of financial professionals.” Bringing cloud computing to finance and accounting, Sage Intacct’s applications are the preferred financial applications recommended by the American Institute of Certified Public Accountants (AICPA) and are used by more than 11,000 organizations from startups to public companies. The solution has evolved over time and today the company has a broader impact on its customers than just transactional accounting, bringing not only governance and control, but also insights necessary for effective tactical and strategic decision-making.

The theme of its most recent user conference, Sage Intacct Advantage 2017, is reflective of this evolution of both the company and its solutions. The theme: “Lead the future.” Let’s take a look at what this means for Sage Intacct, its customers, and the finance leaders in those organizations.

Leaders Are in For the Long Haul

Intacct was acquired by Sage in July 2017, becoming Sage Intacct. All the top executives from Intacct remain in place post-acquisition. They are led by Rob Reid, former Intacct Chief Executive Officer (CEO) and current Executive Vice President (EVP) and Managing Director (MD) of Sage Intacct. Mr. Reid and his direct reports remain commited to leading the company, not just through the transition, but for the longer term, providing stability and continuity. But not content with the status quo, Mr. Reid is inspired by Abraham Lincoln’s famous quote, “The best way to predict the future is to create it.”

It would appear that both Intacct and Sage gained from the acquisition. According to Sage President Blair Crump, Sage was attracted to Intacct because of its leadership, not only in terms of the people, but also in terms of growth within North America and in customer satisfaction. It was also a good strategic fit with respect to Sage’s commitment to being “cloud 1st.Born in the cloud and offered exclusively as a multi-tenant software as a service (SaaS) solution, Intacct’s portfolio of products makes a nice addition to the newly announced Sage Business Cloud. While Sage itself is already strong at the low end of the small to medium size business (SMB) market, with its Sage 50 and Sage Live products for small businesses, Sage Intacct’s cloud financial management solutions are complementary. With very little overlap in target companies, Intacct should help Sage be stronger up market. While it is quite easy to outgrow those low-end solutions, it is much harder for companies to outgrow Sage Intacct. Together Sage and Sage Intacct intend to offer the “only financial management solutions a company will ever need.”

Good for Intacct = Good for Its Customers

Obviously Sage benefits tremendously from this acquisition. But can the same be said for Intacct? We believe so, if for no other reason that it paves the way for global expansion. Expansion into new global markets means customers must deal with the complexities of new tax, regulatory and compliance requirements, and potentially new accounting standards. With its focus on finance, this is not entirely new territory for Sage Intacct. Yet it has mostly been successful in North America, while Sage is more global, bringing both functional experience as well as global reach, including expanded local support.

And a side benefit to Sage: While it has become almost a household name in the United Kingdom and parts of Europe, it does not enjoy that level of brand awareness in North America. So the strengths of Sage and Sage Intacct are complementary.

As part of Sage, Intacct also has access to more resources and technology. For example, Sage Intacct can benefit from the experience gained by Sage in natural language processing (NLP) through the development and introduction of its virtual assistant (chatbot) Pegg.

However, this type of technology transfer is hardly a one-way street. Intacct appears to have been far ahead of its (now) parent company in developing artificial intelligence (AI) through deep machine learning. But because Sage can also benefit from this effort, Intacct will likely be able to draw on more resources than it could afford on its own.

The third component in terms of “leading the future” is helping people evolve as leaders. More specifically, helping the finance leaders that are playing key roles in the companies that are Sage Intacct customers. Sage Intacct is not stopping at just streamlining and automating tasks in the accounting department. Those are table stakes in today’s financial management applications. Mr. Reid feels, “Our job is to transform the way people think and work, removing barriers to achieve success and lifting them up so they can achieve more.” A lofty goal indeed, but what does that really mean?

Mr. Reid acknowledges three different styles of leadership within the community of finance leaders: the historian, the business analyst and the data scientist. The historian relies on traditional reporting, while the business analyst leverages data and analytics to drive decisionmaking. The data scientist takes that analysis to a whole new level in terms of cognitive, predictive and prescriptive analysis.

Mint Jutras takes a slightly different view, looking at these, not so much as styles of leadership, but rather skills sets that must grow and evolve progressively. The business analyst can’t afford not to be a historian. And the data scientist can’t afford not to be a business analyst. Can finance leaders today be all three? Not without the right set of tools. While analytical skills might be a common trait amongst good finance leaders, they are not data scientists. Which is why Sage Intacct must build business analysis and data science into the solution. That takes aggressive innovation.

Leading with Innovation

As the pace of change accelerates today, the need for more features and better functionality doesn’t stop once you get a new solution up and running. We live in an age of disruption. As a result, the pace of innovation must accelerate. We asked participants in our 2017 Enterprise Solution Study how the pace of innovation had changed since they had first implemented (Figure 1). Indeed, 39% report that upgrades are now delivered more frequently.

Figure 1: Change in Pace of Innovation Since Implementing?

Source: Mint Jutras 2017 Enterprise Solution Study

However, it is one thing to deliver innovation more frequently, but quite another to consume it. If we average the frequency of delivery across all our respondents, we find upgrades being delivered just about every 6 months. We also asked our participants how often they upgraded and found they consumed those upgrades about once every 13 months. If we contrast SaaS deployments to those licensed, we found upgrades consumed far more frequently (Figure 2) when delivered through SaaS. And yet we know this can vary quite significantly from vendor to vendor.

Figure 2: How frequently are these upgrades “consumed?”

Source: Mint Jutras 2017 Enterprise Solution Study

Delivering more innovation through more frequent (and robust) updates not only delivers more value, but is also one of the most differentiating factors in comparing cloud solutions. While some of the potential benefits of a cloud-based solution are inherent in the cloud itself, the cadence and method of delivery of innovation are not among them, varying significantly from one solution provider to another.

With four releases a year, including about 30 enhancements in each, Sage Intacct is keeping pace with the top SaaS solution providers. Below are some highlights by industry of the 150 product enhancements that have been delivered over the past year.

Nonprofit Organizations

Sage Intacct, along with new partner GuideStar, introduced the Sage Intacct Nonprofit Financial Board Book. The concept of a “guide book” or “Intacct Digital Board Book” was introduced back in 2015. They are designed as vehicles of communication , making enterprise data easier to consume, with instant access organized for action.

These Digital Board Books are very industry-specific and the first one off the shelf was designed for software businesses that, like Intacct, deliver software as a service (SaaS). This new one is designed specifically for nonprofits along with the assistance of GuideStar, the world’s largest source of nonprofit information.

The Nonprofit Financial Board Book is based on the framework developed by GuideStar to monitor the financial performance of nonprofit organizations. It uses real-time transactional data from the system of record in Sage Intacct to automate the calculation of key financial and operational metrics that GuideStar uses to not only demonstrate the financial health of nonprofit organizations, but also ensure the organization is on track in accomplishing its mission – a key element in attracting donors for funding.

Professional Services and Project-based Businesses

Sage Intacct also recently unveiled its new Project Manager Digital Board Book, which also includes new project budgeting capabilities. It is designed to empower project managers with better insight into project status and performance, keep projects on track so resources are available for the next highest priority, and uncover key insights to eliminate waste and improve productivity.

Software and SaaS Businesses

For software and SaaS companies, the contract is at the core of managing the lifecycle of the relationship with their customers. Sage Intacct recognizes the transition to the new ASC 606 revenue recognition guidelines is making the contract the new “unit” of Accounting. Back in May 2016 Sage Intacct Contract and Revenue Management was one of the first solutions to address the new complexities in revenue recognition created by the upcoming changes. Further enhancements were announced to enable companies to more fully integrate and automate the entire sales and finance process.

