Sage Partners Reeling Over Channel Exec Shakeup

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"I think they missed the mark," Anthony Castle, CEO of New York-based Sage partner Castle CRM, said of Macdonald's dismissal. "Taylor certainly contributed a lot to the community, was entirely partner-focused, and will be greatly missed."

Macdonald's removal was part of a broad purge imposed on Sage's North American business unit, the company's biggest sales base, by its U.K.-based parent organization, the Sage Group. Sage dismissed North America CEO Ron Verni and CFO Jim Eckstaedt, announcing plans to recruit new hires for those roles. It also eliminated the channel chief position Macdonald held and the chief technical officer position occupied by Jim Foster, opting instead to push channel and technical strategy decisions down to the business-unit level. Sage reorganized in May to form four distinct business units around its profusion of product lines.

Sage's purge came as the board reviewed its North American operations and decided that "a change in leadership is required to realize the full potential of this business," the company said in a written statement. Sage concurrently released preliminary financial results for the fiscal year it concluded on Sept. 30. Sage's North American unit generated annual revenue of £508 million (US$1 billion), up from £361.5 million (US$ 741.6 million) in 2006. Excluding the effects of acquisitions, Sage calculated its organic growth rate in North America as 4 percent.

Sage Software spokesman John Schoutsen said Sage's design to have more channel decisions made at the brand level was behind the move to eliminate Macdonald's job.

"Those divisions already have very strong channel services in place, and those organizations will pick up the strategy," Schoutsen said. Some of Macdonald's subordinates, such as Vice President of Partner Programs Stephanie Kleber, remain on the job and will continue running company-wide channel initiatives, he said.

Many Sage partners said they were sorry to lose Macdonald, a popular channel figure. A veteran Sage VAR before he joined the company's executive ranks, Macdonald was a fierce channel advocate who introduced innovative programs to support partners like the "100/100" initiative, a venture that offered partners financial grants to assist in training and recruiting staff. Macdonald also launched a series of "sales academies" that partners enthusiastically endorsed.

Next: Business as usual ... so far Mind Over Machines President Lloyd Smith became a Sage partner though its 2004 acquisition of Accpac accounting ERP software from Computer Associates. Macdonald made that transition a remarkably easy one for Accpac VARs, Smith said: "When he said something, he would execute what he said. It was kind of a novel approach."

Partners in Technology COO Merilyn Van Zwieten said Macdonald's ouster shocked her both because of his success in keeping Sage's channel running smoothly and his high profile as a company evangelist.

"Every time you'd pick up any kind of technology magazine, you'd see his name and picture in there, and at conferences, he'd be all over the place," she said. "He's a guy with a lot of star quality."

With channel satisfaction on track and Sage's business apparently running smoothly, partners said they've been left scratching their heads about Sage's drastic management sweep and what the company hopes it will improve.

"We haven't heard one little peep as to what it is, other than the fact that Sage USA hasn't grown as rapidly as Sage Europe," Van Zwieten said.

Sage drives almost half its revenue through its channel. Company spokesman Schoutsen said there's no plans to change the company's channel-based sales strategy, or to alter any of the programs Macdonald put in place.

Partners say that so far, it's been business as usual. Tony Chiodo, principal of Axis International in Chicago, has attended one Sage leadership training session since the management shakeup and said all went well. He said Axis hadn't yet felt any ill effects from the transition, and hopes that remains the case: "Things are working fine, but they were also working very well the way they were. We had absolutely no problems."

The one silver lining in the changes for solutions providers may be greater alignment with Sage's individual brands. As master of a portfolio assembled through acquisitions, Sage has a very heterogeneous channel, with many partners specializing in just one or two of its product lines.

That's the case for Diana Laughner, founder and president of Capitol Computer Systems in New Cumberland, Pa., a small firm that focuses on Sages MAS accounting software. While Laughner never had any problems getting the resources and support she needed from Sage, most of her dealings are with the MAS management team, and any moves that give brand managers greater control over channel plans affecting their specific partners could be advantageous for Laughner's firm.

"We haven't seen any changes yet, but any time you can get a closer level of involvement with the individual product teams, that's good," Laughner said. "[Channel managers] would be spread pretty thin if they had to handle strategy and partner needs for absolutely every Sage brand."

Sage is scheduled to meet with its Business Partner Advisory Council on Nov. 11, a meeting participating partners hope will shed light on its future plans. In the meantime, Sage's channel is watching and waiting.

"I'm hoping for business as usual," said Partners in Technology's Van Zwieten. "If this improves something, I'm ready for it, but I'm not sure how it could."