Sage drops forecasting and costing, shoots self in face
- Summary:
- Sage does itself few favors by dropping forecasting and costing but then it's a financially driven business, not customer driven.
John Stockdyk pressed Sage on this topic and was told that this fits in line with the company's decision to focus on core accounting and payroll. The example of a refreshed interface was offered as a way of explaining where the investments are going. Stockdyk has a different view:
My interpretation of his response is that we probably have seen Sage 50 Accounts hit the ceiling of its functional capabilities. It will morph into some new shapes and interfaces (eg mobile and cloud hybrids) but I suspect that if you want the facilities Sage 50 Job Costing and Financial Forecasting delivered, you're going to have to start talking to Sage's mid-market division about Sage 200.
While I have some sympathy for Sage's point of view - though not much - the company forgets that Sage 50 scales up to support some fairly hefty businesses in the SME market. My guess is that they've not found enough demand for the solutions to justify continuing investment and so are dropping them.
The more prosaic answer though can be found on page 94 of the company's 2013 annual report. Sage cost of sale dropped from 6.3% to 5.8% while the cost of selling and admin fell from 70% to 67.5% of revenue. In short, they're investing less across the board - period. That in turn means Sage's strategy is one that solely measures success by profit contribution rather than investing for genuine growth.
This is a topic I've talked about on many occasions and to me, it is the wrong strategy. There just isn't any way to invest for innovation that will reap reward in growth from iterative changes to the product. In common parlance, you can't put lipstick on a pig.
Sage has fallen for the oldest delusion in software businesses. They see a technology change, assume that leadership confers entitlement, do nothing for a period and then, when they finally realize the writing is on the wall, attempt to forklift an old technology to something more modern, gaining very little in the process. In Sage's case, they've lost because by all measures, they are not growing organically except through acquisition of other old products. Instead, they're ceding market share to the new kids on the block that are far more aggressive on pricing and functionality.
Needless to say, commenters to Stockdyk's story were far from happy. One summed it up nicely:
With this latest news from Sage it is hard to see what their USP will be for Sage 50 going forward.
The recent loss of ACT and Construct, followed by Forecasting and Job Costing, not to mention their failure to follow through with Intelligent Reporting, means that Sage 50 is now just another book-keeping and payroll solution.
I have clients using Forecasting as a tool for their management accounts, taking advantage of the links to actuals and budgets. Obviously they will feel let down, but spare a thought for other clients with whom I am currently working towards doing the same, they will feel their investment of time and money has been wasted.
None of this bodes well. So the only remaining question is this: can Stephen Kelly find a way to re-invogorate Sage when he takes up his position on November 5th?
Image credit: © gilbertc - Fotolia.com