These are are just some highlights from the 150 product enhancements delivered over the past year by Sage Intacct via four quarterly releases. While these continue to supply Sage Intacct customers with a steady stream of useful and consumable enhancements, it was a preview of the future that was perhaps the most innovative and the most exciting of all.

Vision of the Future: Taking Intelligence to the Next Level

To sweeten the pot even more, Sage Intacct introduced its vision for a new digital assistant to the CFO. Its name is Pacioli. Think of it as a Siri or Alexa for enterprise applications. Pacioli will dramatically change the way the user interacts and interfaces with the software.

What’s in a Name? Pacioli

Fra Luca Bartolomeo de Pacioli (sometimes Paccioli or Paciolo; c. 1447–1517) was an Italian mathematician, Franciscan friar, collaborator with Leonardo da Vinci, and a seminal contributor to the field now known as accounting. He is referred to as “The Father of Accounting and Bookkeeping” in Europe and he was the first person to publish a work on the double-entry system of book-keeping in this continent.”

Like da Vinci, Pacioli was a polymath.

Source: Wikipedia

On the surface, Pacioli might look a lot like some other “virtual assistants” offered by other vendors recently, including Sage’s Pegg. Sage calls Pegg “the world’s first and only accounting chatbot,” but it’s not the only virtual assistant that can capture expenses from your mobile device and give you some visibility into cash flow.

While Pacioli is not yet ready for prime time and Sage Intacct may very well leverage Sage’s work with NLP, it is far ahead in terms of true AI – a good example of how the acquisition could have mutual benefits to both parties.

Although Pacioli makes use of advanced new technology, including deep machine learning, Sage Intacct doesn’t want to deliver it as a general technology tool, but instead will look for problems to solve and develop specific solutions to solve them. This is smart since its typical customers will not seek out or purchase technology for technology’s sake. Other vendors, far bigger than Sage Intacct, have struggled to gain traction when they released elegant new technology in search of a problem. Current and future Sage Intacct customers start with a problem and search for a solution.

Pacioli will have to start out with fairly simple questions, much like Siri, Alexa and even IBM Watson do. All these digital assistants must be trained to answer anticipated questions. Current AI technology isn’t good at coming up with brand new answers to questions nobody has thought of before. It is good at recognizing the question as one with a (stored) answer. Even with current limitations it can add tremendous value because we’re not talking about a few questions and answers; we’re talking thousands or more.

While many today have begun to fear that AI will take jobs away, much like the automation that occurred in the latter part of the 20th century, one Sage Intacct customer, Meals on Wheels doesn’t fear it. The nonprofit’s chief financial and administrative officer, Don Miller welcomes it, “If it saves us time and gives us more time to work strategically, that is useful progress. Some might worry about job security. But if it takes five hours to pull data together and AI can do it in minutes, I’m all for it.” This is consistent with the objective Mr. Miller had when he came on board: It’s all about eliminating “stupid work.”

For Intacct, it’s all about delivering a tool that will maximize the human potential. It has the potential of automating and eliminating the tedious, time-consuming tasks that keep a knowledge worker from working efficiently and effectively, without wasting time searching for data, policies or processes.

But… Is Intacct Getting Too Far Ahead of its Customers?

Sometimes software companies must take a leadership role in terms of innovation, inspiring customers and prospects to apply leading edge technologies in new and creative ways to create a competitive advantage. Without this push, many (most?) companies can become complacent. If the software that runs the business isn’t broken, there’s no need to fix it.

Eighty-four percent (84%) of survey respondents participating in the 2016 Mint Jutras Enterprise Solution Study agree that digital technologies of today (those that serve to connect operations, people and processes through the power of the Internet) have the potential to fundamentally change the way we all do business. Furthermore, 88% understand that embracing digital technologies is necessary for survival. And yet, we found the vast majority still coasting or riding the brakes when it comes to digital transformation.

Last year we also found that while 58% of participants felt they were well prepared for the digital economy, in peeling back the onion, we concluded that many were perhaps over-confident in their progress, often held back by old ways of thinking and a lack of understanding and appreciation of what is possible today.

So in our 2017 study we dug a little deeper to assess how well companies understand these technologies, and the potential they hold for their businesses. We selected 14 different kinds of technology and asked respondents to assess their level of familiarity with each in terms of how they relate (or not) to their business. The technologies that Pacioli might utilize are shown in Table 1 (in no particular order).

With the exception of predictive analytics and IoT, those that are unfamiliar, only somewhat familiar and/or don’t perceive the value outnumber those that have embraced these technologies. And yet these technologies have actually insinuated themselves into the lives of many consumers. And most of us don’t even realize it.

Table 1: How familiar are you with these technologies as they relate (or not) to your business?

Source: Mint Jutras 2017 Enterprise Solution Study

Anyone using Siri, Alexa or Cortana has used a virtual assistant and natural language processing. Google, Spotify and Pandora all employ “deep learning” (aka machine learning) to create a better play list for you. Did you ever notice that your GPS seems to get smarter over time, suggesting the routes you actually prefer? And the more you use any of these “apps”, the smarter they get.

These technologies are no longer science fiction. They are woven into the fabric of our lives. Apple, Amazon and Microsoft didn’t require you to buy something extra. They just made it part of what you got with your new device. And didn’t those features make you want the latest and greatest device?

That is exactly what Sage Intacct is setting out to do: take the lead in weaving these technologies into the fabric of the software we use to run our businesses.

Key Takeaways

Sage Intacct, with the backing of its new owner, Sage, has indeed set its sights on “leading the future.” The global reach and resources of Sage, combined with the stability and continuity of a strong leadership team positions it quite well. It will need to continue to aggressively provide innovation, continue to listen to its customers, while also leading them in new and innovative directions. It must continue to support the historians, while making them better business analysts. If it can deliver on its vision of the future, effectively incorporating artificial intelligence into decision-making, it can bring data science into the world of finance, without requiring its customers to be data scientists.

 

 

 

 

 

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The New Sage: Who and What Is It? Where Is It Going?

Early in his opening keynote for Sage Summit 2016, CEO Stephen Kelly announced, “Our real purpose is to champion the ambitions of entrepreneurs.” This sentiment goes well beyond the development and delivery of software products. Mr. Kelly himself is a business ambassador to the Prime Minister of the United Kingdom, representing the interests of small and midsize businesses to governments, in global markets, at colleges and universities, and on the political front as well. He has pledged to bring Sage’s products to the cloud and more innovation to the products. And he has declared that Sage is “The only company providing your digital heartbeat from Start-up to Scale-up to Enterprise.” [These are the new monikers for the markets in which Sage plays, replacing references such as “small” and “mid-size.”]

But, having grown through acquisition, Sage faces some challenges, not the least of which is the sheer number of products it owns, many of which are based on older technology and run exclusively on premise. I’ve never done a specific count, but based on a quote from Mr. Kelly presented in a Diginomica article by Stuart Lauchlan back in May after a mid-year earnings call,

“Our historic, federated and fragmented and de-centralized business model meant that we couldn’t fully leverage the scale and the global reach for the benefit of our customers or ourselves. In fact, it was actually hindering our ability to grow.

Our acquisition-led growth strategy compounded the internal fragmentation and complexity. And this fragmentation I’ve shared with some of you before in terms of 270 different products, 73 different code bases, over 150 different sales compensation plans, 139 sites, 105 databases from management accounting, 21 different CRM systems. I could go on and on.”

