Posts Tagged ‘Sage’

A number of KashFlow customers have got in touch recently to tell me about an email they received from Sage.

Earlier this year we offered our online accounting software for free to anyone that could send us a copy of their boxed accounting software. A little video on YouTube demonstrating the future of boxed software got over 27,000 views and really helped fuel our campaign.

Sage then launched a campaign offering small businesses 25% off their software if they trade in a competing product.

The interesting part is that on their site they list “examples of suppliers that we offer our trade in discount against” for Sage 50 Accounts and list a number of products including Quickbooks and MYOB. But the onlyweb-based accounting software they mention is KashFlow.

When we ran our offer we received loads of software, including lots of copies of Sage. The total “value” of the software was over £10,000. I’m willing to bet Sage wont attract a single KashFlow customer with this tactic.

They can’t be getting much interest in the offer or someone would have pointed out to them that their link to the Sage 50 Accounts product actuall goes to a page for Sage 50 Payroll.

If you’re an international company  planning a US launch of a product, the UK is often used as a testing ground.

But what to do when the UK is your main market?

Sage released a dire web-based (and I use the term loosely) accounting system called Sage Live in January this year which was pulled within in a month of launch due to security issues with it that were flagged up on this blog.

Sage own a South African company called Softline which in turn own a company called Pastel. Pastel have a wide range of accounting products for the South African market and I’m told by the accountants we work with that they’re actually quite good.

In May this year, Pastel launched “Pastel MyBusiness Online“. They’re still working on improving the product and haven’t pushed the marketing boat out in any big way just yet. The design of the site shows traces of coloured abstract shapes Sage are using worldwide in their branding. If you have 10 minutes to spare, you can watch this video presentation from the launch:

I’ve not taken a thorough look at the software (I’ll leave that to Ben Kepes), but from what I can see it appears they’ve written it from the ground up specifically for the web. It has a nice uncluttered  interface and is available on a monthly subscription of around £12 per month (14o SA Rand).

In terms of functionality it seems pretty limited, especially in comparison to the many features in KashFlow, but it does cover the basics.

I’ve written on this blog before that Sage can’t do SaaS in-house because a) it’s not in their DNA – desktop programming skills and mentality don’t transfer to the web and b) it cannibalizes their existing business model. My proposed solution was for them to have a separate company set up specifically for developing SaaS. Fund it well but leave them alone.

It seems Sage already have that in Pastel.

So the only question remaining – why aren’t Sage taking Pastel MyBusiness Online and pushing it to the UK market? It looks like a half-decent product, true multi-tenanted Software as a Service and not the half-baked approach they’re using for SaaS CRM.

I suspect the answer is simple. In a company the size of Sage the left hand sometimes doesn’t know what the right-hand is doing. Perhaps Sage aren’t even aware that they already own a capable SaaS development team and an apparently respectable attempt at SaaS accounting.

It’s good to hear Sage haven’t been scared away from SaaS and the cloud after Sage Live, their aborted attempt at a web-based accounting app.

They’ve announced that their SalesLogix CRM system will be available as a web-based offering by early in 2010.

They say it’s a full-featured, ‘single-tenant’ cloud edition of Sage SalesLogix.  It’s a positive sign that they’re using “proper” cloud technologies, like Amazon EC2, to deliver the product. Their problems around Sage Live were irresolvable because they’d used an unsuitable middleware product (which they didn’t own) to deliver the application.

One big problem though. Single tenant? One of the biggest benefits of the SaaS model is that the software is multi-tenanted.

A “single tenant” system means there is an installation of the software for each customer. Indeed, Sage say that users can choose when to trigger an upgrade to the vlatest ersion of SalesLogix, rather than have Sage automatically upgrade them (what’s the betting this will be chargeable too?).

As well as not being ideal for the customer, it also creates problems for Sage themselves. This model of delivering software over the internet simply isn’t scalable, nor does it allow them to take advantage of (and reflect in their pricing) the ability to easily support the software knowing that everyone is running the same code.

All in all, it sounds like they’ll make a better go of it than they did with Sage Live. But it’s still a flawed strategy. For proper web-based CRM, see our partners here.

Perhaps by their 3rd attempt at getting into the cloud Sage wll finally grasp the concept in full.

Update: Good to see Philip Carnelley at TechMarketView agrees with me on the multi-ternnancy issue aswell as making some other very valid points. A saner person would argue that it’s me agreeing with him as he published way before me and our post titles are rather similar - but I swear I’ve only just read it!

