SAP Q1 2013: a mixed bag

Image courtesy of BusinessWeek

Image courtesy of BusinessWeek

I am writing this on request. It’s hectic at Howlett Towers and this will likely be the last #evilplans post here before we launch the real #evilplans on 1st May. Keep your eyes peeled.

SAP announced its Q1 FY2013 results earlier today. Despite missing the consensus revenue forecast by some five percent, I was more concerned with the detail. This is important for a number of reasons that I will discuss over time.

First, it is important to remember that all vendors, regardless of size, should be subject to financial sanity checks. Buyers need to know that the companies they buy from have a long term future. That is especially true for companies that run their back office with a single supplier. Here, I define ‘back office’ as accounting, HR admin and CRM admin functionality. These are the core ‘things’ that all large businesses need in order to develop an efficient organization. They represent the backbone functions upon which all businesses depend and which provide the way in which they pay and get paid for the goods and services provided.  SAP is no exception.

Next, and as promised, SAP adopted a method of reporting that gives better visibility into its sources of revenue. This makes it much easier to understand the trends and business drivers, leaving less room for speculative forecasting or interpretation. On to the numbers.

My initial analysis suggests that SAP’s core ERP, BusinessObjects and Sybase businesses are declining. There was a fall of around six percent in revenue for these core items on a year over year basis. This amounted to some €38 million. In an analyst call, the company attributed this entirely to activities in Asia Pacific.  I have to take SAP at its word but I have been predicting that without a significant refresh, SAP runs out of steam on core ERP by 2017.

Elsewhere, while attention continues to be focused on SuccessFactors and HANA, I wonder what’s happening with Business ByDesign.

Jim Hageman-Snabe took a call from me on these points. His take (paraphrased):


Provides a way of radically simplifying the landscape. Quoting SAP’s own implementation of HANA, Snabe claimed the company has reduced hardware cost from €3.8 million to €0.5 million. That’s fine but then I don’t know how much HANA was needed to achieve these savings. Neither do I know the amount of retrofitting and testing necessary to achieve those savings. If SAP is to convince and benefit, then it MUST share benefit with its customers. That means ensuring that simplification also translates into reduced implementation cost. Times five software license cost will NOT cut it. As a side note, I hear that Cisco is offering ‘free’ HANA boxes to kick start its entry into the market. IBM is in the process of divesting its server business to Lenovo. That should remove another cost pressure point.

Extending the traditional business. SAP is selling BusinessWarehouse on HANA very hard. Accelerating the warehouse provides incremental value although that can amount to millions of dollars/euros in value. If SAP gets Business Suite on HANA into full production for the summer then the picture changes as SAP is then able to offer real time operational systems. This will put them firmly into competition with the cloud players which already have real time capability while providing a safe haven for those who may feel under pressure to move to the cloud but are nervous about the implications.

Open innovation – new solutions. This is the part that SAP has yet to flesh out and about which Snabe is not fully prepared to discuss. The last year, I, along with my video partner Jon Reed, have been following SAP’s startup support efforts in this business unit. We have found a number of good examples. Only the other day I met Warwick Analytics who have a fledgling solution for discovering root cause quality problems in manufacturing industries. More to come on this but the solution we discussed is genuinely exciting. The other week, I caught up with Basis Technologies. They are working on predicting customer propensity to complain or leave in energy utilities. In both cases, the business value runs many millions of dollars/Euros. And that is just two examples. My personal view is that regardless of the value HANA may bring to Business Suite and BW customers, the biggest potential is in this area of new solutions. It is SAP’s to win…or lose.


SAP is selling SuccessFactors hard and accelerating the onboarding of users for Ariba. The results speak for themselves. Cloud revenue is at an annual run rate of €900 million. Having said that, there is plenty of controversy surrounding SuccessFactors. I routinely hear of tensions between SAP and the implementation channel where the smaller SIs are ignored in favor of the big hitters. Then there is the question about how well SuccessFactors integrates back to core HR and/or whether the newer SuccessFactors products will be sold in as replacements. For now and tensions aside, SAP is leveraging its customer base well. ByDesign is a different story.

On our call, Snabe talked about wins against NetSuite and on products that are subsets of the main BYD suite, including Sales OnDemand. I can point to wins the other way. Snabe said that the mid range is continuing to buy functions with finance leading the way. I find this depressing. The cloud provides ways to transform business. If SAP is a proxy for what’s happening in the market then that isn’t the case in the mid market. More research is needed here.

