Sage Partners Steel Themselves For Sage 500 ERP Phaseout7:55 PM EST Thu. Aug. 16, 2012
Some Sage partners aren't happy with the company's decision to phase out some products, while others are breathing easier because the products they resell will continue to be developed.
But, most partners seem resigned to the product road map Sage executives outlined at the Sage Summit conference in Nashville this week and are determined to work with the company's plans.
"I appreciate the clarity," said David Cieslak, a principal with Arxis Technology, a Sage partner in Simi Valley, Calif. Arxis has "a pretty notable MAS 500 business," he said, referring to the product that was rebranded Sage 500 ERP earlier this year, which Sage announced this week it will be phasing out. "I may not necessarily love every single announcement. It's something we're just going to have to think through. But, at least now I know what I need to do from a business perspective."
"I think the move to further refine the portfolio is the responsible move for the investors, but I do not look forward to the frank conversations with our accounts who have invested so much in Sage 500 ERP," said Paul Ziliak, a partner at Xkzero, a Sage solution provider. "Many of those accounts are manufacturers who value the kind of mature feature set that Sage 500 ERP has. I hope the support for that product can continue on beyond the five-year timeframe projected by Sage."
When asked about Xkzero's long-term relationship with Sage, Ziliak said: "We're all in."
At this week's conference, Sage executives, including Sage North America CEO Pascal Houillon and CTO and Product Strategy Executive Himanshu Palsule, outlined plans to focus the company's development resources on a few key platforms, including Sage One and Sage ERP X3. Development of other products, including Sage 500 ERP, Sage Pro ERP and Sage PFW ERP, will be reduced and eventually the applications will be phased out.
The product plans follow an acrimonious year in which Sage riled some channel partners with a rebranding effort that changed the names of some longtime Sage products, and the creation of a subscription price option for customers that partners say greatly reduces their margins.
Sage has scores of products, most acquired over the years, and continuing to maintain and develop them -- including adding cloud and mobility capabilities across the entire portfolio of individual products -- is unsustainable.
NEXT: Some Remain Skeptical About The End Of Sage 500 ERP
Sage will phase out Sage 500 ERP in five years -- the only product for which Sage executives provided a specific end-of-life timeline. Sage will eventually migrate Sage 500 ERP customers to Sage ERP X3.
"I personally feel that Sage 500 ERP is a great product," said Joe Noll, president of RKL eSolutions, a Lancaster, Pa.-based Sage partner. It has some dated technology on the [user interface], but so does a lot of their other products including Sage ERP X3 which they are calling the flagship product.
"Sage 500 ERP has a great database and [application programming interface] architecture, a very loyal partner channel and a very extensive offering of third-party add-ons. I feel they need to keep Sage 500 ERP around to fill [the needs of] a certain group of customers that do not fit within any of their other product offerings," Noll said.
Some partners still found it hard to believe that Sage will follow through on discontinuing Sage 500 ERP.
It's been a very successful product for us," said Cherry Gray Williamson, sales director at Emerald TC, a Sage partner is Suwanee, Ga., noting that the Sage 500 ERP business makes up about 80 percent of Emerald TC's sales. The company also works with Sage 100, Sage ERP X3 and most other Sage products.
While Emerald TC works with Sage ERP X3, Williamson said it currently can't "scale down" enough to meet the needs of smaller manufacturing customers like Sage 500 ERP can. She noted that the product generates about $30 million in annual maintenance revenue for Sage. And, she pointed out that Sage is working with development partner Escape Velocity Systems to build a new .Net-based user interface for Sage 500 ERP.
All that made her question whether Sage 500 ERP really will disappear. "A lot can happen in five years," she said.
NEXT: Others Plan Migrations To Sage ERP X3
Others seem ready to make the transition. "Look, we love [Sage] 500," said Alex Solomon, a principal with New York-based Net@Work, one of Sage's biggest channel partners. The solution provider has some 150 customers on Sage 500 ERP, as well as some 650 on Sage ERP Pro, which is also likely to be phased out in the near future. But, Solomon said his company has already developed migration tools and practices for Sage 500 ERP and is moving customers to Sage ERP X3 and other products.