Wow! That’s a heck of a lot to consider. But Mr. Kelly seems up to the challenge. Make no mistake: This is a new Sage. Over the past year there has been a changing of the guard, with many departures, and many more new faces. But more to the point, Sage has re-architected its positioning. This started a year ago when Mr. Kelly declared Sage would no longer sell ERP, noting the acronym should really stand for expense, regret and pain. This year that sentiment persisted.

Throughout the keynotes, we heard reference to “accounting, payroll and payments,” but never “ERP.” Couple this with the heavy dose of “entrepreneurship” and you walk away thinking Sage is the place to be for small businesses in need of an accounting solution. With enormous installed bases from acquired products like Peachtree, AccPac and Simply Accounting, you might say, of course they are.

But what about all those “enterprise” customers running Sage 100, Sage 300 and Sage X3 where the founder of the business has long since exited? I found myself wanting to be their champion amidst all the accolades for the entrepreneurs in the audience. These enterprises need more than accounting, payroll and payments. They need to manage the complete system of record of the business, including orders and/or contracts. Fortunately the Sage products formerly known as ERP do just that.

And I felt for the partners who sell these products into the ERP market. When a new prospect wants to buy a new ERP solution, with this new positioning and the declaration that ERP is dead, will they even give Sage a look? Precise percentages might vary, but experts today estimate 60% to 70% of the evaluation process happens before a single vendor is ever contacted. Will those in the market for a new ERP system ever find Sage? The answer is maybe – but not necessarily because of Sage’s efforts, but rather because others still hang on to that label.

As I wrote last year, I have never been a big fan of the “ERP is dead” mentality. To my way of thinking, although the acronym itself has lost a lot of its meaning over the years, ERP is a convenient label. While early ERP solutions were fraught with problems, and indeed some of those problems persist today, calling it something else doesn’t fix it.

Based on my conversation this year with Mr. Kelly I understand his intent. This statement was his way of sparking some controversy, something Sage had previously been unwilling to do. However, based on how vigorously some of his Sage colleagues have defended this stance, I worry a little that the spark has become a flame that continues to burn at Sage. This is not only troublesome for existing ERP customers and partners, but also for those start-ups that will eventually scale up and become full-fledged enterprises. If Sage wants to continue to provide the “digital heartbeat” for these growing companies, it needs to provide a logical path forward that doesn’t require any steps back.

Sage provides different products for different stages of company growth. Early on, startups might run Sage One or the newer Sage Live (built on the Salesforce platform, which allows it to take advantage of many of the cloud, mobile and social capabilities inherent in the platform). But as the company starts to scale, perhaps it makes a move to Sage 50c, the Sage product most recently enhanced with integration to Microsoft Office 365. Or it might go to Sage 100, Sage 300 or skip right on up to Sage X3.

But Sage itself admits that it needs to catch up in terms of new features and technology. To its credit, Sage is not satisfied with just catching up, but wants to leapfrog its competition. But will all products along the path have some of the nifty new features inherited from the Salesforce platform or added to Sage Live? An example of this leapfrog effect was seen in a demonstration that linked Sage Live to TomTom WebFleet to record mileage as an expense in Sage Live without any human intervention whatsoever. In the future it will be possible to record billable hours this way using a Siri-like conversation to “start the clock.”

Another leapfrog moment on stage was the introduction of Pegg, an accounting chatbot that can take input from Slack and Facebook Messenger (for now, others to come) to report expenses using natural language English. Pegg combines a natural language interface with machine learning and intelligence to potentially do much more. Sage even describes it as a “personal trainer” for your business, but I suspect it needs to mature a lot before that really happens.

But what happens to this innovation when the customer outgrows Sage Live? Does it too get carried forward? Does the integration to Office 365 carry forward? Can you bring Pegg along or your TomTom? When you look at all the different paths forward, you start to realize the devil is indeed in the details. And all the permutations can be daunting.

This potential complexity is the reason why I think the most important Sage Summit announcement of all was the Sage Integration Cloud. During the keynote, we watched Nick Goode, EVP of Product Management integrate Sage One with Expensify in just a few minutes and a few clicks. As Nick said on stage, “No code, no fuss, no maintenance, no techy skills required.”

It was so incredibly simple, you knew there had to be something more to it than met the eye. And there is. This is built on Cloud Elements, an API Integration Platform for application providers. And the author of the “add-on” product (in this case Expensify) has to do some work in order to allow customers to connect it this easily. The level of preparatory effort will depend a lot on the technology and architecture of the solution(s). But Cloud Elements has created a Sage Hub, which means in connecting it to one Sage product, it connects to all (relevant) Sage products.

This is incredibly important for those on older Sage products, particularly as Mr. Kelly reinforced a commitment he made to customers at last year’s Sage Summit:

  • No forced migration.
  • No end of life for any Sage products.
  • If you love your current Sage solution, whether it is desktop or cloud, Sage will support your continued use of it.
  • When you are ready to move to cloud, full mobility and real-time accounting, then Sage is ready to take you there.

Sage is essentially promising never to “sunset” a product. Sage is not the only company making this promise. Infor, which also grew through acquisition and faces similar challenges, makes a similar promise, although Infor is also clear on saying it provides no real innovation to these non-strategic products. That’s the difference. I sense that Sage is (or should be) going down this “no innovation beyond compliance” path, but has not been as forthcoming with that statement. But both Infor and Sage continue to support a very broad and diverse portfolio.

On the surface this might seem quite noble of both Sage and Infor, or perhaps simply the right thing to do. But is it? Do they actually do a disservice to these customers by making it too easy to simply stay where they are and continue to be severely limited by this old technology? We understand the fear of disruption of ripping out an existing solution and replacing it, but in reality this fear and these older solutions are holding these customers hostage.

In order to make it less easy to stay put, Sage will most definitely use the carrot and not the stick. And the Sage Integration Cloud could be a very appetizing carrot. By offering some add-on components that might help these customers emerge out of the dark ages, Sage could “show them the light” (so to speak) and get them hooked on the opportunities newer technology provides. But in order for these customers to make a giant leap to a newer cloud product, with mobile and social capabilities built in, they will need to drag these new components along with them. That is the role the Sage Integration Cloud can play.

And it will also serve to make the Sage solution much more than “accounting, payroll and payments.” Sounds a lot more like ERP (and more) to me. This whole positioning exercise sort of reminds me of when Prince changed his name to a symbol. Everyone simply started calling him “the artist formerly known as Prince.” Ultimately (and fortunately) Prince went back to just being Prince, only better than ever. I am still hoping Sage might come full circle too.

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Sage Says ERP is Dead. What (I think) They Really Mean Is….

At Sage Summit 2015 earlier this week, new CEO Steven Kelly announced the company would drop the moniker ERP from its product names. Sage NA CTO Himanshu Pasule followed up by announcing that ERP is dead. This announcement produced a mixed response. There was some applause (ding dong the wicked witch is dead!) There were some shrugs (I don’t really care what you call it.) In conversations with clients I got some eye rolls and one actually said, “This too will pass.” My reaction? Yes, we need new ways of designing, delivering, consuming and innovating ERP. But you don’t say the automobile is dead just because there are some old clunkers still on the road.

Of course proclaiming ERP to be dead is not new news. Headlines along these lines started appearing shortly after Y2K (which proved to be somewhat of a non-event.) They were attention grabbing for a while and then they began to fade away, only to reappear periodically. So… with this revival does Sage intend to stop selling products that have been labeled “ERP?” No. It just won’t call them that anymore, explaining that instead of standing for Enterprise Resource Planning, what ERP really means is “Expense, Regret, Pain.”