Whether BYD shrivels away is an unknown. If that happens then it will be an opportunity wasted that will hurt customers and SAP’s reputation. If SAP is able to get BusinessOne into the cloud in workable form then this discussion becomes moot. BusinessOne is a very good solution and more advanced than BYD. That should not be a surprise given its maturity.

Concluding thoughts

This quarter’s results are the clearest indication of a company in transition. The fact SAP can point to a relatively small market as the reason for a forecast revenue number miss tells me that core ERP sales are fragile. The HANA and cloud replacements are coming along at a brisk pace but then buyers should not be wowed by the double and triple digit growth numbers. SAP is coming from a small base and would be rightly panned if they achieved anything less. HANA is the future at many levels but, as we will discover, SAP has numerous issues to overcome before it can declare that HANA is mainstream. Right now, Snabe is talking up proof of concept conversions. That’s all good. But I can equally point to customers who are holding back, waiting to hear SAP clarify its messaging, simplify pricing and accurately articulate benefits before they make what, for many, will be a multi-million dollar investment. They’ve been bitten before, they won’t fall for it again.

The Russian EuroCloud

What’s the state of the cloud market in Russia? On a fleeting visit to San Francisco, EuroCloud VP and cloud blogger Phil Wainewright caught up with Max Chebotarev, chair of the Russian cloud interest group RCCPA, which will shortly become EuroCloud Russia.

There’s a lot of interest in cloud in Russia but a lot of it is still private cloud, Max explained. It turns out that credit card or Paypal payment is not a good way to get Russian businesses signed up for services such as or Microsoft Office 365. Corporate payment cards are not often seen in Russia and it’s a big problem for Russian companies to transfer funds across borders to make payments in Ireland or Luxembourg. If these providers were to team up with Russian payment processors, Max believes they’d make a lot more progress.

Max also talked about the upcoming EuroCloud Russia Congress, which takes place on April 24th at the Digital October venue in Moscow. Formerly known as CloudConf, this is Russia’s biggest cloud computing event.

Show notes

0:43 All about EuroCloud Russia Congress on April 24th
1:25 State of the cloud market in Russia
1:48 Advice for global players coming to Russia
2:28 Why international payment issues are holding back SaaS
3:18 Local partners are needed to explain concepts like CRM
4:08 There’s distrust of cloud but hosted email is now gaining ground
4:48 Some companies count on the cloud to hide data from the authorities

Glossary: CIS = Commonwealth of Independent States, the former countries of the Soviet Union.

Co-innovation: myths and reality

innovationSoftware vendors are cozying up to customers big time. The market for greenfield sales is done, there will be an occasional shuffling of the deck chairs but that’s pretty much it. Any future growth and especially in ERP has to come from revisiting the customer base to sell them more. But what do you do if they have the full ERP suite? This is where co-innovation comes in.

Earlier in the week, I was musing on the topic with Vijay Vijayasankar, formerly associate partner at IBM and now part of Vishal Sikka, executive board member SAP’s team who are tasked with helping customers build new classes of application. The idea is that customers take advantage of HANA, SAP’s much discussed in-memory database and development environment. To date, much of the action has been around working with customers on the one hand and encouraging the developer community on the other hand.

In a piece entitled, Co-innovation – It Takes Two To Tango, Vijay makes a number of important points, starting with:

I am of the firm opinion that a vendor should not claim innovation on any product or service – only a customer should. I am in two minds these days on whether analysts and bloggers are good judges of innovation. But till I get some clarity of thought, I am going to stick with customers as the sole judge.

I am with Vijay on this. Customers are always the final arbiters of what is and is not innovation. But then he makes the crucially important observation:

One reason for this balance being hard to strike is because vendor solutions are not always outcome based. Almost every customer has budget to make more money – be it revenue increases or cost reductions. But not all vendors and customers can articulate IT solutions in the context of a business solution. It is an in-exact science to begin with.

This is where we diverge. My sense is that technology companies are overly fond of talking technology without necessarily engaging the business in ways that matter. Customers on the other hand also do a less than stellar job in articulating what needs to happen. End result? Often chaotic, rarely optimal and a continuation of the ‘geek v suits’ arguments that plague the industry and deliver little value back to customers.

I have met customers who do ‘get it’ and will be publishing a video I shot with one CIO who talks about two issues: speed to outcome and change management.  What needs to change?

