ANALYSIS
A Tale of Two Sages

Sage convened its fall user group meeting in Atlanta this week. The event was set in the cavernous Georgia World Congress Center, a complex of three starship hangars left over from the Intergalactic Olympics. The facility is beautiful and very big.

Sage estimated attendance at between 2,500 and 3,000 people, but despite that number of people, the place looked underused. As you might expect in a recession, Sage officials told me that many companies sent fewer people to the event, so that overall attendance was down somewhat year over year, though the number of companies sending employees was relatively constant.

It is important to distinguish between the Sage partner event, Insights, held in May, and the user group meeting called "Summit." Since Sage sells exclusively through a partner channel, it makes most of its product and policy announcements at Insights each year. At Summit, the company focuses more on end-user training and adoption, and there is less hard news coming out of the event.

Jodi Ueker-Rust, president of Sage's business solutions division, gave a keynote on Monday that emphasized three directions for Sage, and they were meant to cover both front-office CRM and back-office ERP products. The most important directions for Sage, Rust said, included support for increasingly mobile users, emphasis on social media, and business intelligence. The speech seemed short on detail, though, and the CRM group has been executing on all three for a while -- score one for the front office.

I sat down with Joe Bergera, GM of Sage CRM solutions, and Larry Ritter, EVP of Sage's business solutions division, for a discussion about the CRM business. Here are some highlights.

Aggressive Outreach

My impression of the messages flying around is that there are two different Sages. One is dedicated to making prudent decisions about moving over to SaaS -- let's call them the front-office gang -- and the other is digging itself into an untenable position in premise-based solutions. I think of them as back-office.

Sage front-office folks have long been leading adopters of social media for internal use, with good results. The company uses communities built into product-specific sites for ACT! and SalesLogix, and the officials told me that a significant amount of traffic for CRM products now arrives, thanks to Twitter and other inbound social media.

Even more impressive to me is that some CRM products automatically survey new customers at the 60- and 120-day marks just to better understand customer use and tribulations, if any. I don't know if other vendors are taking this step, but it strikes me as the kind of aggressive customer outreach a vendor has to have -- especially if the purchasing process is retail-oriented, i.e., without a sales representative and maybe without much implementation help.

Sage is doing a lot with community data, and I wish more companies would realize that leveraging social media is about the outbound and sexy Twitter and Facebook applications, as well as inbound community applications. Analyzing customer input and data collection is still in its infancy for Sage, but Bergera and Ritter told me they were beginning to see a difference in product uptake that they attributed to social media.

Good for them, I say. It's nice to see a vendor drinking some of the Kool-Aid we've been mixing up. However, they haven't stopped with basic social media blocking and tackling. One of the more interesting things I discovered is that Sage has produced about 16 short product videos that it deploys on YouTube.

I am a big believer in using this kind of video as a way to develop thought leadership and leverage social media. There's nothing social, per se, about a video, but once it has a URL on YouTube, it is likely that it can become viral through social media -- and this is what is going on, Sage executives told me.

The Inevitability of SaaS

It is also good to see Sage keeping to its 2010 strategy to bring its diverse CRM products into tighter alignment. So far, the big deliverable has been the ACT! 2010 version introduced in September. ACT! has made great strides in the last few years, moving upmarket from simple contact management and adding low-end SFA functionality, and then some. The addition of e-marketing, for example, has enabled sales people to better generate leads than prior generations of the products.

I am not an ERP expert, and a great deal of any Sage conference is focused on accounting and finance. Having grown by acquisition, the company has highly specialized ERP solutions for construction, real estate and other sectors that I don't know much about.

Sage is a big organization with 14,500 employees, 27,000 partners and US$2.55 billion in revenue generated by 5.8 million customers around the world. It would be nice to see the company step up more vigorously to embrace SaaS in the front office as a long-range goal, even if it doesn't plan to make any partners or customers convert overnight. The competition from Microsoft (Nasdaq: MSFT), NetSuite and now Salesforce make it necessary.

The current approach, at least by the back-office group, is to stick to their guns, vowing to be an on-premise company leveraging the "software plus services" mantra, which is phony. It serves no one very well and a more positive message to partners and customers, IMHO, would be to acknowledge that SaaS is an important direction, and vow to take customers and partners there when the time comes.

That positive message doesn't commit anyone to anything immediately, but it begins the thinking process for what will be inevitable at some point.

Leveraging Web services is a good place to start -- but at some point, the Web will be leveraging the premise-based applications.