Thanks to Derek du Preez of Diginomica who actually captured Mr. Kelly’s quote: “We believe ERP is a 25 year old industry term, characterised by cost overrun, and in some cases even business ruin, that has been imposed on you for the benefit of others.

“To the finance directors of the world, ERP stands for Expense, Regret, Pain. Sadly our industry has a long history of invasive, disruptive initiatives that have been carried out at the expense of their customers.”

Hearing this or reading it, you somehow get the sense that all ERP implementations are failures. I would disagree and can share some very impressive results from those I have determined to be “World Class.”

You also might get the sense Mr. Kelly was implying this involved some malicious intent – certainly not by Sage, but by all those other ERP vendors. Personally I think a lot of ERP vendors did the best they could with the technology they had available at any given time. But that technology is nothing like what is available today, just as the Model T is nothing like the Masserati, or even the Ford Taurus today.

Old, monolithic ERP solutions have been notorious for being hard to implement, harder to use and sometimes impossible to change as business conditions and businesses themselves change. Over time they have grown more complex and more unwieldy. I agree we need to fix that. Today the industry must find new ways to design, develop, implement and run these systems if they are going to keep pace with the rapid evolution of both technology and business today.

We need solutions that are easier to consume, using new ways of engaging users, over a wide range of devices. We need software that can be easily extended and/or configured without invasive customization that builds barriers to innovation. And we need more innovation, but it must be easier to consume with less disruption to the business. And finally, we need better integration capabilities.

Does any of this sound familiar? It should if you have been following me for the past couple of years. This just happens to be how I describe and define Next Generation ERP. Type that in the search box on my blog and you’ll get lots to choose from, starting with this first post. Could I have labeled it something other than ERP? Sure, I could have named it with the symbol . But if anyone referred to , they would always add, “used to be called ERP.” So I didn’t bother. Maybe we could start just calling it “the software previously known as ERP.” It seemed to work for Prince for a while, but ultimately he went back to being known as Prince.

Some are suggesting it be called Business Management Systems, although that too is far from new. Many have tried using this term in the past and it just hasn’t caught on, largely because those using the term tended not to have a complete ERP solution and were also targeting very small companies that typically lived in fear of ERP. So that sort of sets a precedent, and not one that is to Sage’s advantage.

And in an industry so enamored of acronyms, Business Management Systems would become BMS. So perhaps the reason it never caught on was in part based on the fear we would soon lose the “M” and we all know what BS stands for… again, not particularly advantageous.

In the end, ERP is simply a convenient label for software that runs your business, although I do use a more specific definition:

ERP is an integrated suite of modules that forms the operational and transactional system of record of the business.

This includes the customer order, which seems to be missing from Sage’s declared focus on the “Golden Triangle” of accounting, payroll and payment systems. Indeed it is typically the management of the customer order that sets a full ERP apart from a financial/accounting only solution. While some of Sage’s products are definitely accounting only, Sage assures me the intent was not to exclude the customer order and does include the full system of record in its Golden Triangle. So customers and prospects can feel safe in assuming at least some of the Sage products will continue to deliver on my definition of ERP.

Note also that my definition is intentionally quite broad. It needs to be, simply because the operational and transactional needs will vary quite significantly depending on the very nature of the business. You can’t run a service business like a manufacturing or distribution business. Retailers, government and non-profits all have their own unique requirements.

ERP evolved from MRP, which was originally short for material requirements planning, but later expanded to become manufacturing resource planning and then eventually grew beyond the realm of manufacturing to encompass the entire enterprise – any kind of enterprise, in any kind of industry. While some ERP vendors do have a very narrow vertical focus, others have taken a more horizontal approach. This has resulted in broader solutions designed to satisfy so many different needs that any one company winds up using only a small fraction of the full functionality. Not only are they encumbered by all that functionality they don’t use, but also there still might be gaps in meeting their specific requirements. So ERP winds up being too much and not enough, all at the same time.

This situation is also clearly exasperated by the fact that the footprint of ERP has grown to the point where it is getting more and more difficult to determine where ERP ends and other applications begin. Functions like performance management, talent and human capital management, etc, that used to sit squarely outside of ERP, today might sit either inside or outside that boundary. To be considered part of the ERP solution they must be seamlessly integrated. That used to mean tight integration that required the whole system to move forward in lock step, which made it rigid and very hard to upgrade. ERP users increasingly felt like they were steering a battleship, understandably so.

Expanding footprints, combined with a broader range of industries means complexity no longer grows linearly, but exponentially. Which I believe is the real problem Sage is attempting to solve. Changing the label won’t fix that. Taking full advantage of enabling technology and changing the way you design, develop, package and deliver it will.

I also believe Sage is making tremendous progress in making these changes, but that progress and the value actually being delivered to its customers is being overshadowed by the rhetoric around the death of ERP. Sage’s journey began several years ago under the guise of “hybrid cloud.” In a nutshell, this approach left on-premise ERP solutions in place and surrounded them with cloud-based connected services. The advantage was to allow customers to migrate pieces of their information systems to the cloud over time.

But there was yet another advantage to this approach, one that I wrote about most recently in describing Sage’s approach to Next Generation ERP. This component-based approach allows Sage to deliver more innovation by extending or complementing existing solutions rather than continually mucking around in the original code base. Today seamless integration can be delivered without old-style tight integration. A more component-based approach is typically referred to as “loosely coupled.” If you aren’t familiar with that term, you might want to read through my 4-part series on Next Generation ERP. For purposes here it is suffice to say that this approach allows you to consume more innovation, with less disruption.

Sage began to take a more component-based approach to development with its “hybrid cloud” strategy. Not only did this facilitate the addition of features and functions without invasive changes to the original code base(s), it also allowed Sage to develop new features and functions once and let different products and product lines take advantage of that effort. That means more innovation and easier integration.

This is also something Sage is getting better at in general. It began to implement rapid application development (RAD) methodologies about two years ago and is really starting to hit its stride. Its goal is to offer two upgrades each year. Of course, the real question will be whether its customers can and will pick up these new releases at an increased pace. According to the results of the 2015 Mint Jutras Enterprise Solution Study, 30% of respondents running on-premise or hosted solutions still skip releases and 11% would actually prefer to stay where they are forever.

This changes however as companies move to a SaaS deployment model (Figure 1). It is much easier to deliver more innovation, more frequently in a SaaS model. And there are fewer barriers to consumption because the SaaS provider does all the heavy lifting when it comes to upgrading the software.

Figure 1: Approach to Consuming Innovation in a SaaS Model

Fig 1 SageSource: 2015 Mint Jutras Enterprise Solution Study

After several years of promoting the concept of “hybrid cloud,” with an on-premise ERP at the core, Sage is moving more aggressively to SaaS, although it is still fully supportive on on-premise deployments. Sage X3 is a perfect example. As of its 7.0 release about a year ago, X3 became a true multi-tenant SaaS solution, although it does provide single tenancy at the data base level (which allows for portability between on-premise and cloud and supports extension of the data model). More recently it announced the official launch of Sage X3 Cloud on Amazon Web Services (AWS).

