While, at the upper-end of the enterprise applications market, many will have been riveted by watching the inevitable intensifying global supremacy war between SAP and Oracle, it might be interesting to analyze the equivalent moves of the two superpowers at the (perhaps even more promising) lower-end of the market, also known as the small-to-medium enterprise (SME) market segment. One player would inevitably be Microsoft Business Solutions (MBS), following two major, well-publicized acquisitions in the early 2000s (see the article Microsoft Keeps on Rounding up Its Business Solutions). On the other hand, the UK-based the Sage Group plc (LSE: SGE.L), one of the leading providers of business management software for SMEs worldwide, with total annual sales of over $1.2 billion (USD) and 4.4 million customers in fiscal 2004 and the only technology stock on the FTSE 100 index for the London Stock Exchange (LSE), has been rounding out, also by annexation, its currently largest SME geographic coverage (see Will Sage Group Cement Its SME Leadership with ACCPAC and Softline Acquisitions?).
While one can never be too certain, it appears that at this moment additional major acquisitions are not imminent when it comes to both MBS and Sage, and that these SME leaders are rather embroiled in sorting out other, more burning internal issues. To that end, in mid-March, the Sage Group announced that, after a three-year hiatus, it intends to resume use of the "Sage" name and brand in North America, enabling the company to better leverage its worldwide strengths.
Part one of the Is "Sage" Wiser and Better than "Best"? series.
Sage's Name Conundrum
Sage lost the ability to use its own name in North America in 2001, when it lost a court fight to Quick Technologies Inc., the small Dallas, Texas (US)-based company that claimed ownership of the Sage name in the region. As a result, Sage had to subsequently and for the time being, adopt the name Best Software for its then primarily US-based operations (prior to the ACCPAC acquisition in 2004, which has since allowed it to penetrate other regions, such as Canada). Some think Sage adopted the Best name, the original name of the Reston, VA.-based specialized software company that had long marketed the FAS fixed asset management, Carpe Diem time management, and Abra human resource (HR)/payroll lines, as a stopgap measure after Quick demanded too much money for the name rights. Whatever the case, the parties have now apparently settled (i.e., in connection with its resumption of use of the Sage name and brand, Best Software has acquired the rights of Quick in the Sage brand, which rights date back to the early 1990s), and Sage plans to fully adopt the Sage brand for its North American business by March 2006.
Sage executives believe that the Sage brand is synonymous with excellence in accounting and business management software for millions of SMEs around the globe. By the same token, the strength of Sage as a global software leader will now stand clearly behind its more than 2.4 million SME customers in North America. On the other hand, Best's top executives claim that, during the last few years, Best had boosted its name recognition into the 20 percent range, and was possibly climbing toward the 30s figures. Best's president and CEO Ron Verni has recently begun an aggressive program to quickly transition to the new company name.
While many value added resellers (VARs) might see the long term value of the Sage global brand, there will always be some with reactions of dismay, given they have lived through several name changes from, for example, former Peachtree Software, "original" Best Software or State-of-the-Art, the company that originated the MAS 90 accounting product, temporarily via Sage Software and the Mid-Market Division of Best Software, to now make a full circle going back to Sage. However, because so many of the products have very strong brand identity themselvesPeachtree, ACT!, Timberline, ACCPAC, MAS and others that have been retained and will continue to be retained under the Sage umbrellathe Sage brand overlay certainly should provide a stronger long term compromise. Still, there is really only one company that has indisputably better name recognition in the mid-market accounting business (if not everywhere else), Microsoft, and one product that is virtually a household name within that target market in North America, MBS Great Plains.However, in North America, some exceptions that can clearly claim the household name recognition in Canada might come from ACCPAC and Intuit's QuickBooks in the US, in the lower-end of the market.
Also, Best Software has long acknowledged that its products are better known than the company name. Companies such as former specialty products provider Best Software (acquired in 2000), customer relationship management (CRM) provider Interact Commerce (acquired in 2001), entry-level accounting provider DacEasy (acquired in 1991), not-for-profit (NFP) accounting provider Micro Information Products (MIP) (acquired in 2001) and another entry-level accounting provider Peachtree Software (acquired in 1999), all had strong brand recognition in their respective target niches and a market presence in the SME market. Thus, both Sage and Best have done quite well respectively, despite Microsoft's big advantage in corporate name and brand recognition.
