“This is the Start of a Real-time Accounting Revolution for Business”
With these words, has Stephen Kelly, CEO, Sage started a war in the SME cloud based accounting software market? Sage Live was announced at the Sage Summit along with a free service for QuickBooks users to allow them to migrate their data into the Sage Live cloud SaaS solution easily.
Sage Live, built on Salesforce
In May this year, Sage and Salesforce announced a partnership that may have been merely a warning shot in the battle for accounting in the cloud. Mark Benioff commenting on the announcement said “I’m excited about the opportunity this partnership creates for our customers”. Now those customers in the US will have to wait no longer as Sage Live is available for access from $15 per month for business users which grants access from mobile devices only, $30 per month for full access to all services.
Sage live is built on the Salesforce1 platform and was developed in partnership with Salesforce. That Sage have managed to develop the software so quickly may send alarms to some of the other accounting packages within the Salesforce platform. FinancialForce and Accounting Seed Financial Suite will certainly watching developments closely, although the former as a full ERP suite and aimed at slightly larger companies may not be concerned yet.
Santiago Solanas, global CMO of Sage, is clearly pleased with the speed of development and commented: “This shows the new speed of execution Sage is working to. From conception in January, to availability in July. Sage Live puts your business in the palm of your hand and gives you real-time information that allows you to make decisions based on what’s in the headlights, not the rear-view mirror. This is the start of a real-time accounting revolution for business.”
The big question will be what can they achieve next? Will Sage be moving a full ERP suite onto the Salesforce platform as well!?
Sage eyes Intuit market share
Intuit should definitely be concerned though as Sage has made a clear grab for their market in the US with an announcement around free migration of QuickBooks® into Sage Live. With QuickBooks® Intuit has 80% of market share of those small companies that use financial software in the US (Source: Chicagnow.com.). This is a big pie and Sage wants a share.
While Intuit already offer Quickbooks Online in several regions Sage Live could be a major threat to their dominance, especially as it sits on the Salesforce platform. A platform already used by many of those same small companies for its CRM and other requirements.
Santiago Solanas, global CMO, Sage is pulling any punches when he announced “We know that QuickBooks customers are crying out for one source of live information to help them to run their business…..Sage Live is available now and makes powerful real-time accounting a reality today. With this offer, we are giving long-suffering QuickBooks customers a simple and no-charge way to join the real-time accounting revolution and energize the success of their business.”
Sage are suggesting that Quickbooks customers should go visit Sage Live where they can share their QuickBooks files and Sage will migrate most of their data at no charge and include a free trial within the new accounting system. What “most” means is realistic though and a Sage offered an explanation:
“This offer supports moving their customers, vendors, GL, etc. to Sage Live. The “most” comment excludes multiple years (e.g., 5 years+) of historical transaction data. It is also possible that some customers will have extensive customized data.”
How much does Sage Live cost?
At first glance the costs actually appear higher than Intuit. Sage Live has three pricing levels Essentials, Standard and Premium. Interestingly Sage are offering Business users(mobile devices only) at $15, $20 and $25 dollars per user per month. The full user version is priced at $30, $50 and $75. With an optional premium support offering available for the lower tiers at $10 per month. This may mean that a Standard Business user with premium support would be the same cost as the Premium for a full user.
The price levels appears to be aimed at accountants more than SME’s though with Essentials supporting one company, Standard up to ten and the Premium version not only multi-national compliance but also up to 100 companies.
Sage Live is not yet complete in comparison with its rivals. Back reconciliation, automatic bank feeds, budgeting, accruals and deferrals and perhaps most surprisingly Excel integration. These are likely to follow soon, but their is no definitive date yet.
In comparison Intuit has Simple Start, Essentials and Plus. Intuit has recently discounted for an initial period so that the headline costs are between 20% and 40% for the first few months. The full pricing is $12.95, $26.95 and $39.95 per user per month but each level above simple start has additional features. Essentials include the ability to manage and pay bills as well as Sales and profit reports. Plus also includes the ability to track inventory and also prepare and print 1099’s (IRS forms).
One other player in this market is Xero, it already has at least 22,000 users in the US and has a similar three tier pricing mechanism though its entry level start package at $9 per month is for very small businesses. Its standard price of $30 per month has more features than Quickbook and its Premium version (at $70) support multi-currency and supports payroll for up to ten employees.
Xero poses an interesting challenge for the business model that Sage and Intuit have been built on. Rather than charge for new features such as payroll, Xero sees these as free features to give to customers. Long term customers of Sage and Intuit will know that extras can be expensive. How Sage will adjust to deal with the aggressive growth of Xero will be interesting.
The decision by Sage to make their Business level access available only on mobile devices was one taken during the design stage. A decision that was backed by both CFO’s and senior business executives and intended to deliver a flexibility it feels that are missing from other accounting solutions. Only time will tell whether the market is indeed ready for this option.
Sage was definitely late to market with a cloud option. Kelly has been clever though, in partnering himself with Salesforce and rapidly delivering a product he has shown that Sage is taking Cloud seriously. While businesses may not have trusted a quickly delivered Sage platform that it is delivered on the Salesforce platform gives it an instant kudos that Intuit may find hard to match.
Sage will be hoping to capture market share quickly in the US and increase revenues. When the product is launched later this year in its traditional markets of the UK and Ireland they should have a product that might catch up the lost ground to their competitors. Whether they will be able to win back business is another matter but a lot of companies in the UK, familiar with Sage may see this as a safe bet. This may play into their competitors’ hands, as by showing that they trust the cloud Sage it may open up the whole market as Accountant start to trust the Cloud for their clients data and will look at the most suitable option.