With this introduction, Sage will be competing more directly with SaaS only ERP providers. Those SaaS-only solution providers that offer multi-tenant solutions are able to deliver more innovation, with higher frequency, because they have the luxury of only having to maintain one line of code. Those that offer both cloud and on-premise versions must minimally support multiple releases (and often offer solutions on different databases and operating systems). Sage has indeed been gearing up for this and the proposed 6-month release cycle is evidence of very good progress.

Further evidence of Sage’s ability to innovate faster is the introduction of several new products including Sage Live, a brand new “real time accounting solution” built on the Salesforce1 platform and brought to market in months, not years. While existing customers don’t benefit directly from this product, they do benefit indirectly. Not only does this demonstrate Sage’s ability to apply RAD methodologies and new technologies (like those capabilities provided by the Salesforce1 development platform), but presumably other product like X3 will indirectly benefit from components developed for Sage Live that might easily be incorporated into the X3 landscape. As Himanshu described, “First the very high end, luxury cars introduce heated seats and pretty soon they become a standard feature.”

Conclusion

Let me repeat my initial reaction to Sage’s proclamation of the death of ERP: Yes, we need new ways of designing, delivering, consuming and innovating ERP. But you don’t say the automobile is dead just because there are some old clunkers still on the road. When it comes to solutions that help (or hinder us) in running our businesses, there are a lot of clunkers on the road today. Many were hard to implement, and are even harder to use and sometimes impossible to change as business conditions and businesses themselves change. Over time they have grown more complex and more unwieldy. I agree we need to fix that. Solution providers, including Sage, have made some great strides in doing that.

Those still driving those old clunkers should definitely think about trading them in. Those with some pretty good engines should look to turbo-charge them. ERP is a convenient label for the software that runs businesses across the globe today. Does it really need a new name? If so, I think we should call it Fred.

 

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What’s New at Sage?

There were lots of announcements coming out of the Sage Summit in Nashville this week. Some were updates on previously announced plans and strategies; some were familiar themes but new for Sage and at least one was something new for the industry.

Update to Prior Plans and Strategies: Re-branding

Updates to prior goals included the status of the whole re-branding exercise that was announced at last year’s Summit. In fact this caused quite a stir last year with many of the Sage partners attacking it as a strategy.

Over the years Sage has acquired numerous brands, including some with high name recognition like Peachtree, Simply Accounting, Accpac, MAS and SalesLogix. And some partners, particularly those dedicated to a single one of these brands, had wrapped their whole identity around it. With the new re-branding all were destined to be re-named into a series of numbered product lines under the Sage master brand: Sage One, Sage 50, Sage 100, 300 and 500. This process has been chugging along in spite of some early resistance, although a couple of the brands did survive. Most notable in the exception category is Sage ERP X3, which now holds a special place in the overall strategy.

The success to date of the execution of this strategy is largely because it is more than just a name change. The website was revamped and there were a lot of back office changes like a single phone system and other infrastructure convergence. And the single master brand allowed Sage to launch its biggest PR campaign ever, which included television ads.

So, you might ask, what’s in a name? Those opposed to the change would answer: A lot. But money talks and they can’t argue with the fact that Sage is able to spend much more on a single brand than it ever could on any one of many. Maybe the partners that resisted the most just didn’t show up this year (although I doubt it), but I just didn’t hear a lot of opposition to this strategy at this Summit.

New for Sage: Focus

New for Sage is more focus. In the past Sage was organized by product, resulting in 11 different divisions. Now it is organized into four divisions and these center around markets. But more importantly, all products will not be treated the same. Each will be tagged as either strategic or non-strategic and also as core or non-core. At first glance, these might appear to be the same, but in fact they are two entirely different ways of categorizing the portfolio.

The difference between strategic and non-strategic is pretty self-explanatory.  There will be far more investment in strategic products while customers running non-strategic products should probably be thinking about moving to a more strategic solution. Sage is already thinking about this and will be advising them of the most logical path forward. While Sage characterizes this as a “migration” I would caution these customers that “re-implementation” should not be regarded as a dirty word. If all you do is carry forward all those decisions you made back when products were far less technologically advanced and feature-rich, then you will be missing out on a lot of the advantages of moving forward. For those long-time veterans who simply want to retire still running the same solution, it is time to either move forward or get out of the way.

This is not true for non-core products. In fact a non-core product may in fact also be strategic. A non-core product is one that doesn’t fit into the general-purpose mold of the core products. It makes no sense for a solution designed specifically for the construction industry to follow the same product roadmap as that of a general-purpose ERP. And it makes no sense for a general purpose ERP to try to meet the special needs of the construction industry. To do so would simply add complexity.  Distinguishing non-core from core products allows these specialized solutions to continue to concentrate on those specialized needs without trying to fit a square peg into a round hole.

New for the Industry: Networthing

Sage brought networking expert Sarah Michel on stage to introduce Networthing. If you click on the hyperlink above she will explain exactly what that is. For purposes here, suffice to say that Sage put networking on steroids.  Everyone knows one of the primary reasons people are drawn to events like Sage Summit is to network: To meet, converse, share experiences with other like-minded individuals facing the same challenges and using the same solutions to meet those challenges. This draw largely explains why many vendors who tried replacing their events with virtual conferences soon abandoned that idea.

Yet apart from Birds of a Feather (BoF) tables at lunch and maybe a session or two, attendees were largely left on their own to connect with others. And let’s face it; some are a lot better at it than others. Sage took a different approach and in doing so took a big risk. Sage took several hours of the conference, a dedicated chunk of time, and organized a networking session.

They set up what they called Sage City, comprised of nine different villages (e.g. Manufacturing, Accounting, General Business, Real Estate and Construction, etc.), each with a “mayor” and a collection of discussion topics. Ideas for these topics came directly from attendees who were polled as part of the registration process. Then they divided the session into chunks of time. Think of it as speed dating where you move from conversation to conversation, although each discussion had more time allotted than a speed date.

This could have been a huge disaster with attendees just walking out after the introduction to wander the 56 acres of the Gaylord Opreyland. Or they could have walked out after the intermission (which served food and drinks). But they didn’t.  They stayed; they engaged, they discussed; they offered ideas and suggestion; they networked. In the end, Sage wound up extending the time allowed and finally had to kick attendees out of Sage City. Think what a gift this was for Brad Smith, Sage’s new EVP of Customer Experience, 14 days on the job, fresh from Yahoo!

These were just three examples of the news emanating from Nashville during Sage Summit. It was a much different event from last year: more energized, more change, more news. There were other announcements as well including the outline of their cloud and mobile strategy, and embedded in that strategy a new way of bringing innovation to customers faster, with less complexity and less disruption. But that deserves a lot more attention than a mere mention in this post. Watch for more on that!

 

 

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Marketing Inspired by Einstein?

Einstein inspired marketing and messaging? Who would have thought that Albert Einstein, recognized for his genius in physics, would inspire so many marketing messages? In December 2010 SYSPRO USA introduced its “Einstein” strategy, a clever association with the genius of the world’s most reknowned theoretical physicist. This Einstein strategy was the brain child of Judith Rothrock, president of JRocket Marketing. Judith has been helping companies boost awareness, bringing visibility and recognition to software solution providers for more than 20 years, including companies like Lawson Software, Hyperion, Ceridian, UNIT4, Deltek, SYSPRO and Meridian Systems, to name just a few.

So if imitation is the most sincere form of flattery, Judith should feel flattered right about now.  Last December Judith helped Syspro introduce the theory of ERP relativity, S=MC2  where M stands for material, and C2 is cost and cash management. S, of course, stands for SYSPRO. Since then I have seen Einstein referenced in marketing by two other companies.