Earlier this year I attended the Business Startup Exhibition in London. They were running an event based on the Dragons Den format.

Someone was pitching an idea for a web-based personal finance application. One of the “Dragons” tried to humiliate him and told him there was no demand for that kind of thing. The muppet was more interested in be a Simon Cowell mini-me than being of any use.  The person I was with dragged me away to stop me shooting my mouth off in defence of the would-be entrepreneur.

There’s plenty of demand for something like KashFlow but for the peronal finance space. Over in the US mint.com has been making great in-roads and taking big chunks of business away from the incumbent player, Intuit.

TechCrunch broke the news yesterday that Intuit are buying Mint in a deal worth £170m (£102m). A very handsome price for a company that isn’t actually making much money. The software is provided free of charge to the user and the company makes money by other means as mint.com founder and CEO Aaron Patzer explains in this video:

In the US, Intuit is a far bigger player in the accountancy software market than Sage, the UK leader.

Intuit “got” the SaaS concept long before Sage did (I’m still not sure they have) and have been successfully offering a web-based version of Quickbooks (US only) for some time now.

So where to now for Mint and Intuit?

Intuit say they’ll continue with the mint.com application and brand and put Aaron Patzer in charge of its personal finance group.

Patzer said part of the appeal to him of the deal was the ability to tap into Intuit’s resources, particularly on the marketing side of things. I can certainly relate to that.

I hope he survives the move from calling all the shots to being an employee. I don’t think I could!

But the question remains, where is the mint.com equivalent for the UK market? I don’t see one. The online accounting software space for small businesses is getting very crowded with a new entrant every month (I was only aware of 1 or 2 others when we launched). My suspicion is that one or two of them will re-position themselves as being a personal finance app in the not too distant future.

Update: @roanlavery on Twitter just informed me of the existence on Kublax, a UK equivalent of Mint. Very slickly presented and appears to be well funded. I’m surprised I’d not heard of them before.

It seems SagePay have been having some technical problems over the past day or so and the problems are ongoing and varied.

If you run a traditional ecommerce website and use SagePay (formerly ProTX) as your payment gateway then potential customers will have been getting to your checkout page, have problems paying and quickly run off to your competitors.

It’s bad enough when problems like this last an hour or two - but 26 hours and counting? I’d be livid!

We moved from SagePay when Sage bought them a while ago – we didn’t want a competitor knowing all of our financials and we also found their support to be less than satisfactory.

We move to IridiumCorp and haven’t looked back since. Their API was great to work with, the support has been top-notch and they even got us a new merchant account that is saving us thousands every year on transaction fees.

Iridium are capitalising on the growing disattisfaction with SagePay and making it easy to move to them. They’ll essentially give you free service for the remainder of your contract with Sage. So you don’t need to worry about waiting until your Sage contract ends.

Enquire now to see what they can do for you – do ask them to look at your merchant account fees too as they could save you money there.

Update:  We’ve been affected by this too now. Our VOIP provider uses SagePay, our account ran out of credit and due to the SagePay problems they didn’t automatically top-up our account. So no one in the office could make any calls – including the sales people. Serves me right for being so smug!

They say a picture is worth a thousand words, so rather than a lengthy blog post I’ve put together a video to illustrate my point.

It’s also perhaps an analogy for the future of traditional software companies that don’t embrace SaaS. Turning to dust and blowing away in the wind.

I find the video strangely therapeutic. Enjoy.

Don’t forget, until the end of this month you can send us your boxed accounting software for our big bonfire and we’ll give you ours free. Details can be found here.

Dennis Howlett blogged today that Sage may never get SaaS. Ultimately he offered the same proposed solution as I did back in May: that they should spin off a new company – seperate from the current management – specifically to work on the SaaS problems they face.

What I loved about the post though was the delicious irony of it all.

Sage buy software firms that have a good customer base but are essentially old, tired and over the hill with declining organic growth.

From Dennis’s analysis, Sage have become what they have acquired – old, tired and over the hill with declining organic growth.

With that in mind, I’ve devised them a new name and logo (above) which they’re welcome to use.

Sage CEO Paul Walker recently told silicon.com:

In the back office accounting area, business solutions, we’re seeing very small, slow growth in terms of demand [for cloud computing]. We have a number of products that meet that demand that so far is relatively modest

It didn’t sound right to me at the time. Why spend 18 months developing Sage Live, (their software-as-a-service offering that later got pulled) if the demand for it is so small and their current product range meets that demand?

