Sage to be acquired?

Sage to be acquired?

Summary: Sage, the UK's largest independent software vendor has become the subject of takeover speculation. Last week, rumors were swirling that Sage was being courted by Infosys.

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Sage, the UK's largest independent software vendor has become the subject of takeover speculation. Last week, rumors were swirling that Sage was being courted by Infosys. Earlier today, Yvette Essen in the Telegraph repeated the speculation, throwing the unlikely spectre of Oracle into the mix. Nick Clark at The Independent meanwhile threw Cap Gemini's name into the ring.

Earlier in the month, UBS issued a positive note on Sage having trawled through the Emdeon customer base:

It has surveyed customers of Sage’s Emdeon US medical software division and believes that concerns about falling demand from medical practices and possible glitches in the software are overdone. However, it said that it had uncovered evidence that the group, whose core business is accounting software for small firms, had made only mediocre efforts to market its medical software.

When Sage acquired Emdeon, I felt they'd paid a hefty premium and earlier in the year it became obvious this division really was not performing at all well. In July, Andy Corbin who ran the unit was fired and at the time I said:

It would now seem that Mr Corbin wasn’t up to snuff as far as Sage is concerned and has paid the price. It will be interesting to see what happens over the next few months.

Interesting indeed.

Sage has been the subject of takeover rumors in the past with Microsoft said to be the front runner. On this occasion, the contenders are an odd bunch. I can't see Oracle going near this one because there's no technology fit. This doesn't sound like the kind of thing that Infosys would do although stranger things have happened. That just leaves Cap Gemini. Given their recent partnering with Google, it could make sense for them to morph towards a full blown development outfit.

The last rumor is that Sage might be taken private. This only makes sense if Sage was seriously thinking about the saas space and had figured that it needed to shovel a lot of money into R&D. Historically, Sage has put minimal resources into research, concentrating instead on backfilling and maintaining its 50+ code bases.

Whether this is of wishful thinking in a stock market currently in the doldrums or whether it is real remains to be seen. Sage isn't acting like a company in acquisition talks. Only last week, Sage acquired European treasury management vendor XRT. My sources would not comment (naturally) but they also seemed surprised at such talk. In the meantime the company is working on new initiatives that will take it into the social media world. This will be its second attempt.

Topics: Social Enterprise, Software

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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3 comments
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  • This could mess up our deal with them

    We currently use Medical Manager and are in talks with them to upgrade to intergy, which is their new EHR software.

    I dont know if oracle or MS would touch them because the software runs on progress SQL, which is closed source. Granted, its SQL based, so the conversion wouldnt be that bad, but it would need to be converted.

    Its funny though.. if MS were to buy them, our shop would be completely MS software. From windows to dynamics, to EHR.

    Keep us posted.
    Been_Done_Before
  • Possibly?

    All the big players must have looked very hard over the past few years at acquiring Sage. The fact that they haven't says a lot about what they think of Sage's technology mess (50+ codebases), because the company has tremendous branding and global distribution infrastructure, which companies targeting the SMB space, like Oracle, badly need. With a viable technology plan, Sage becomes irrestible.

    Or, would have been. I think Microsoft (who might not be allowed to buy them on competition policy grounds) and SAP may have moved on. Maybe Oracle has too - depends when they plan to buy NetSuite.
    AndrewV
    • The codebase is a problem and a symptom of flawed business strategy

      Sage has grown by acquiring companies in many different countries.

      If you do business in Germany with Sage software you are using utterly different software from the British Sage, likewise from the Dutch Sage. So if you are a German company with a Dutch subsidiary (or vice versa) which Sage do you use? Are the Dutch and German arms of Sage actually business rivals rather than business partners in this case?

      Now given that small and medium sized businesses will be doing more and more business across borders in the EU and presumably setting up branches in those other countries Sage's strategy doesn't seem to make much sense.

      Europe isn't several different areas of business with different requirements, from a business perspective Europe is one region. Sage may have done a great marketing job, but they don't look like a future ready company to me at all.

      I expect Oracle would only be interested in Sage to get their customers, not their technology.
      jorwell