Xkzero is also in the early stages of developing its Route Sell Solutions applications for distributors, which run on Sage 100 and 500 ERP, for Sage ERP X3. "Sage's focus is aligned with the path we're already on, and for that we feel fortunate," Xkzero’s Ziliak said.
"We're making a push toward [Sage ERP] X3. It's very clear that's the road map of the future for Sage," said Bill Harris, co-founder of MicroAccounting Solutions, a Richardson, Texas-based Sage partner that's in the process of merging with Xkzero. But, he noted that his company has a wealth of experience with Sage 500 ERP, and building up that same knowledge base with other products will take time.
RKL eSolutions added Sage ERP X3 to its product portfolio about two years ago, Noll said, and the company already has a number of customers on that application set and "a nice pipeline of prospects" as well.
Miami-based ADSS Global resells the Sage 300 ERP applications, previously known as Accpac, as well as Sage CRM and Sage HRMS products -- but not Sage 500. So, President Peter Kaufman feels like he dodged a bullet. "I'm sure it's kind of nerve-wracking if you're in the Sage 500 business," said Kaufman, who as a member of Sage's Business Partner Advisory Council, had some inkling the changes were coming. "But, in this industry, you've got to change."
In addition to discontinuing some products, Sage is designating certain categories of products as "core," including its accounting, ERP, payroll and related applications that often work together.
Other products, largely those that are more specialized or operate on a standalone basis, are being designated "non-core" and will be managed independently. Sage said both core and non-core products would remain key parts of the vendor's overall portfolio.
NEXT: The 'Core' Vs. 'Non-Core' Debate
Some partners worried that might create confusion among customers. "It makes sense for Sage to focus their efforts on certain areas. However, the use of the term[s] core and non-core was very unfortunate," said Sean Mohan, president of Strategic Sales Systems Inc., a partner in Maryland Heights, Mo., which offers CRM solutions from Sage, SugarCRM and Salesforce.com.
"The term 'non-core' almost insinuates a negative attitude with Sage regarding specific products," Mohan said. "If truly it just means 'stand-alone,' Sage should have designated it as such. Our competitors will surely use this terminology against us. It will make it tougher to convince new prospects to commit to non-core products even though these are very good offerings. It is a very competitive environment, [and] something as simple as terminology can become a very big issue in a sales cycle."
Partners attending Sage Summit could affix small tags to the bottom of their badges to show what Sage products they work with. As a protest, one reseller of the Sage Act! application made up his own tag that said "Non-Core" and wore it on his badge.
Some Sage partners, such as Blytheco and Arxis, have in the last year begun working with other vendors such as Intacct, NetSuite, SAP and SugarCRM. They say those moves are designed to broaden their product portfolios with software-as-a-service (SaaS) applications and do not represent an effort to move away from Sage.
But, others seemed reluctant to work with competing vendors because of the latest changes at Sage. "It's a huge investment," said Harris at MicroAccounting Solutions, a "Sage Select" partner that works exclusively with the vendor. While he said working with other vendors is an option, he hasn't found anything so compelling that he would move away from Sage. "Sage has been a very good partner," he said.
Some partners see big opportunities in the Sage ecosystem. Net@Work is launching a partner alliance program through which it will work with other Sage partners. Net@Work, for example, can work with a Sage CRM reseller when a contract also calls for ERP applications or provide IT hardware and software from other vendors in partnership with solution providers that work exclusively with Sage applications.
Net@Work's Solomon said that by next year as much as 30 percent of the company's sales could be generated through such alliances.
Azamba Consulting Group likewise sees opportunities to provide its Sage CRM expertise to other Sage channel partners, said President Peter Wolf. And, he expects some of those partner-to-partner matches to be driven by Sage itself. "The Sage cross-sell program is very effective," he said.
"I think our biggest opportunity is to cross-sell to our existing base," agreed Harris, specifically on selling Sage CRM applications to MicroAccounting Solutions' ERP customers.
PUBLISHED AUG. 16, 2012