Chiefs Disagreeing

Motasim Najeeb, relatively new CTO for Sage North America, made some interesting comments at their Partner event in Nashville. He talked about making Sage products an alternative to cloud-based offerings like salesforce.com. 

In the article linked to at the start of this post, Walker told Silicon:

in two or three years time I’d be very surprised if 50 to 60 per cent of our customers were on [cloud-based applications] but it could be more like 15 or 20 per cent

But Najeeb is quoted as saying that  in three to five years Software-as-a-Service will probably surpass on-premise software.  You can guess who I agree with.

SaaS, not “Cloud Computing”

Sage also seems to be some confused about what their soon-to-be-ex customers actually want. Walker talks about delivering more ”cloud computing” apps - which is a catch-all term that includes just delivering the same old software over the internet (not the same as “the web”) using remote access software. The ex Sage customers we and other SaaS accounting companies are picking up aren’t looking for cloud computing solutions. They specifically want true SaaS applications that will pass The Touring Test.

Sage say they’re meeting the existing demand from their customers. Here’s a quote from a direct message I received on Twitter today which is typical of the kind of thing we’re hearing all the time:

I’m historically Sage oriented but willing to look at online solutions as well and Sage’s offering is ****. Perhaps demo ?

The sender doesn’t want to be named as he still has a relationship with Sage. But needless to say he has now seen our software and it’s the only product he’s recommending to his clients for web-based accounting. He only came to us because Sage have nothing suitable – ie, they’re NOT meeting the demand.

It’s not only Sage resellers, consultant and accountants that are telling us Sage can’t fulfill their needs, but some of their bigger international commercial partners are  too – more about that another time perhaps. 

The demand from the Sage reseller channel for a SaaS app has been so great since the start of this year that we had to develop a reseller programme specifically to be able to capitalise on it.  We don’t have anything online promoting it just yet, but it’s up, running and being used.  (Contact Neil Ballard on 0800 848 8301 if you’re a reseller interested in this)

Plugging into the web

I made a post last year with the title Sage Prove They’re Both Worried and Clueless. The “clueless” in the title was about their lack of understanding of the ‘net and specifically social networks. Since then I’ve been really impressed with the way they are using Twitter to engage with clients. And now it seems Sage, in the US and the UK, are reaching out to industry commentators, like Ben Kepes, that really know their stuff.

I guess it takes a while for a juggernaut to change direction. But all the signs now are that Sage are (very) slowly moving in the right direction.  Hopefully the CEO will listen to his CTO about the technology (the clue is in the T!) and we’ll see a viable product from them one day soon which will give a lift to the whole SaaS accounting industry.

My Tuppence Worth

As Sage seem to be soliciting opinions on their approach, here’s mine just in case anyone is still reading.

They seem to have two major problems:

1. Software for the web bears no resemblance to software for the desktop, they have lots of experience with the latter, but none with the former. The skills are not transferable – that’s what doomed the Sage Live project. Software for the web is not in their DNA.
2. SaaS is a business model as well as a software delivery model. That business model cannibalises the existing models of software companies like Sage. You can’t have the same people responsible for pushing forward a SaaS company and a old-style software company

To me the solution to both problems is pretty simple:

They need to get a new company up and running, owned and funded by Sage PLC (although I know a few VC’s who would happily pour money in)  – give it a big fat budget and some good project managers and let it run independently.

Then recruit developers that are real web developers, not desktop developers. These people can’t be from within Sage - they need to be people that know the web but aren’t tainted by exposure to old-school software houses, their methodologies and blinkered approach. They need to build an app from the ground up using pure web technologies – PHP, .Net, Ruby, whatever.

The new company should be able to access Sage’s expertise on the accounting side of things – but not make use of ANY of their existing technology, code,database structures or concepts of how software should work. That last bit is so important. I can understand how tempting it must be to re-use code and database structures to save time and money. But that would be like a cancer in the new product. Don’t do it!

I reckon they could easily put together something good enough to take to market within 6 months.

From then on, they can revive what I suspect was part of the Sage Live game plan: release the app sooner rather than later and improve it based on feedback from actual users. Improve and release again ad infinitum (a web-app is rarely finished) and price it very aggressively.

Once the product is working well, let them tap in to the marketing machine that is Sage PLC as well as having their own budgets for online marketing.

