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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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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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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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Sage X3 Launches in Russia and Austria. Sage who?

Actually Sage X3 launched in these two markets back in November 2010, but recent wins and partnerships underscore the global nature of the offering. If you travel around the major cities in Europe you will find Sage to be quite well-known. Not so much in North America. At Sage’s recent North American Analyst Day, all of the top execs that were present lamented this anonymity, most specifically Pascal Houillon, CEO Designate selected to replace Sue Swenson, current President and CEO of Sage North America when she retires later this year. In moving from France to California, he has been constantly reminded of this challenge of awareness both personally and professionally. His goal – make sure those that see him in the grocery store know who and what Sage does.
The stats from the most recent launch of Sage ERP X3 v6 in January 2010 signal X3 is indeed gaining traction. In the last twelve months Sage reports:
  • 300 new customers have adopted Sage ERP X3
  • the total number of X3 customers worldwide numbers in excess of 3,000
  • Sage ERP X3 is now available in 53 countries
So why do so few people know who Sage (a $2.24 billion company) is? Why don’t they think of Sage when they think of the top ERP players? First of all, Sage is not just an ERP company. The company also sells accounting, CRM, Payment Solutions, Healthcare EHR and practice management and more. So that $2.24 billion is not all ERP sales. But it does have 3 different ERP solutions including MAS, X3 and Accpac with more than 165,000 users worldwide.
Part of this identity crisis results from Sage having grown largely through acquisition and having preserved many of the brands along the way. In fact, Sage ERP X3, until the last couple of years, was known as Adonix X3. Whenever I talk with a company that is acquiring another company, one of the first questions I ask is about preserving the brand. Changing names is hard, especially when there is a significant amount of brand equity in the name.
I went through those same decisions back in the mid-90’s when CA bought ASK. The CA management wanted to lose the MANMAN name. The problem was, everyone “knew” MANMAN even though hardly anyone “knew” ASK. So my advice to CA management was, you can change the name, but people will always call it MANMAN (today MANMAN is Infor ERP MANMAN). Sage had a similar situation with MAS and Accpac (acquired from CA, by the way) and therefore the prefixing of MAS and Accpac with Sage ERP is the logical solution to introduce the Sage brand while preserving the brand equity of these two solutions. But getting staff and customers to call them anything but Accpac and MAS is a constant struggle. Old habits die hard. But Sage had the opposite situation with X3. Adonix was more well-known than X3 and Sage allowed Adonix to operate as a subsidiary, preserving the Adonix name, for several years.
So I am afraid Mr. Houillon is going to have to continue to work very hard to get the same level of name recognition here in North America that he enjoyed in Europe. But in a market where name recognition is paramount to market awareness, it is certainly worth the effort.
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