Four steps to successful co-innovation

  1. Customers and vendors need to meet each other half way. It’s not enough to finger point when things don’t work out the way they were initially thought.
  2. Consultants need to spend far more time in the pre-blueprinting phase getting to know about customer needs. Starting off with ‘we need a bank systems refresh’ is hardly a good basis for project and technical assessment.
  3. Vendors – or rather the consulting organizations – need to get away from the constant change order mentality that says something like: ‘anything that deviates from plan is a change order and you need to pay us more money because we didn’t budget for that.’
  4. Much is made of top level buy in but in reality you need top level engagement all the way through to the people who will end up using the new system. Engage users early and often, iterating along the way.

This is not an exhaustive list but it is a good place to start and one for which there is evidence of success. And in fairness to Vijay, he makes many of the points in his own way. There is one more step though that the industry sorely needs. Vijay kind of references it where he says:

Vendors will need a solution that they can lift and shift to other customers . That will typically mean – some features specific to the given customer they are working with might not fit a “framework” model. Customers on the other hand will want an out of the box solution that they don’t need to customize any more.

The days of having a solution custom built that will deliver single business value are done. Sooner or later, everything gets commoditized. Going one step further, value achieved is not about the functionality a company thinks will give it an edge but about the way it implements, the degree to which it handles change and the way it uses the softwares in the context of the business process problems it is solving. The truly innovative companies quickly discover this and once they have siphoned off value, move onto the next thing.

Vendors on the other hand should always be looking for ways in which they can take what they’ve learned from projects and push it to a wider audience. Claiming ‘custom’ for everything doesn’t wash. If, after the first iteration, the vendor cannot offer 80 percent to other customers then there is something wrong.

Times are changing and customers demand more for less. There now needs to be a fresh kind of partnership between vendors and customers. One that allows innovation to thrive but doesn’t do so at the expense of the market as a whole. One that leaves lawyers at the door because the work is being done between trusted partners.

Consulting Sapphire: creating the obvious

Dealing with the obvious is a cracking good way to break myths, tackle gnarly problems and generally make a dent in the universe. Sometimes the obvious catches people by surprise, other times it delights. It always puts a smile on people’s face. None more so than the other week when I met with Dan Barton who is creating a new consultancy practice for the SAP world. His schtick (among other things) is about making SAP projects accountable. What does he mean? (Check the video above for a more detailed explanation.)

Too often we see projects that are/have/will fail because the moment the contract was signed and the implementatino kick off meeting got under way, two things happened:

  1. The initial business case and ROI calculations were quickly forgotten.
  2. Something changed that blows the project off its intended course.

The first is inexcusable, the second is rarely impossible to contain or prevent. Why?

When management decides to make a software selection it usually does so on the basis of a known pain point. It doesn’t necessarily understand  or know the nuances involved in arriving at their selected solution. This provides the consulting firms with the kind of ‘change order’ bouquet they love to receive. It gets then out of thin margin fixed price deals, allows the reselling of past solutions at ground up development pricing and provides fertile ground for ‘added value.’

Barton doesn’t say his approach can fix all of those issues but he does insist that project management is accountable. It’s obvious yet so rarely done as project leaders become embroiled in the minutiae of delivery.  So if Barton’s model can’t necessarily fix stuff then what’s the point? Simple – learning. SAP is one of those solutions that involves multiple projects, often with similar characteristics. The more that’s learned, explained and documented, the better the chances of avoid future pitfalls.

It is early days but Dan has a strong value proposition and has got contracts in waiting. I wish him well in a world that too often hits the headlines because of failures.

The chaotic world of mobile

MWCThis week has been Mobile World Congress in Barcelona. As events go, it is by far the largest I attend, with around 1,500 exhibitors spread across nine halls and an estimated 70,000 visitors. This year I got a sense of panic, chaos and bewilderment in an industry that seems befuddled by conflicting standards and an inability to rejig itself for the 21st century – at least in the developed world.

There were no blockbuster announcements but a heck of a lot of upbeat yap. There was a mass of innovation, mostly among the small vendors. There was a lot of talk about how opportunities in Africa are leading to amazing new business models, and especially around mobile finance. There was emphasis on the smart city enabled by mobile devices, applications and infrastructure. But scratch beneath the surface and you quickly find a lot of confusion.

