Sage VARs Scramble To Capture Former MIS Group Customers

When MIS Group, one of Sage North America's largest VARs, suddenly shut down in July, it sent a tremor through the vendor's channel ecosystem and left hundreds of MIS Group customers -- including some that had paid MIS Group for undelivered software and services -- without an IT solution provider.

In the three months since MIS Group's collapse, however, other Sage channel partners have stepped into the breach, taking on some of the failed VAR's customers, which number somewhere between 2,000 and 3,000. Some have even provided services at reduced or no cost in an effort to help former MIS Group clients make up their losses.

"There were some challenging opportunities and, honestly, some clients that were upset," said Stephen Blythe, CEO of Sage channel partner Blytheco LLC, which has picked up about 75 of MIS Group's former customers.

Several of the solution providers working with former MIS Group clients are VARs that MIS Group acquired and have sought to reconstitute themselves in the wake of the company's failure. Other VARs have recruited former MIS Group employees as they try to sign up the company's former customers.

Dallas-based MIS Group, Sage North America's largest reseller for two years running, suddenly closed its doors July 6 citing the economy, tight credit and "market circumstances beyond our control," according to a notice left on the company's Web site.

While details of what happened at MIS Group have remained unclear, interviews with Sage executives and other Sage solution providers paint a picture of a company that had spent heavily to acquire other solution providers in an effort to grow and closed suddenly when it was unable to acquire financing to cover the cost of its operations.

Sage immediately began offering free phone support to MIS Group customers that were not under any kind of Sage support plan and were reliant on MIS Group for service. But some were in the middle of software implementation or upgrade projects, several resellers said, while others lost money they had paid for software and services.

Some Sage competitors, including Microsoft and NetSuite, used the failure of MIS Group as a chance to try to recruit Sage's reseller partners, saying the sudden closing of the Dallas VAR raised questions about the stability of Sage's channel.

Sage has sent former MIS Group customers lists of the company's channel partners within their geographic regions, according to solution providers, but they say the vendor has been careful not to play favorites by recommending specific resellers.

Next: Sage Customers Are Tracked Throughout The U.S.

While MIS Group had customers in every U.S. state, many were in the company's home state of Texas.

Blytheco, based in Laguna Hills, Calif., with offices in Austin, Dallas and Houston, has picked up several former MIS Group employees to augment its staff and provide leads to the defunct VAR's clients. To help win over those clients, Blytheco absorbed the cost of business analysis and development work it performed for some new customers who had already paid MIS Group for those services as part of a larger project.

Blytheco has even developed a Web page saying: "Our door is open to all MIS Group clients."

Blythe, like many of the solution providers who are snapping up former MIS Group customers, works with most of the same applications that MIS Group did, including Sage MAS 90, MAS 200 and MAS 500 ERP software, Abra HRMS applications and SalesLogix CRM software. But a lot of MIS Group customers also used the Sage Timberline suite of construction and real-estate applications and fewer solution providers are working with that product.

MicroAccounting Solutions, a Dallas-based Sage channel partner, was acquired by MIS Group in December 2007. "When things fell apart at MIS [Group], we broke back out and restarted MicroAccounting," said Lorrie Harris, a partner with the company. MicroAccounting today has 17 employees, nearly all of whom were with the company before the acquisition.

And that's quickly becoming true of its clients. Relaunching within a week after MIS Group closed, MicroAccounting quickly rounded up some 100 of its old customers and now has a client roster of 300. Because Sage was not assigning MIS Group customers to new VARs, MicroAccounting called its old clients to let them know they were back in business. "We're a very customer-service-oriented company," Harris said. "We had a lot of good [customer] relationships from before."

Sage gave MicroAccounting a hand by helping it get set up as a new legal entity -- even getting its old phone number back -- and getting re-established as a Sage channel partner, Harris said. "They've been very good to work with through the whole process."

Next: Discounts Attract Customers

MicroAccounting offered some customers discounted rates to make up for maintenance deals left "in limbo" by MIS Group's collapse and consulting services that were paid for but not delivered, Harris said. She also praised Sage for working with MicroAccounting and its customers to resolve those issues and get new software to customers. "Sage definitely had to take a loss on this," she said.

New York-based solution provider Net@Work, a Sage reseller, opened a Dallas office in August, responding to what the company sees as a growing demand for Sage software and third-party support. While the company had been contemplating an expansion into Dallas, "the whole MIS [Group] demise kind of accelerated everything for us," said Co-President Alex Solomon.

Net@Work hired three former MIS employees, including Eddie Provencio, previously MIS Group's director of support, training and optimization services, who is heading up the new office. Net@Work has attracted some former MIS Group customers, although he couldn't say exactly how many.

In August The Rand Group, a business technology consulting company and Microsoft channel partner, revealed that it was developing a Sage software practice, carrying the vendor's MAS ERP, SalesLogix and Abra HRMS and Sage FAS fixed asset management applications, and opening new offices in Dallas with former MIS Group employees among the staffers.

"As we've grown, there's some inherent risk in working with just one software vendor," Ron Rand, president and CEO, said in a recent interview about becoming a Sage reseller. Rand declined to specifically cite MIS Group's closure as a factor behind the expansion into Dallas, saying the move "adds to our strategic position and profile." But he added: "With the team we have, we can certainly help MIS Group customers."

BCS-Prosoft, a Sage software reseller based in San Antonio, is expanding its Houston operations as a direct result of MIS Group's closure. The company hired a consultant and an account manager who had worked at MIS Group in that city, said CEO Clark Haley.

Even more important, BCS-Prosoft hired Randy Burch, co-owner of Burch Consultants, an accounting software consultant that was acquired in 2005 by ERG, a Dallas-based Sage partner. ERG, in turn, merged with MIS Group in 2006. (Burch Consulting worked with applications from Best Software, which Sage's parent, Sage Group plc, bought in 2000.) Haley said there are some 125 to 150 former Burch Consulting clients in the Houston area that were left without a solution provider after MIS Group failed, and so far his company has signed up nearly 90 of them as customers.

"It made a lot of sense to go after that market," Haley said in an interview.

Haley said fewer than 10 of the customers BCS-Prosoft has picked up had application implementation and upgrade projects interrupted by the closure of MIS Group. "Most of these clients weren't in bad shape," he said, adding that the failed company's Houston staff had done a good job caring for the customers right up until the day the company closed its doors.

"We're finding that a surprisingly significant number of [MIS Group] accounts have not yet made a decision on a reseller yet," Blythe said. Most of them didn't have any projects under way at the time MIS Group failed, he said, and so they have had no immediate need for services beyond Sage's phone support.