Sage drops term 'ERP' from product line: “It stands for Expense, Regret, Pain"

Derek du Preez Profile picture for user ddpreez July 28, 2015
Say what you want about Sage, but it can't be denied that CEO Stephen Kelly has injected some much needed enthusiasm into the company.

stephen kelly sage
CEO Stephen Kelly

Stephen Kelly isn't a man that likes to waste any time. It's only been about eight months since he was appointed as the new CEO of Sage, one of the largest providers of ERP to the mid-market, and he has already...erm...killed off ERP.

Well, kind of.

Kelly took to the stage of Sage's annual user conference in New Orleans this week to announce that Sage will no longer be using the word 'ERP' anywhere in its product line and it is effectively banished from use within the company. Why? Because it represents an industry that relies on complexity and pain for businesses, which only benefits vendors in the long run. Kelly said:

To symbolise our commitment to building products that add value to your business, as of today we will no longer use the word or the term ERP to describe any of our products. We believe ERP is a 25 year old industry term, characterised by cost overrun, and in some cases even business ruin, that has been imposed on you for the benefit of others.

To the finance directors of the world, ERP stands for Expense, Regret, Pain. Sadly our industry has a long history of invasive, disruptive initiatives that have been carried out at the expense of their customers.

I don't think that Sage can exclude itself just yet, given that it has been touting itself as one of the top ERP players out there for years. But that's Kelly's mission: to now focus Sage's business around its customers, colleagues and partners. He wants to improve customer service, give businesses choice about their deployment options and he wants to minimise any pain associated with rollouts. He says:

I don't even look at the stock prices, I don't know what they are. I just worry about our colleagues, our customers and our partners. If we are doing the right thing for those communities that we serve and love, the investors will be delighted, because we will be attractive and we will be winning new business.

We did a massive capital markets day for our investors, who are very confident on the objections that we have set for the company. You can build great companies sustainably and I think we have a fantastic foundation at Sage, where our investors will be really reassured that we have got our hand on the tiller to navigate the transition to the cloud.

And although Kelly still has a hell of a lot to prove, and not all will buy into this vision (in fact, I bet plenty will be ready to criticise his 'no ERP' stance and his approach to cloud) – it can't be denied that he has injected a level of enthusiasm into the company that has been lacking for years. As someone that attends dozens of these events every year, it's easy to spot when there's a buzz that goes beyond the usual PR hype.

However, that doesn't mean that it's a done deal. Kelly is moving at pace, but there is still a lot that needs to be done to convince customers and the market that this is a new and improved Sage. And the strategy needs some additional fleshing out if Kelly really wants Sage to be the backbone of the SMB economy, both in Europe and further afield.

But there is one thing that Kelly is absolutely, 100% clear on: Sage is not going to force you to go to the cloud. Kelly is adamant that vendors should not push the cloud onto their customer base – it's “disrespectful, he says. And as a result, Sage is committing to protect its on-premise customer base from any movements it makes into the cloud (which it is now doing at speed), whilst also making it easy for them to transition there if they so wish.

'Customer for life' means three things. It means helping you run the business, it means putting you in control and it means giving you choices. We will continue to support the golden triangle of: accounting, payroll and payments.

Sage loves on-premise. Sage loves hybrid. Sage loves the cloud. What this means to us is that we are absolutely happy for you to run your business from your own offices, with your own data. We are also absolutely happy for you to run your business from your offices, but unleash the power of mobility for viewing information on the go. And we are also really, really happy for you to run your business in the cloud.

You run your business the way you want to run a business. And Sage is there for you. The question I put to the team when I joined, the question you want to ask too, is: how do we build a roadmap that allows each of you to control the pace of migration to the cloud, should you choose to? Because it's all about you controlling the pace of migration. Sage will not force you to migrate, you will decide and we will be there to help you. End of life and forced migration are painful words that cause you business disruption and needless cost.

To this end, Sage execs took to the stage today to not only talk about its latest 'social accounting solution', Sage Live – which is built on the Salesforce 1 platform and is an important partnership for both Sage and Salesforce – but it also took time to highlight the investments it has made in modernizing its existing solutions, including Sage One, Sage 100 and Sage 300. Sage X3 has also been released in the cloud.

Kelly said:

We want to implement solutions in days and weeks, not months and years. We believe that there

Sage Life
are three elements that are an integral part of making customers for life. A commitment to customer service. A commitment to partners. A commitment to accounting and bookkeepers.

Businesses are sick of technology companies invading with fashion that doesn't actually fit their business. So what we are calling out is the destruction of complexity. Enough is enough. We want to position Sage as the champion of SMBs, on the side of the customer.

My take

It was a bold and passionate pitch from Sage today. And you can tell from speaking to the customers and the executives internally at the company that they are completely sold on Kelly's vision and his excitement for the products and his strategy.

The Salesforce tie-up has caused a particular stir, as this not only gives Sage a decent amount of visibility into North America (a region it has typically struggled), but it also allows the company to move at an incredible pace into the cloud. Kelly said that he is targeting 1 million companies signed up to Sage cloud products – although he wouldn't give me timelines for this figure.

And it's kind of hard not to buy into the excitement. Change is always a bit exciting, isn't it?

However, there's still a lot to do. Kelly's pitch is that Sage can now successfully go after newish companies that wouldn't consider having their systems on-premise, whilst still protect his existing customer base. But if I was wanting cloud, would I not be tempted to go with a pure-play cloud vendor? Maybe. Only time will tell whether this plays a role.

To an extent though, by saying 'it's okay to be on-premise', Sage is also protecting itself from a certain amount of transition pain that we have seen from other vendors that are shifting to the cloud. It walls those revenues, slows the rate of transition, whilst still allowing for an element of growth to come from new cloud customers.

Also, although there's rapid change internally at Sage, a leopard doesn't change its spots over night. Having Kelly at the top, driving the change down will make a huge difference. He's very convincing. But it's a big organisation and this shift will take some time.

I had a conversation with Jayne Archbold today too, who is CEO of Sage's enterprise market in Europe, and she summed up quite nicely Sage's current position. So I'll finish with her thoughts. Archbold said:

I've been with the business for 17 years and worked under a number of different leaders. I would say that the vision and clarity that Steven has brought in is very, very clear. Every single person all the way through the business knows where we are going. Do we know exactly how? Is it all perfectly mapped out? No. But that's okay. The pace and ambition makes it the most exciting time to be at Sage. Is it easy every day? Absolutely not. But it's given that energy back.

We have a huge customer base and it's critical for us to keep that. Stephen talks about 'customer for life', that's absolutely critical. We can't take our eye off the ball of loving those existing customers that are very happy with their local product. We need that to live in harmony with the new world. Therefore, one of the challenges we have is having a different operating model where we treat the local customers in the local countries on more traditional products differently to what we would a customer on Sage One, Sage Live and X3 going forward.

The challenge is getting those to co-exist, but we are starting to see how that would look now and we are moving in that direction. We need to keep the focus, because if everybody gets too excited about the new things and we drop the ball from our huge install base, that's our biggest risk.

Endnote: I got the chance to interview Sage CEO Stephen Kelly and will be posting the write up at some point tomorrow.

Disclosure: At time of writing, Salesforce is a diginomica premier partner.

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