Sage has been a value-driven software vendor for quite several years but given our exposure to Sage buyers, and the activities within the company are concerned about Sage’s future. Without a change in management, Sage can within five years become a vendor with serious problems and an acquisition target.
Sage is another follower of growth through acquisition, which we consider a low-quality path to growth. As with JDA, this has lead to the purchase of software vendors with duplicate functionality – which is a sign of a vendor, which is making acquisitions not for the software but as a way to purchase customers.
Quality of Information Provided
Sage is similar to Epicor and Infor in that their size versus their market opportunity is not favorable, which means that salespeople are tripping over themselves and dealing with them as a customer means being perpetually pitched new products. This will always bode poorly for the accuracy of the information that is received from sales, but it has not come back to bite Sage in the same way as some of the other software vendors that are in similar predicaments. In reviewing multiple documents available at Sage’s website, we found quite a few unsupported contentions made within them. Statements like this one…
“Well-run, global organizations are increasingly adopting a two-tier enterprise resource planning (ERP) strategy.”
Without any reference or evidence were easy to find. Therefore, Sage’s published material should not be considered a reliable source of information.
Consulting and Support
While we do not have the statistics to prove that Sage has high turnover, given what employees say about the company, it appears that low pay below the industry standard leads to early departures. This is negatively affecting consulting and support. Sage has also been one of the most aggressive ERP vendors in outsourcing support to countries where English is a second language. It is amazing to us that so many ERP software vendors are so expensive, and yet outsource their support to India. This is true of the giants in the ERP market as well, such as SAP and Oracle. However, these costs savings don’t ever seem to get passed on to the buyers. All of these decisions are showing in Sage’s reduced ability to provide support. This is yet another in a string of short-term oriented decisions that are eroding Sage’s reputation and ability to deliver on sales promises.
We reduced their rating in several areas because Sage’s strategy may yield short-term results. Still, it is travelling down a lower quality path, and we consider it one of the most likely of the ERP vendors to continue to lose market share. Buyers have to consider two countervailing factors – one is the fact that Sage has some good products, but the other is that Sage, as a company, is far less impressive than its product database.
A poor management team more focused on personal enrichment than on maintaining a sustainable and dynamic company is causing Sage to shrink, even with a quality product. There is also some question as to whether Sage is dedicated to continuing to develop their ERP product or if it to be treated as a cash cow.
Recently Sage made an acquisition. They purchased Intacct. Intacct was one of our highest rated vendors, but the purchase by Sage means we had to downgrade Intacct although the purchase of Intacct should lead to a bump for Sage.
Sage has historically been a modest innovator. However, we have lowered their Current Innovation Level because recent management changes will naturally lead to a decline in innovation.
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