INSIGHTS
Sage's Swenson: One Year Down

A lot happened at Insights, the Sage partner meeting held in Nashville earlier this month, though not necessarily at the press release level. I was there and got a sense of change happening. It was the first anniversary of new CEO Sue Swenson coming on board and our first opportunity to see the imprint she is making on the company. Last year, Swenson had been with the company for only a matter of weeks and as CEO could only talk about the future. With a year behind her some results are apparent, but the expectation is that there is a lot of work ahead.

The big takeaway I got from attending Insights was that a slumbering giant was waking up. I was a bit surprised but also happy to see Sage embracing social networking in ACT. Twitter and Facebook integration are on the agenda, followed by other social media. As social media continues to increase in popularity, you can bet more CRM vendors will take it on. My big question is, how will Sage partners deal with it?

Noah Had It Easy

One of Swenson's early moves was to bring in a new CTO, Motasim Najeeb. He's taking a hard look at products, architectures and all the things that go into making whole products. Importantly, he's a technology guy with business street cred. His resume reads like a mini-biography of Silicon Valley, with senior positions in product and product strategy for such companies as Oracle (Nasdaq: ORCL), PeopleSoft and WebMD (Nasdaq: WBMD).

One of Najeeb's challenges, which I think he acknowledged in his keynote, is reviewing a product portfolio that grew by acquisition and now looks like the Noah's Ark of accounting and front office software. Noah had it easy by comparison -- he could keep things apart. However, in this era, companies are looking for economies that come from consolidation, and part of Najeeb's job is to modernize products and rationalize the portfolio while balancing the needs of the partners who sell the products. As G.H.W. Bush might have said it -- Tough job. Gotta get it done. Wouldn't be prudent not to.

Another new face in the executive ranks is Jodi Uecker-Rust, president, Sage business solutions. She was previously corporate vice president of business solutions with Microsoft (Nasdaq: MSFT) and COO of Great Plains Software. That's a good background in this space. Uecker-Rust has a lot on her plate and will be working closely with Najeeb, I think.

Growth by Acquisition

Unlike most software companies, Sage grew by acquisition, building a portfolio of business solutions for small businesses. You might say other software companies did the same thing, but they more or less made strategic buys once they got big organically. On the contrary, Sage grew by acquiring products. Today, the company is a federation of individual brands under a corporate umbrella doing business around the world.

The portfolio strategy left the company with many products that were and are architecturally distinct. The overhead associated with managing so many code sets must be pretty big. At some point, a prudent manager needs to take inventory and begin a consolidation process, and that's been overdue at Sage.

One reason consolidation has not taken place, I think, is the way Sage goes to market. The company sells through a reseller channel. The model has some definite strengths, and Sage is not the only company in the market to employ it. There's no question, though, that an indirect channel adds complexity to decision-making. You can't change a product too much, regardless of how beneficial the change might be, if the partners are not behind you. Not surprisingly, the company made multiple gestures of support to the partners and tried to reassure everyone that any changes moving forward would be net positive.

Upgrades and Migrations

All that being said, the CRM/front office applications seem to be in good shape. Last year, the company announced a multi-year plan (the 2010 strategy) to rationalize the CRM products, making ACT work better with SalesLogix and incorporating new Web technologies. So far, all that seems on track. I think there's more work to be done relating to Web-based applications, and no one debates that.

The next one to three years will be important for Sage. The company needs to make progress on some product upgrade and migration issues that, in truth, are overdue. The good news isn't hard to find, though. Swenson appears to be making some good moves and tough calls, and the partner channel is global and energized.