Late last month, Sage was forced to announce that CEO Paul Walker is standing down after many years of service. It was something of a shock. The way the announcement was brought into the open it was very unclear whether he jumped or was pushed. Senior execs at Sage assured me it was a personal decision. Whether true or otherwise, it has opened a Pandora's Box of speculation about the future of the company. Step back a moment to understand why.
In Vinnie Mirchandani's upcoming book, The New Polymath, Larry Dignan describes the ZDNet bloggers as: "part industry analyst, part journalist, part entrepreneur, part circus monkey." I'm not in the slightest bit offended and yet circus monkeys are emerging everywhere. Not least among the new SaaS marketers. Salesforce.com CEO Marc Benioff used SAP co-founder Hasso Plattner as a verbal punch bag. It's a pity Leo Apotheker didn't survive long enough to go Round 2. Zach Nelson CEO of NetSuite is turning SAP bashing into an art form. At the SME level, Duane Jackson, CEO Kashflow is turning his attacks on Sage into a successful marketing campaign.
Earlier today in a Tweet exchange, Mr Jackson claimed that UK financial analysts have been calling him up in order to understand Sage's SaaS strategy. Initially I saw this as Kashflow guerilla marketing BS. On closer examination, the market might be onto something with Mr Jackson as their circus monkey. Mr Jackson was good enough to share with me the bones of the discussion between himself and these analysts. Here is the transcript of what he threw over the email wall:
As per twitter, I’ve had at least 3 city analysts get in touch wanting a chat so far this year. Not little firms, big firms. I’d rather not name names for their sake.
I suspect Sage have inadvertently set me up as the “go to guy” for SaaS, as all have told me that KashFlow has had numerous direct mentions at AGM. By the audience and Mr Walker.
They have a basic understanding of SaaS but want to understand it better as they’re sensing it’s becoming more important. So conversations were around the business model itself and the growth we’ve experienced here as well as around the technical side of it – such as perceived issues around single- and multi-tenancy.
On Sage specifically the analysts have been interested in what went wrong with Sage Live, and what struggles Sage are likely to face in adopting a SaaS model – specifically looking for more meat around comments I’ve made in the past about it cannibalising the on-prem model (they all seem to have read my blog thoroughly)
I’ve given them my thoughts – such as single-tenancy not being scalable. Also the issues with having to “provision” the software. It’s not uncommon for us to get 70 trial-sign ups a day. We couldn’t possible deal with that level of demand if there was any human involvement on our part with getting a new trialist set up.
I think some of them came in expecting I’d have some sort of magic silver bullet that would get Sage up and running with SaaS. So I’ve explained I don’t and it’s not a situation I’d want to have to get sorted out. My only thoughts on it are at [this post.]
I’ve been asked how come we’ve been able to launch a profitable SaaS product [Note: Kashflow turned a small profit on around $750K revenue] whilst Sage can’t and I explained that I think it’s because we have no legacy issues in terms of software or revenue streams that we need to protect.
As for the future, if Sage bring in fresh blood from the outside that embraces SaaS then it could get very interesting in Newcastle. But if they recruit internally then perhaps not. Although I’m told that some of the internal people are very pro-SaaS and Paul Walker blocked a lot of things. So based on that then maybe even a new CEO recruited internally could make waves.
I suggested that perhaps “waves” isn’t what a lot of Sages institutional investors want, but I was told that isn’t the case and there’s a strong feeling that Sage are missing something important.
This last quote is crucial in understanding Sage's perception among analysts. Sage has so many failed attempts at entering the SaaS market yet has managed to sail through analyst days with nary a problem, largely on the back of growing maintenance fees. If Mr Jackson's reporting of calls is worth weight then the tide is turning for a company that in both the UK and US has enjoyed a premium reputation among SME buyer influencers.
Like Mr Benioff and Mr Nelson, Duane Jackson doesn't fight shy of 'talking crap' when it suits him so you have to take what he says with the bag of salt that is implied. And in full disclosure, I have well aired concerns about Kashflow's PaaS approach. Those concerns aside, it says something when a sub million dollar revenue minnow is getting the attention of analysts who are looking at a $2.3 billion plus revenue business and wondering where it goes next.
I have long held the view that Sage is utterly clueless on SaaS. When Mr Jackson recently claimed Sage is about to release Son of Sage Live I called up the company and was categorically told that is untrue. Sage's last attempts at getting SaaS into the world were doomed and to assume that 3-4 months on things have changed would be fanciful in the extreme. I am equally mindful that Sage's internal organization is so chaotic that if and when it does get a SaaS offering out then it will be below par. In my call as a follow up to Mr Jackson's assertions, I was told that Sage is consulting with customers. To the best of my knowledge, it is not consulting with a single consultant who understands this market. And that despite Sage and I have met to discuss SaaS influencers.
All of which has to get you wondering what the heck is going on inside this company. Your guess is as good as mine. But to repeat - when analysts are calling up competitors to gain perspective then one of several things is happening. My guess is that the proverbial do-do is about to hit the fan.