For example, I met with Deutsche Telekom which has a partnership with IBM and SAP for the connected public sector. Each provides a great brand name. Each brings special skills and technology to the party. But ask who leads the deals and you are met with blank stares. DT think they do because they already have the customers. Ask IBM and you get the same answer. Ask SAP and they are darned certain they lead because of the applications. But in reality, nobody really knows and they have as yet to figure a way of collaborating sensibly in the deal space so that everyone wins.

Contrast that with PHB Development, a tiny mobile financial services and microfinance outfit based in Belgium that spent the last year or so building out mobile payment technology in Nigeria for Orange. There is a video to come but it is a great story of how financial services and carrier companies could not figure out how to reach the unbanked. PHB worked it out for them.

Then there are the carriers. I have a special interest in Vodafone because as far as I can tell, their service is going from great to garbage at a fast clip. I went on their stand to find out if it is possible to aggregate routers as a way of cranking up my bandwidth. The answer? The folk I needed were all at lunch. ‘Come back in an hour.’ And this on a stand consuming acres of space.

Meanwhile, Volubill based out of London was talking about systems that help carriers to create tailored offers for consumers based upon predictive analytics. The system can provide a policies based scenario in less than 15 minutes, saving the carrier millions in consulting and custom code. It’s going down a storm in developed countries but is almost impossible to make work in developed countries. Why? The carriers cannot get from underneath their fixed rate plan mentality.

Monetising for the business world

The biggest problem however remains in the area of monetisation as it relates to mobile services that address business issues. It seems to be finally dawning on the application vendors that making money from mobile applications per se is unlikely to lead to any pots of gold. Instead, value will be derived from the services that create and enable new applications plus some sort of fee for connected devices. That makes sense in a world that is far removed from the 99 cent Apple Store. Why is this the case?

Talking to a number of vendors, the consensus is that pricing per app was commoditised by the Apple App Store long before business application vendors came on the scene. That meant there was no real way to price in the enterprise environment on a basis with which they are familiar. However, you can establish benefits for particular projects and then price accordingly.  It is a fair way to approach this problem but it is still very early days.

The carrier problem

As I went around listening to carriers, developers, appliance makers, infrastructure people and service providers, it became clear that those with the biggest problem are the carriers. Data is exploding around them. YouTube decides to make some new HD video facility available and the carriers have the headache of matching bandwidth needs at ever increasing cost. How do they solve that today?

In the developed world it is all about nickel and diming the customer with complex plans that cannot keep up with the needs of consumers or business. In my own case, simply browsing, checking GMail and floating around on Twitter and Facebook for less than two weeks and I consume 500MB of data. Want more? Sure – but pay for it in chunks I may or may not use. Want to use VoIP? No chance. That service gets throttled, driving me back to voice – the legacy cash cow the carriers are desperately trying to cling onto.

Even so, I got a sense of panic among the carriers who are finding that not only are costs out of their control but customers are unwilling and unable to pay the exhorbitant prices the carriers want to charge. As they see millions of users switch to the virtual operators, the mainstream carriers are left with few cards to play, ending up in a double bind from which they cannot extricate themselves without wholesale rejigging the business model. No-one wants to be the first one to blink.

My sense is that it will take significant pressure through social channels for the carriers to come up with alternative methods of pricing that satisfy demand yet preserve their EPS. But change may happen sooner rather than we think. The imposition of new European rules around roaming charges in 2014 means that the carriers will see their premium pricing for roaming disappear to a large extent. They will no longer be able to impose bill shock. It will be interesting to see their response.

Another response might be to pay closer attention to those who are working on ways to make the delivery of rich media more efficient and less consuming of bandwidth. We met with Kontron, a specialist development company out of Canada that is talking about technology it can embed inside Intel chips and inside server racks that helps crunch down the requirements for high quality video. They anticipate selling into content delivery network providers who in turn can then offer better services at lower bandwidth consumption levels.

The developer angle

Mobile development for business is still in its infancy. One organisation we met said that most of the ‘shops’ they come across consist of a handful of developers. Bringing them into large application ecosystems is a tricky business because as outlined above, the business models going forward cannot realistically be developed along the lines of the Apple App Store or Google Play. It is also expensive, requiring a significant upfront investment that isn’t easy to justify at a time when the models are unclear.

I suspect that the likes of SAP, Infor and others will start to figure this out over the coming year. Simply making the comparison to consumer App Stores and then deriding them as poor cousins fails to recognise the reality for everyone involved in the value chain.

