Sage Continues Its Housecleaning Effort

After engaging in a soul-searching exercise a while back, which has lately resulted with more coherent strategies in some regions, and with the recent public statement of its commitment to making customers happy, Sage Group announced at the opening of trading at the London Stock Exchange on February 15, 2013, that it has reached a definitive agreement to sell Sage Nonprofit Solutions to Accel-KKR, and ACT! and SalesLogix to Swiftpage. Accel-KKR has extensive expertise in accelerating the growth of software companies in vertical industry segments, KANA Software being one example. The investment firm brings a wealth of operational best practices and strategic insight to its portfolio companies and is a good partner to help these businesses reach their full potential.

For its part, Swiftpage provides digital marketing service solutions for micro and small businesses and, as an existing ACT! and SalesLogix partner providing integrated e-marketing services, seems well positioned to advance these products. Sage remains committed to customer relationship management (CRM) software via its global Sage CRM (formerly Accpac CRM and eWare) solution and will continue product investments to ensure it meets the needs of its small to medium business (SMB) customers.

The Divestiture Rationale

While the writing has been on the wall since Sage’s current CEO Guy Berryer announced a thorough review of the company’s assets at the beginning of his tenure, this is still a major move. With so many overlapping solutions, this is probably a smart thing to do. We should wait and see whether Sage will do further divestitures with some of its still overlapping accounting systems.

While hardly anyone is puzzled by Sage selling off its nonprofit solutions, some might still wonder, why ACT! and SalesLogix? Is it because contact management, which ACT! provides often as a single user application, is a commodity now? Most users probably mainly leverage contact management capabilities, even while paying much more for the product’s broader CRM functionality. Sage is charging about $5 per user per month for ACT!—can it afford to compete with In addition, how many cloud or iTunes-like single user apps have been created of late? With app stores sprouting up all over the Internet, a one-person-shop that outsources software product development is now a potential competitor. The costs to develop, market, and sell ACT! have to be very low, and Sage is smart to let Swiftpage put the product to better use.

Sage CRM as the Go-forward

Sage (at that time known as Best Software in North America) paid $260 million for Interact Commerce, the former ACT! and SalesLogix owner, back in 2001. The fact that Sage is now getting much less than what it paid for it could indicate that its venture into CRM has not been a great success. SalesLogix has undeniably been losing the cloud CRM war with, Microsoft Dynamics CRM, SugarCRM, Oracle, SAP, Infor’s Inforce (on Salesforce Platform), etc. Recent SalesLogix wins have certainly been few and far between.

SalesLogix (and Sage’s now outgoing CRM division) has always been a separate entity, with not much synergy and integration with Sage’s enterprise resource planning (ERP) products. The division even had its own analyst and media folks. For that reason, it indeed makes more sense for Sage to stick to the aforementioned Sage CRM (former Accpac CRM) product, which has always been more oriented towards CRM-ERP integration for manufacturers and distributors.

While some changes will inevitably affect existing Sage customers whose products are changing owners, they should not be too painful given that Sage has had a relationship with these companies and that many Sage employees and product experts are moving to these companies as part of the deal. Sage has also prepared some well-thought-out answers to questions from its multiple constituencies.
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