The first time I noticed it was at the Sage Summit in July 2011. I was walking the show floor and saw a picture of Einstein on a pillar sign. I did sort of a double-take. Of course I knew Syspro wasn’t anywhere to be seen at a competitor’s user conference. But sure enough, there he was near the booth of one of Sage’s largest partners, Blytheco. If you Google Blytheco and Einstein together, it will lead you to their blog posts on “Leadership through the Eyes of Einstein.” You will see some very interesting quotes from the great man including a couple of my personal favorites:

“Insanity: doing the same thing over and over again and expecting different results.”

“Creativity is seeing what others see and thinking what no one has ever thought”

The second time I heard it was just yesterday. While I didn’t manage to get up in time to watch the opening keynote of SAP’s SAPPHIRENOW Madrid (it started at 3AM my time) I did manage to watch the replay. There he (Einstein) was again, right in Jim Snabe’s opening remarks, this time with yet another rendition of his famous equation. Mr. Snabe’s definition managed to include all four pillars of SAP’s innovation strategy:

e = mc(imc)2 where e = Enterprise, m = Mobile, c = Cloud, and imc = In Memory Computing

Of course I can’t say for sure that either Blytheco or SAP saw (and perhaps were inspired by?)  Judith’s and Syspro’s original Einstein strategy, but I can say I saw it there first.

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Sage Launches Sage ERP MAS 90 and 200 Version 4.5

 On November 1, 2011 Sage North America announced the launch of Sage ERP MAS 90 and 200 version 4.5. The new release includes:

  • customer requested enhancements
  • a new option of upgrading to Microsoft SQL Server 2008
  • one free user and server license of the fully integrated SageCRM
  • one Sage MAS Intelligence Report Manager license

This announcement also coincides with the release of Sage ERP MAS 90 Online, the new cloud-based deployment alternative for  Sage ERP MAS 90 and 200. Together these announcements reflect Sage North America’s efforts to keep pace with the growing demand for a fully integrated, expanded footprint of Enterprise Resource Planning (ERP) while providing more choice.

First of all, for those not familiar with Sage MAS 90 and 200, The Sage MAS product line is one of three offerings in Sage’s ERP portfolio, which also includes Sage ACCPAC and Sage X3. MAS 90 and 200 share a common set of code that forms a fully integrated business management solution for small to mid-size businesses (SMBs) managing a local operation. While MAS 90 runs on a single computer, MAS 200 uses a client server structure. As part of a re-branding exercise, in January, these two products will become Sage 100. The numbers loosely relate to the number of employees and annual revenues in its target market. So in this case, Sage 100 is well suited to SMBs, often with up to 100 employees or $100 million in revenue. However, these are only guidelines and fit is primarily based on complexity of accounting and financial needs.

Why is this announcement significant? My research shows World Class ERP implementations (the top 15% in terms of results, progress against goals and current performance) are 44% more likely to be operating on the latest release of ERP. Yet companies also rate the challenge presented by the cost and effort of upgrades as 3.4 on a scale of 1 to 5 (where 5 is extremely challenging). While not a show-stopper, most companies will not upgrade unless there is significant benefit in doing so. Therefore it is important to provide enough value in the release to help customers build a business case for that cost and effort.

What’s new in 4.5 that can help Sage MAS 90 or 200 customers build that business case? Here are some highlights:

  • National account management: Even SMBs sell to large corporations with subsidiaries and branches and MAS customers have been asking for a more streamlined way of managing those relationships. Version 4.5 introduces a new type of customer, a National Account whereby a parent company can be billed for goods and services while still keeping a unique customer account for each entity.
  • Handling payroll complexities: Five new methods of calculations have been added to handle a variety of specialized deductions and benefit accrual has been enhanced to reflect conditions and minimums.
  • Sales Order enhancements: These include new pricing options, new capabilities for split commissions and the ability to automatically generate purchase orders from sales orders. Also added is the ability to allocate by lot and serial number and provide better integration with job costing.

The 4.5 release also incorporates 37 enhancements provided through downloadable Product Updates since the 4.4 version shipped last year. These updates touched Accounts Payable, Accounts Receivable, Bank Reconciliation, Inventory Management, Job Cost, Paperless Office, Payroll, Sales Order and system-wide features.

In addition to these enhancements to the core ERP solution, customers upgrading to version 4.5 will also receive one free SageCRM 7.1 user and server license and one Sage ERP MAS Intelligence Report Manager license.

SageCRM is really all about automating sales, marketing and service processes to improve communication and internal collaboration. SageCRM is available for iPhone and also allows companies to monitor and track customer communications on Twitter. SageCRM also integrates with Sage eMarketing, one of several Sage cloud-based connected services. A 60-day trial of Sage eMarketing is also included so that SMBs can experiment with executing marketing campaigns.

MAS Intelligence in version 4.5 extends General Ledger reporting allowing customers to attach Reporting Trees to Report Designer layouts to model reporting structures and let customers view their organizations in different ways. Report distribution can be set up to be fully unattended and allows distribution through a variety of formats, including Excel, sending reports to a file, publishing to an FTP site or sent via email.

Obviously Sage is hoping one free license of each will lead to the purchase of more licenses, but this is a good way for customers to kick the tires of both prior to making a purchase decision.

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New Sage ERP MAS 90 Online Provides SMBs with Choice

On November 1, 2011 Sage North America announced Sage ERP MAS 90 Online, a cloud-based solution of Sage ERP MAS 90 and 200. Hosted by Sage, this option lowers up-front costs, eliminates the need to build an IT infrastructure and associated staff, and provides web access to a fully integrated business management solution for small to mid-size businesses (SMBs). Because this deployment choice is added to current on-premise options, it also comes with the option for seamless migration to an on-premise deployment in the future. Sage ERP MAS 90 Online will be available November 22, 2011.

Here’s what you get for $169 per user per month:

  • Access to all core software modules
  • Sage Business Care support
  • Backup services and disaster recovery

For existing customers of Sage 90 and 200, this will also include an upgrade to the latest version 4.5, announced at the same time (more on that in the next post).  This may very well provide incentive to small companies currently running small business accounting solutions like Sage’s own Peachtree or Intuit’s QuickBooks.

The Product Line

The Sage MAS product line is one of three offerings in Sage’s ERP portfolio, which also includes Sage ACCPAC and Sage X3. MAS 90 and 200 share a common set of code that forms a fully integrated business management solution for small to mid-size businesses (SMBs) managing a local operation. While MAS 90 runs on a single computer, MAS 200 uses a client server structure. This new deployment option adds web-based access to the mix. As part of a re-branding exercise, in January, these two products will become Sage 100. The numbers loosely relate to the number of employees and annual revenues in its target market. So in this case, Sage 100 is well suited to SMBs, often with up to 100 employees or $100 million in revenue. However, these are only guidelines and fit is primarily based on complexity of accounting and financial needs.

Extending the Solution

In addition to ERP for SMBs Sage also offers what it calls “Connected Services.” These are extensions to ERP such as Customer Relationship Management (CRM) or payment services, employee benefits, sales, marketing and lead generation services, etc. By adding these as separate cloud-based solutions, Sage has been adding value to all its product lines simultaneously and making that added value easier to consume. So “cloud” is not necessarily a new concept for all MAS 90 and 200 customers.

How much do SMBs care about SaaS ERP?