Bright spots

There were some truly interesting application scenarios on show. One that I will return to in a video looks at the whole supply chain for vending machines. It doesn’t start and stop with using the mobile device as a payment mechanism although that is cool in itself. They’re looking at dynamic pricing based upon numerous variables like the weather, time of year and so on. They’re also thinking about tying sales of soft drinks to suggestions for snacks delivered as push notifications and alerts to mobile devices. They’re talking about using the data that comes back to feed into replenishment systems. That in turn leads to intelligent routing information that can be fed to delivery fleets. It’s heady stuff.

Concluding thoughts

Mobile is one fo those areas where the imagination can run riot. The possibilities are truly astonishing. Sensor information is now taking on significant importance as the business of mobile monetisation moves to the machines as in machine-to-machine communication of the kind implied in the vending example above. It is an exciting future and one that will stimulate important discussions between lines of business and technologists. That is a good thing.

Curiously, it is the kind of development I believe will help to drive transformational value in ways we can barely see today but which will be vital to economic growth and success in the future.

UNIT4 continues to pivot with subscription services

rev by category - unit4Earlier today, UNIT4 held an analyst call to discuss its full year 2012 results. While overall revenue only rose 4.5 percent, the company was at pains to point out that its transformation to a subscription based business hides the long terms growth. During the formal presentation, the company said that what it describes as ‘subscription and SaaS’ revenue now represents about 10 percent of its overall business. Traditional on premise new license sales represent 16 percent.

Despite the modest amount of revenue from subscription sources when compared to the whole, the company clearly signalled that this is its model for the future. It should come as no surprise then that UNIT4 was peppered with questions about, its pure play cloud offering. Numbers from the presentation and discussion:

  • Annual subscription run rate accelerated from €46.8 million to €57 million between June and December 2012.
  • SaaS/subscriptions grew 25 percent in 2012, expected to be 30 percent in 2013. Taking out, UNIT4 grew subscription revenues by 17 percent.
  • FinancialForce is on a current €17 million run rate. The company projects this will rise to €70 million by 2015.
  • The company lost €9 million on FinancialForce in 2012 but implied break even by 2015.
  • UNIT4 expects to continue investing in from its own resources with no mention of additional external funding.
  • FinancialForce now employs 150 people, many of which are located in the US.
  • Despite being US centric, the company counts customers from 45 countries.
  • is now seeing many more enterprise deals.
  • UNIT4 is not averse to seeing grow by acquisition.


  1. has proven that a European applications vendor can go to the US and succeed in the cloud market. This should be welcome and an encouragement to others in the SME space. Xero, BrightPearl and FreeAgent have all made moves in the last year or so to establish a presence in the US.
  2. Having visited the company’s San Francisco offices, met a number of its staff and listened to management’s plans over the last couple of years, my sense is that can do very well. Its plans are ambitious but there’s nothing wrong with that in a market where there is plenty of opportunity.
  3. Riding on the back of the platform has accelerated time to market in a way that is not possible for other vendors who have to build out their own infrastructure. The flipside is that is captive to’s own development. This has, at times, held it back but again, my sense is that as it grows management will pay more attention to’s needs.
  4. While still considered an SME play, the company is making inroads at the enterprise level. That’s important because it elevates the company’s ability to take a seat at the bidding table. In the short term it won’t win too many of those deals and will likely find that it is not sufficiently feature complete in some areas. Even so, that will encourage the company to run as fast as possible to address functional white spaces.
  5. Its acquisition of Appirio’s professional services business in late 2011 has clearly paid off. That line of business continues to be expanded while its relationship with Rootstock for manufacturing also helps to broaden the addressable market.
  6. It was good to hear UNIT4 affirm continued investment in the business. It is always tempting to resist bold investments when you have a significant recurring revenue business. It is encouraging to see that management is transparent about what this means and how it works. The stock chart shows that well run companies that act in this way are rewarded – even when in transition. That bodes well for the future.

Disclosure: is an ongoing product strategy client

Sage offloading assets, now what?

sage logo smallAt the end of last week, news emerged that Sage Americas, France and Spain are offloading what it describes as ‘non-core’ assets. Here are the transaction details taken from the company’s investor site:

In North America, Sage has reached definitive agreement to sell the trade and assets of Sage ACT! and Sage SalesLogix, the two international CRM products identified as non-core, to Swiftpage, and the trade and assets of Sage Nonprofit Solutions, Sage’s vertical software solutions for not-for-profit organisations, to Accel-KKR. The consideration is $101.2m (£64.8m*) in aggregate, of which $91.2m (£58.4m*) is payable in cash on completion. In addition, Sage is receiving a $3m (£1.9m*) seller note from Swiftpage and $7m (£4.5m*) in the form of a 16.1% equity stake in Swiftpage^. As at 30 September 2012, the related gross assets were £243.1m* and EBITA for the year ended 30 September 2012 was £4.8m#.