If done correctly the new business will very quickly start taking customers away from it’s parent company. But these customers were going to be tempted away anyway – better for Sage that they leave for a Sage-owned subsidiary than elsewhere.

Or there’s always Option B. If Sage want to save some time and make a very serious web play that will keep them relevant to the fast changing market then they should just buy 37Signals. That’d shake things up a bit!

Back in March I said that we would give you our software for free for a year if you sent us your copy of an old-fashioned, boxed software for our bonfire.

After a slow start, the boxes have now started coming in thick and fast – much to the annoyance of our postman.  No “slow-burn” puns please. Some of the thicker manuals have already gone up in flames after being used as firelighters for bank holiday barbecues.

As well as the expected copies of various versions of Sage and Quickbooks, we’ve also had an unexpectedly high number of MYOB products. I suspect this is due to experiences like this with new owners, Mamut.

What’s been really entertaining for us all here is reading the notes that have come with some of the packages:

I would like to take advantage of your kind offer to rid myself of poxy software and jump ship to KashFlow. Here’s looking forward to never having to use bloated accounts packages again!

Dear KashFlow, Please find my old Sage software enclosed which you may destroy!

If you need any help putting the fire out, I will gladly urinate on my copy of Quickbooks after it’s been burnt to a cinder. More power to KashFlow!

The original offer was meant to finish at the end of April. Due to how popular it’s been we’re going to extend it until the end of July.

Same rules apply as last time:

• We must receive your product in it’s original Quickbooks/MYOB/Sage packaging and with proof of purchase.
• We can withdraw this offer at any time
• New customers only
• Your product must arrive with us on or before 31st July 2009
• Your product must have been purchased prior to 5/03/2009 (the date this offer was first announced)
• Offer not available to anyone who types ‘Kashflow’ (lower case F)

Send your package to our postal address and be sure to include your username.

If you’re not already trying KashFlow – sign up for a free trial here.

If you were reading this blog last year then you may remember Sage proving they were worried and clueless - worried about SaaS, and clueless about how a small firm like KashFlow can use the internet to get our story heard. 

After we stole their thunder they reported us to Trading Standards over a pricing comparison on our site. Because of their aggressive approach towards us, when I then found security holes in their attempt at SaaS, Sage Live,  I blogged about it instead of quietly telling them.

The combination of a flawed product and their bullying antics resulted in a torrent of bad PR, including Daniel Goldman (son of the late, great Sage founder David Goldman) writing on his blog that Sage should have kept schtum.

Well, today I’ve agreed a resolution with Newcastle Trading Standards. We agreed that it’d take considerable time and resources on my part to prove my case (reckon Sage knew that?) and the easiest thing is for us just to remove the comparison that they objected to so we can focus on growing the business. A bit of an anticlimax for those of you expecting blood and gore in the tornado I’m afraid.

Sage Live itself also seems to have been a huge anti-climax. Everyone in the SaaS accounting industry was excited about Sage entering the foray. But just as quickly as it arrived, it was taken offline to “as a precaution” after my post about their security issues. Their line to the media has been that it’ll be back as soon as the issues are fixed. That was 3 months ago. I’ve been hearing on the grapevine that the problems are so fundamental that it’ll never be back – not in anything like it’s former guise anyway. As if to confirm those rumours, I’ve had recruitment agencies in touch this week touting CVs of developers and sales people that worked on the Sage Live project.

It would seem that when it comes to Sage and the Cloud – they’re in an Egpytian river. Paul Walker, their CEO, yesterday told silicon.com:

In the back office accounting area, business solutions, we’re seeing very small, slow growth in terms of demand [for cloud computing]. We have a number of products that meet that demand that so far is  relatively modest.

He did go on to make some more positive noises, but I don’t think he realises what’s going on in the industry right now, today. Not in 3 – 5 years.

It seems Sage are really tightening their belts at the moment with a round of redundancies being offered. Not surprising you’d think given the recession. But we’re recruiting and so are at least 4 other SaaS accounting companies that I know.

Two other contrasting bits of news recently: Salesforce.com, the darling of the SaaS industry, recently passed $1bn in revenue. Whilst Microsoft, the grandaddy of installed-software, have reported their first year-on-year fall in revenue for 23 years.

I read once that the short-term impact of new technology is often overestimated (hence the dot com bubble), whilst the long-term impact is usually underestimated. I’m inclined to agree.

Thanks to @10Yetis for the heads-up on the silicon.com article