Sage has gathered 300 of its Business Cloud Enterprise Management channel partners (from some 19 countries) to its Enterprise Management Partner Summit in Sevilla, Spain. This brings together ISV’s, VARs and alliances with Sage executives and its product experts. The intention is to equip and support these partners with the tools to grow Sage’s sales. Partners are a vital cog in the Sage ecosystem.
Jennifer Warawa, EVP, Partners, Accountants and Alliances at Sage said, “I am delighted to be welcoming partners from around the world to this event. It is a unique opportunity for our partners to have direct access to experts and executives from Sage, hear the latest news and most importantly uncover new opportunities to grow their business. There will also be plenty of time to network through peer-to-peer discussions with other Enterprise Management partners and ISVs from around the globe. Our mission for this event is for partners to leave feeling empowered, motivated and knowledgeable.”
One extra element of this event is “Giving back to the community”. Sage will invite attendees to join Sage Foundation’s $1 Million Challenge. This is a high-energy social impact competition powered by Philanthropitch. Representatives from three charities: La Rueca Asociacion (Spain), Moovjee (France), and The Key (UK) will present their views on youth workforce development programs.
Sage 1H 2018 results
Blair Crump, President of Sage, summarised the first 6 months of trading as follows:
- there was no material changes to the financial information or guidance given in the warning of 13 April 2018, with the exception of cash conversion, which improved
- organic revenue grew 6% (H1 201717: 7%); this showed recurring revenue growth of 6% underpinned by software subscription growth of 25%
- momentum continues with Sage Business Cloud, with annualised recurring revenue of £336m (growth of 57%)
- the organic operating profit margin stood at 24.5% and there was a reduction in G&A expenses to 13.8%, a drop of almost 2% on the year previous
- FY18 guidance, as revised in April, remains at c.7% with the expected organic operating profit margin expected to be c 27.5%.
Stephen Kelly, Chief Executive Officer, said separately: “The significant market opportunity, as outlined at Capital Markets Day, is compelling and unchanged. Sage Business Cloud remains the most comprehensive cloud platform in the market to capitalise on this opportunity. Organic revenue growth in H1 18 was around £5m below our expectations, due to slower and more inconsistent sales execution than we had planned for. We have already started the implementation of robust plans to address these execution issues and to accelerate our growth through high-quality recurring revenue throughout the rest of FY18 and beyond. The revised revenue guidance for FY18 reflects the H1 18 performance, but also our absolute commitment to ensuring we focus on driving high-quality subscription revenue, aligned with the strategy.”
What Mr Kelly did not explicitly call out (in the statement quoted above) was, as a result of poor sales performance. he had culled 30 senior executives whom he feels were responsible for failing to deliver the expected growth. (Source The Telegraph – registration required). All 30 were either directors or vice presidents. The inference is that the leadership believes reducing management layers will lead to faster decision making and a more agile sales operation. It is not yet clear where the axe has fallen.
The Sage share price closed fractionally up on the day. It is still trading some 25% below what it was in January 2018.
Other points from the Enterprise Summit keynote session
Blair Crump highlighted the following:
- Sage’s long term growth must come from two complementary factors – Enterprise Management and working with Sage’s partners to expand an opportunity estimated at US$28B in 2019 (Sage ‘only’ has c US$2B of this at present)
- the Enterprise Management market is highly fragmented at present, which represents a major opportunity
- the impact of Cloud, in its many guises, goes from strength to strength – for Sage as well as for others; three million plus Sage customers offer a solid platform from which both to build and expand market penetration
- his priority is to aim for Sage market leadership, across the 20+ markets in where Sage is strong.
Mr Crump made an explicit appeal to the Partner Summit. If Sage and its partners work together both will succeed, as will their mutual customers. Both partners and Sage have a common interest; he would be focusing Sage making Sage easier to work and do business with.
Enterprise Times: what does it mean
All events are full of hyperbole and brave faces. Necessarily Sage management produced this. Yet, putting cynicism aside, the potential scale of the Cloud opportunity with Enterprise Management is vast.
Microsoft is succeeding with Office 365. Sage is not ignoring what this represents. It already combines to run what it refers to as ‘Sage Connected’. This runs on Microsoft Azure in combination with Office 365.(Sage contracts for Azure with Microsoft, on behalf of partners and customers.) Though Microsoft are more likely to recommend Dynamics rather than Enterprise Management, Sage clearly believe that the integration is table stakes for some customers.
Prima facie, Sage seems well placed to benefit. Yet others will see the same possibilities. The next three to five years look tough; technological plus management excellence will matter. The axe has fallen on 30 of the alleged poor performers, if the results do not pick up in the next half, Kelly will have to answer some harder questions. The trouble with putting so much in a cloud basket is that many eggs can break all at once. The Sage Enterprise Management Partner Summit aims to prevent this.