However, sometimes any company, including SMBs might be receptive to moving these complementary solutions to the cloud while still resisting moving ERP, which runs their business. In the past I have referred to ERP as “the last bastion of resistance” to SaaS but these barriers are beginning to break down and we may very well be on the cusp of a mass change in mind set. The Mint Jutras 2011 ERP Solution Study collected responses from over 900 survey respondents, qualified by their knowledge of ERP implementations. It asked the question, “If you were selecting an ERP solution today, which deployment options would you consider?” The percentage that would consider SaaS, taking into account all sizes of companies, was 47%. But when we examine the same data cut in a variety of way we find some interesting results.

While many industry observers and ERP solution providers think of SaaS ERP as a small company play, our survey results actually see the willingness to consider SaaS ERP increases with company size:

  • 42% of small companies (revenues under $25 million) would consider SaaS ERP
  • 48% of lower mid-size companies (revenues between $25 and $250 million)
  • 51% of upper mid-market companies (revenues between $250 million and $1 billion)
  • 59% of large enterprises (revenues over $1 billion)

So while companies who initially select a cloud deployment might feel it is important to have the option to move to on-premise later, it may not be growth that prompts that movement. This is particularly true since many large enterprises are comprised of a collection of small to midsize divisions, operating locations or business units. Because many of them have a multi-tier strategy for ERP (an administrative ERP is implemented at the corporate location and one or more different ERP solutions run the operating locations), cloud deployment may indeed be a way to bring remote locations on line more easily while standardizing implementation. So growth as a result of expansion to a new geography or an acquisition might also prompt a new deployment. And it may not just be new purchases that are considering SaaS. We may start to see current on-premise installations moving to the cloud and therefore we may be just as likely to see current Sage MAS 90 and 200 implementations migrate to a cloud deployment in the future.

But there was another way of looking at this data that was even more “telling.” The Mint Jutras 2011 ERP Solution Study was also used to benchmark the performance of ERP. It defined “World Class” performance as the top 15% of implementations based on results produced, progress against company goals and current performance of selected metrics. Interestingly enough, those with World Class ERP implementations were 35% more likely to consider SaaS as a deployment option for ERP (58% of World Class versus 43% of all others). Generally speaking, the companies with World Class implementations focus more on the end goals of increased revenue and profits and less on the means to the end. IT and enterprise applications are that means to the end and not the end in of themselves.

The Service

Sage ERP MAS 90 Online will utilize the same cloud service that already supports Sage Accpac running in the cloud, which has had a 99.874% recorded up-time for 2011. While the application itself is managed by Sage, the data center is run by QTS Atlanta Metro Data Center, the second largest data center in the world with an on-site Georgia power substation and direct fiber access. It is also SaaS-70 Type II Compliant. This data center is backed up by a second data center on the opposite coast in Santa Clara, California which is a fully redundant environment, with near real-time data duplication and less than four hour recovery time.

While we are seeing increased interest in SaaS ERP, there are still lingering concerns. Only 12% of survey respondents indicated they had no real concerns at all, and the top concern is still one of security. Security should be a concern for everyone whether running in the cloud or on-premise. Unless your systems are behind an impenetrable fire wall with no access from the outside world (including remote employee VPN access); and laptops never leave the premises and are never connected to any other network, you need to worry about security. And this is where small companies should be looking to secure SaaS solutions to bring a level of redundancy and security they would never be able to afford to build on their own.

Key Takeaway: Choice

Sage MAS 90 Online is being announced along with new database options and innovation which includes 50 customer-requested enhancements. In combination, it is all about giving customers more choices. Sage MAS 90 is an important element in providing deployment options with no lock-in whether you choose to run on-premise or

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The Sage re-Branding Effort Revisited

Back in July I wrote, “Sage North America is taking its brand very seriously these days.”

  • In spite of the fact that it is about an $858 million business and part of the larger global Sage Software, a $2.24 billion company…
  • In spite of the fact that is supports more than 3.2 million customers…
  • In spite of the fact that is has more than 27,000 Value Added Resellers…
  • In spite of the fact it employs 4,000 people in North America and 13,600 across the globe….

In spite of all this, and partly because many of these customers are very small businesses, Sage is hardly a household name. In an effort to strengthen its brand, at its Sage Summit last summer the company announced a major re-branding effort which would rename all of its products. While currently products are grouped and managed internally by software category (e.g. ERP and CRM), each with multiple brands and product lines, the thought moving forward was to simply group them by target of company size. This prompted many questions and caused a bit of an uproar amongst its channel partners, happy with current names and unhappy with incurring the expense of this effort.

Yesterday (October 18, 2011) Sage met with these channel partners virtually.  In a webinar presentation Sage EVP of Corporate Marketing, Dennis Frahmann, and Sage VP of Channel Management, Tom Miller, shared some details of the current plan. As you can see from the plan below, Sage has backed off on re-naming ALL its products. However, the goal remains the same: to build the “Sage” brand. In order to do that Sage will invest in marketing to leverage “Sage” as the master brand.

As stated before, the Sage branded portfolio will consist of product sets referred to by numbers that indicate increasing levels of sophistication or capability. These numbers/products were announced as: Sage 50, Sage 100, Sage 300, Sage 500. The numbers loosely relate to number of employees and annual revenues. For example, Sage 50 is well suited to smaller businesses, often under 50 employees or $50 million in revenue, but I described the coupling as “loose” because these are only guidelines. The fit is primarily based on complexity of their accounting and financial needs.

 

Sage also “exempts” some from this numbering scheme by saying, “All are bonded by a common set of Sage commitments: integration with common applications such as CRM, Fixed Assets and HRMS; Connected Services that connect the desktop to the cloud such as payment services; plus pre-requisite Sage services such as Sage Business Care and Sage Advisor.” So for example, you will see Sage CRM sold along with several of the Sage “number” lines. Sage ACT! is likely to be sold with Sage 50 and SalesLogix can still be sold stand-alone. Its name is not changing. And neither is Sage X3.

 

This makes the re-naming exercise largely ERP-centric. By treating CRM, HRMS, Fixed Assets and Connected Services as shared components, Sage will eliminate much of the anticipated confusion over where these products would “land”. I’m not sure how the decision on X3 really fits into the grand scheme, only that it seems Sage management decided it had enough brand value to leave it alone – at least for now. The same could be said for SalesLogix and ACT! Perhaps they will just get through this round first (a substantial effort) and revisit those decisions later.

 

In an effort to maximize the value and ease the burden on its channel, Sage is also promising to provide channel partners with materials that will assist in the brand transition, including a complete electronic brand transformation tool kit to transition. Sage also promises help in updating websites and co-funding up to 100% for eligible brand transformation activities.

 

In the meantime, here’s the new mapping:

  • Sage 50 is available in US and Canadian editions, representing Sage Peachtree and Sage Simply Accounting.
  • Sage 100 includes Sage ERP MAS 90, Sage ERP MAS 200, Sage Master Builder, and Sage Fund Accounting.
  • Sage 300 includes Sage ERP Accpac and Sage Timberline Office.
  • Sage 500 includes Sage ERP MAS 500 and Sage Fund Accounting
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How are you paying for ERP? Here’s how others are.

Back in May I posted some commentary and a warning not to confuse how you buy ERP with how you deploy it. There is much written today about deployment options in general and cloud computing in particular. Although how you pay for ERP is different from the way it is deployed, the two are definitely intertwined because you will either be paying for software or you will be paying for a service or both. This service is not to be confused with the consulting and implementation services you may contract for. This is either software as a service (SaaS) or hosting services, which may also be combined with Application Managed Services (AMS), where the company hosting the software also manages the applications and perhaps even the business processes the software is used to model (e.g. Accounts Payable or Accounts Receivable). But how are companies generally paying for ERP these days?