In Europe, Sage has received a binding offer from Argos Soditic for the sale of C&I, ATL and Automotive in France and Aytos in Spain. The sale requires prior approval from the French Works Council in accordance with French law. The agreed consideration is €33.2m (£28.6m*) of which €27.2m (£23.4m*) is payable in cash on completion.

Alex Williams at TechCrunch cited some of my past analysis on this topic saying:

I rarely hear about Sage. It’s a company that has grown through acquisition over the past 20 years and profited handsomely. That is until about five years ago when, as Dennis Howlett analyzed last summer, the company became a bit too content to belly up to the table and dine on those fat maintenance fees it collected for the aging software.

Those who have read AccMan will know that I have been highly critical of Sage’s strategy, arguing that they have let many opportunities slip past them. In some cases, the misses have been almost comical. In September 2011, Sage dumped Emdeon, its acquired US healthcare division at a loss of $245 million or 43 percent. This latest set of disposals represent an even bigger hit on the carrying value. What are the takeaways?

Seven points to consider

  1. Sage says that it is returning the proceeds of sale to investors. This is a sure sign that Sage has currently given up on investment in new technologies. Financial analysts will now be looking more closely at the return Sage is achieving on the remaining assets to identify other ‘non-core’ activities that can yield shareholder value.
  2. The sales in France and Spain are not surprising. Both economies have faced tough times and the returns must be dismal. Better to dispose while there is a market to dispose to.
  3. Disposing of ACT! and SalesLogix has a certain logic (sic.) Both are very old products albeit they have been well loved over the years. Partners will be alarmed as they often saw these solutions as a way of developing incremental revenue from the installed base. That work will not go away but customers will want to know about the future direction. Simply pointing them to Sage CRM won’t be enough when there are a number of good cloud alternatives.
  4. It’s not all bad news for Sage. Its payment processing division is doing well. However, this is pretty much the only bright spot the company can hold up as a revenue generator.
  5. Sage recently achieved full HMRC accreditation for its SageOne payroll as a Real Time Information (RTI) solution. That will give it some additional credibility where the shift to online has pretty much destroyed its print business and at a time when RTI is a top of mind topic.
  6. The main concern has to be around Sage’s shift to cloud. BillingBoss was a great start but got dumped at the end of last year. That was a mistake because billing is one of the most difficult functions to get right. Having a solution in play provided opportunities to think about developing the solution for the subscription economy. That opportunity is now lost.
  7. SageOne has been a slow burn. Last year it grew from 1,000 to some 6,000 customers. We don’t know if those are paying customers, but others are adding those sort of numbers in a matter of weeks, not a year. The good news is the company has opened up SageOne to developers. That might provide a fillip provided developers find the API friendly enough for their purposes and can see enough of a market to make the integrations worthwhile. In the meantime, potential customers have plenty of other choices.

Concluding thoughts

One should never write off a company the size of Sage. Its cash generating ability has not been significantly diminished and that still leaves open the door for sizeable acquisitions – should it so choose. Contrary to what many think, a cloud acquisition makes sense but it would have to be at a huge premium and even then Sage would have to find a good way of handcuffing acquired management. That’s hard when the potential targets are in hyper growth mode and enjoying good relationships with customers – something with which Sage struggles.

Sage’s biggest difficulty comes in the dichotomy it faces when on the one hand facing the financial community, while on the other hand having to satisfy changing customer demands.

There remains a huge, untapped market for startup and very small businesses (VSBs) that Sage could address. That whole market is going online from the get go. Programs run by the likes of Barclays, which bundles FreeAgent and other services are providing Sage’s competition with routes to market that are a near guarantee of bulking up. Others have driven a wedge between Sage and its captive accounting professional markets. And while Sage might think that its market muscle helps it, the reverse is the case. Like others with a history of incumbency, its past reputation for producing flawed bloatware and forced upgrades leaves it coming from behind. That’s not to say Sage will not overshadow its competitors but the company just doesn’t command enough attention in the market for that to seem likely any time soon.