Best Software sells such a portfolio of renowned US and Canadian brands as Abra, ACCPAC, ACT!, BusinessVision, CPASoftware, FAS, MAS 90, MAS 200, MAS 500, MIP, Peachtree, SalesLogix, Timberline Office and Simply Accounting, among many others. In the fiscal year ended September 30, 2004, Best Software reported revenue of $516.6 million (USD), representing 42 percent of Sage's global business. To be exact, in addition to its North American leadership, Sage is the leading provider of accounting software for SMEs in the UK, Spain, France, Germany, and South Africa. Globally, the vendor reported over $1.2 billion (USD) for the last fiscal year with profits in the mid-20s percentage range, a comparatively very strong business compared to the chief rival Microsoft, whose business solutions group managed slightly more than half of Sage's revenues ($667 million) and significant losses in excess of $200 million (USD) in its last fiscal year.
Best Software outlined the brand transition at its Insights reseller conference in May, whereby setting the name switch deadline at next year should give resellers time to make due changes in their marketing materials. Earlier, in March, Best announced its first ever combined user conference, the Sage Summit, scheduled to take place on November 2-5, 2005 in San Diego, California (US). This will be the first time that customer conferences for all of the company's North American product lines will be combined into a 3-day event for attendees to network, gain insight to better utilize their software, and hear about industry and business trends affecting their organizations. Open to the more than 2.3 million SMEs in the US and Canada who use Best Software or Sage products, the 3-day Sage Summit conference will combine the company's three previous customer conferences focused on Timberline Office, CPASoftware, and MIP software, and will add conference agendas incorporating other products in the Best Software family such as MAS 90, ACCPAC, SalesLogix, and more than a dozen others. There will also be a special one-day session for users of ACT!, Peachtree, or BusinessWorks.
Using a "conference within a conference" format for the expected 3,000 attendees, Sage Summit is designed to preserve the experience of a community for customers while also providing the opportunity to engage with a wide range of Best Software and Sage product users from a variety of industries. Session tracks will be broken out by business needs and industries rather than specific products, so that customers should have the opportunity to learn about relevant issues impacting their industry segment and explore other software tools to improve their businesses in addition to learning how to get better return on investment (ROI) from their current software.
MBS' "Green" Pasture
While some might think that Sage/Best, by being embroiled in yet another name change, is handing the archenemy MBS a club, it appears that MBS too might have more burning issues to handle itself. Namely, whether for the reasons of miscommunication from MBS to the market, or for more serious (for example, the overwhelming scope of the undertaking) reasons, the vendor has lately gotten much unwanted attention and negative rap from the market observers. Namely, the now proverbial Project Green feat, whose original goal from two years or so ago seemed clear: the development of a single code base that would be the successor product to MBS' four major product lines stemming from the abovementioned acquisitionsi.e., MBS Great Plains, MBS Solomon, MBS Navision, and MBS Axaptahas had a rough go from the start. Namely, it has repeatedly fallen behind schedule, in part due to the vendor's decision to significantly reduce the number of developers assigned to the project. Then, it faced further delays with the postponement of delivery of Longhorn, the parent Microsoft's next generation operating system (OS), which was to supply the developer tools and other infrastructure pieces for Green.
Some of these concerns and speculations were in part allayed in early March, during MBS' annual user conference, which highlighted the company's unrelenting strategy for business applications and detailing its enhanced technology road map to partners and customers. Convergence 2005, held March 6-9 at the San Diego Convention Center, included keynote addresses by Microsoft chairman and chief software architect Bill Gates, and Doug Burgum, senior vice president of the MBS Business Group at Microsoft.
Gates' keynote at the close of the event discussed business applications as a core component of day-to-day businesses operations today and in the future, and reinforced their strategic importance to Microsoft, particularly in light of some analysts' (possibly premature, if not preposterous) speculations of the MBS' eventual spin-off due to protracted group's losses (which are still a mere drop in Microsoft's bucket of wealth). He emphasized that while Microsoft Windows and Office are a powerful foundation for productivity and a rich platform for partners to build great solutions and add value, the MBS group's charter will be to build on that foundation to deliver world-class business applications that are simpler and less expensive, offering more user companies new ways to enhance the way they work.