Just to recap:

Enterprise application software is typically not bought and sold; it is instead licensed for use. It may be licensed to be used by a company, on a particular computer or by other criteria such as number of users. This is similar to consumer software. Buying it once doesn’t mean you can duplicate it and share it with all your friends, or even sometimes use it on all your own computers. For enterprise application software how you pay for that license and the term of the license can vary tremendously.

A software license can be perpetual. Early findings from our Mint Jutras 2011 ERP survey indicate that 76% of responding companies have perpetual licenses. That means you pay for it once and can use the enterprise application forever. Maybe. This used to be the case, but more and more often today a perpetual license agreement might have a stipulation that you have the right to use that software only for as long as you continue to pay maintenance to the software vendor that provides the product. In fact, if you are buying ERP today, expect this requirement to pay a recurring maintenance fee in order to continue to use the software. In our survey 62% of those with perpetual licenses have this requirement.

A maintenance agreement, which is a recurring cost, typically provides both technical support and certain innovations. Some of those innovations will be included in your maintenance fee and others may still need to be purchased. Maintenance is typically priced as a percentage of the software license and the going rate at list price today is around 22% for ERP. While anecdotal evidence tells us that most companies actually pay less than this (closer to 16%-18%) this is largely due to specially negotiated rates and older rates that have not necessarily escalated at the same pace of increased list prices. But if you are purchasing a new ERP solution, expect this to be the starting point for negotiation.

But perpetual licenses are not the only type offered. Instead your license might be for a specific period of time.  This is generally referred to as a “term” license. At the end of the term, you must either renew the license or discontinue use of the software. In fact the application might have the equivalent of a kill switch in it that will disable it and prevent you from continuing to use it at the end of the term.  This type of license is less common and in fact only 7% of our survey respondents indicated this was how they paid for their ERP. Effectively managing this type of license requires some license management code to be embedded in the solution and this was not always done, particularly in older legacy software. If it was not, and you don’t renew, you are in breach of contract and you might find some software auditors on your doorstep.

Subscription-based pricing is another alternative, particularly for those who are looking to expense their investment as an operating expense rather than a capital expense. About 15% of survey respondents pay by subscription. You might pay a nominal startup fee, but you avoid the big front-loaded expense of a software license. Unless this is coupled with a SaaS deployment, this does not necessarily address the up-front cost or the on-going expense of the hardware. Only 28% of the subscriptions paid by our survey respondents were SaaS-based.  Running in a hosted environment where the supporting hardware costs are embedded in the subscription fees may indeed address these capital costs and allow you to account for payment completely as an operating expense.

The findings noted come from the 2011 Mint Jutras ERP Solution study. Look for more data to be shared in the upcoming weeks. If you are in any way involved in the selection, management, maintenance or use of ERP in your company, please participate in our survey. By doing so, you will receive the full executive summary and also have access for inquiry to Mint Jutras for a 6 month period. Your contact info is entirely optional but we will need your email address to deliver your report and an access code for inquiry. Mint Jutras makes it a policy to never share contact info under any circumstances.

To participate click here: 2011 Mint Jutras ERP Solution Study Survey.

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ERP: Join me in a stroll down memory lane

I’ve been “watching” ERP (Enterprise Resource Planning) for more than three decades now. You might even say I’ve been watching it before it even existed, before it emerged on the market, when it was still a twinkle in the eye of software companies. You see, back in the 1970’s most of the software industry looked with disdain on “packaged” software. Everything was pretty much home-grown or custom developed back then. After all, how in the world could you possibly write software that would really meet the needs of a wide range of companies? Back then of course, all companies were “different” and therefore software had to be developed to meet those unique needs. Right?

The answer even back then was really, “No, of course not.” Each and every company was not really that different. Every for-profit company took orders, delivered goods or services and paid their bills. Manufacturers bought components or ingredients and made things.  Distributors moved goods. Retailers procured, stocked and sold product. Even non-profits needed to balance their books and produce financial statements.  All but the very smallest companies had payroll to meet and taxes to pay. Yet business processes were/are not identical from company to company and each had/has their own nuances. Back in the 1970’s god forbid, if a software company dared to question how things were done, or worse, attempt to change policy or procedure. If something had to change, it was definitely the software. And back then, that meant mucking around deep down in the source code. And it was even worse if the file or database structures had to change.

When you look at it from this perspective you realize just how far we have come. Back 30 years ago, data entry clerks (dare I say even key punch operators?) and data processing (the predecessors to IT) departments were the only people who actually “touched” software. The only thing management touched was the mountain of paper produced as output and that paper was green bar, continuous forms that might or might not be “burst” into individual pages. Thirty years might seem like a life-time to those in Generation X, Y or the new iY. But to Baby Boomers who entered the job market during the 1960’s and 1970’s it seems like just yesterday.

ERP has of course evolved from MRP which originally stood for Material Requirements Planning, then expanded to include more than materials and became Manufacturing Resource Planning. Somewhere along the way there was an MRP II, but at this point in history the difference “II” added doesn’t much matter anymore. Then as the footprint of the software grew to encompass other aspects of the business, MRP merged with accounting applications and morphed into ERP. It broke free of the boundaries implied by Material and Manufacturing, to be an enterprise application for all types of industries. Some struggle to define ERP today. I don’t. I define it as an integrated suite of modules that forms the transactional and operational system of record of the business. But the boundaries of ERP have steadily grown to include a broader and deeper footprint, to the point where ERP is not really confined by any boundaries.

Back in the 1970’s, nobody would have conceived how far we could go in the next 30+ years, just as we couldn’t conceive of having the same (or more) processing power clipped to our waistbands  as that which used to require raised floor, climate-controlled rooms.  So where are we going now? All the rage of course is:

  • Mobility: accessing enterprise data from those ubiquitous mobile devices
  • Cloud computing: operating ERP in a hosted environment, public or private clouds, buying Software as a Service (SaaS) and connecting traditional on-premise solutions to those in the cloud
  • Two-tier ERP strategies: does it make sense for a multi-divisional company  to standardize on one ERP, or to have one (or more) operational ERP’s coexisting with a corporate, administrative ERP?
  • Mashing up data from ERP with other applications and even external applications like Google Maps, Outlook and anything you can reach through a url.
  • Processing huge volumes of data in seconds or even nanoseconds

But the real bottom line in implementing ERP is just that… the bottom line. How does it impact cost and efficiency? What business benefits does it bring? And is anyone measuring? This is the subject of my recently launched survey.

If you have ERP, you have a chance to weigh in on how important these trends are to you and then see a summary of the results and engage in the discussion. Even if you haven’t invested in ERP yet, jump in. We want to hear about what you are doing now, what’s holding you back and what are your plans?

You might be asking yourself, “What’s in it for me?” I will share a copy of the Executive Summary of the findings with all participants and I am also offering access to Mint Jutras for questions and inquiry regarding ERP for 6 months after you take the survey. While contact info is optional, I will need your name and email address to deliver this to you. Don’t worry, this exercise is not a marketing ploy asking for your permission to share your contact info. It’s really just about the research, so don’t be afraid to have your voice heard.

Please click on our Survey link to participate.

A note to solution providers: Feel free to take the survey but ONLY IF you answer questions honestly as a user (not a provider) of ERP solutions. Or, if you prefer, pass this along to your customers. For more information on how you might participate (see and benefit from the results) please contact me at cindy@mintjutras.com.

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