Burgum reaffirmed Gates' vision for business software in his keynote, underscoring the MBS group's commitment to providing customers with a choice of solutions that are rich in functionality and that offer a precise fit for their business needsat a lower cost than competing offerings. Microsoft's above outlined ambitious vision for business applicationsto remain focused on breakthrough innovation that delivers rich functionality with high adaptability and at lower costshas been dubbed "Affordable Adaptability" and is centered on both a people- and process-centric application design delivered through a model-driven approach, which will be explained shortly.
It has long been (and still likely remains) a quandary how to drive down costs of deploying enterprise applications while at the same time deliver a more functional solution that is more adaptable to both partners and customers. The issue gets aggravated by some providers that are leveraging enterprise applications technology and putting a middleware layer on top of it, despite the fact that adding it is a certain way to increase cost without delivering additional value to the cost-conscious and risk-averse SME market. Others are offering hosted "Software as a Service" (SaaS) model, but typically with somewhat limited customization capabilities (see The Players of Software-as-a-Service Business Models and Finding the Best Value Propositions).
Driven by the vision of enabling user organizations to pursue their business goals by bringing people and processes together with familiar and affordable Microsoft software, the MBS group has shipped major upgrades and enhancements virtually to all its core business management products over the past twelve months or so. The enhanced roadmap for MBS is to align its development efforts with customers' needs and their current technology environment. To that end, the company pledges to enhance and support today's business management solutions until at least 2013 and offer five years of mainstream support for each major release, based on the product's date of general availability (GA), whereby most products will include eight years of on-line self-help support.
The key to delivering on the above vision of "Affordable Adaptability" is to bridge the gap between a user company's "business model" and "software model". Enterprise applications should be all about making people more effective in conducting business processes, and MBS cites that when businesses talk about, for example, enabling more self-service for their customers, trading partners and employees, being more responsive to demand in their supply and delivery chains, or about their financial reporting and consolidation needs in the world of increasing compliance requirementsthey are in fact talking about the increasing levels of constant change and agility in their people's roles and business processes.
This in turn means that for enterprises to get benefits out of their business application investments, these applications need to be much more agile, flexible, and resilient to change. Further, as everyday users' tasks should also be easy and fun rather than mere chores, these applications must not simply repave the existing paths, but should rather present new ways to overcome the old processes or practices or innovate to facilitate new ones, while providing the optimal possible performance and usability for the "lowest common denominator" users and situations. From an information standpoint, applications should strive to enable the contextual manipulation of key information.
To meet the above needs, MBS has embarked on the shift towards a more model-driven approach in designing business applications. The idea is to reflect more of the business processes model in the software model so that when changes happen within the user organization or its business processes, the software can adapt to these changes much more easily and affordably. For more information on the related trend, see Leveraging Technology to Maintain a Competitive Edge During Tough Economic Times -- A Panel Discussion Analyzed; Part Two: Business Process Modeling.
Building on the strengths of the solutions offered today, Burgum announced the next two significant release "waves" that will deliver further on this vision. In other words, Project Green, the code name for next-generation MBS' development efforts, becomes and ongoing research and development (R&D) project rather than a product per se, and will be delivered over the course of two waves (or even more thereof, if needs be).
The first wave will occur between 2005 and 2007, and will include the release of a shared user interface (UI) based around fifty common configurable roles that people have within a user company, all seamlessly integrated with Microsoft Office. Also, Microsoft's business applications will interoperate with service-oriented architecture (SOA)-based applications via a Web Services layer, and include a common configurable reporting environment based on Microsoft SQL Server Reporting Services and a common security-enhanced intranet and extranet environment based on Microsoft Office SharePoint Portal Server to enable new levels of collaboration within and across companies.
In other words, the above innovations, formerly or still referred to as Project Green, will come in at least two waves of upgrades to all MBS' major enterprise resource planning (ERP) product lines. The first wave will include a Web Services layer; enhanced "user experience" based around fifty or so configurable employee roles; portal-based collaboration within and across companies, including a common configurable and secure intranet/extranet environment based on SharePoint Portal Server; and contextual business intelligence (BI) integration, including a common configurable reporting environment based on SQL Reporting Services enabling easier report creation and distribution.