Subscriptions Are First Step In Sage ERP And CRM Plan

With competitors like Epicor, Infor, and Microsoft on the move, Sage is making over its enterprise applications portfolio.
With more than $2 billion in revenue and 12,000-plus employees, Sage Group Plc. is a well-known global software company, yet its profile in enterprise resource planning (ERP) and customer relationship management (CRM) isn't as prominent as it could be. The company is trying to change that with a recent reorganization and a new subscription plan, announced on Monday, that's said to be the first of several customer-oriented changes to come.

Sage needs to up the ante in enterprise apps given that competitors including Epicor, Infor, and Microsoft have already done just that. Microsoft recenlty announced it will bring its Dynamics ERP apps to the Microsoft Azure cloud later this year. The group controlling Infor acquired Lawson Software last year, and it has has also forged a strategic relationship with And Epicor merged with Activant last year, nearly doubling in size within just a few short months. And then there's the purely cloud-based competition from NetSuite and Workday.

The reorg at Sage North America has created four groups organized around customers: Small Business Solutions sells Peachtree accounting and Act sales software; Mid-Market Solutions handles the company's ERP and CRM apps; Specialy Solutions serves construction, real estate, and non-profit organizations; and Payment Solutions offers services such as credit-card processing to retail, e-commerce, and B2B businesses.

[ Want more on enterprise apps vendors? Read our 2011 InformationWeek report ERP's Cool Again. ]

As for those mid-market solutions, the Sage systems formerly known as MAS 90/200, Accpac, and MAS 500 have been renamed Sage 100 ERP, Sage 300 ERP, and Sage 500 ERP. That puts the emphasis on the parent brand, and it's more consitent with the names of the company's flaship Sage ERP X3 and Sage SalesLogix CRM apps.

Stepping up from entry-level Sage 100, Sage 300 is aimed at midsize firms operating globally and coping with multiple regulatory and legislative requirements. Sage 500 emphasizes breadth of functionality, covering accounting, HR, payroll, distribution, and manufacturing.

Sage 100, 300, and 500 ERP were already available both on-premises and as subscription-based hosted offerings, but with Monday's announcement, on-premises software will also be available by subscription. Sage ERP 100, for example, will cost $65 per user, per month for financials, $99 per user, per month for financials plus distribution, and $150 per user, per month for financials, distribution and manufacturing.

By contrast, a perpetual (one-time) license fee for the Sage 100 financials module is $1,500 per user. But a subscription includes unlimited phone support as well as the advantages of being an operational expenditure rather than a capital expenditure, a budget-friendly approach to buying that many businesses prefer. In addition, Sage's on-premises subscription requires only a short-term commitment; Sage said individual user subscriptions are cancelable with 120 days' notice. That's not quite as elastic as a cloud plan, but it's more flexible than a perpetual license.

Sage SalesLogix CRM will also be offered by suscription, with prices starting at $45 per user, per month on premises or $65 per user, per month hosted in the cloud. There's more to Sage's new plan than subscriptions and name changes, according to Joe Langner, Sage's executive VP for Midmarket ERP and CRM Solutions. The company is pushing for channel partners who can sell and support the complete product portfolio. And when partners want to stay specialized on one or two products, Sage is providing incentives to partner or pass on leads so customers can move to the most appropriate products.

Sage is also working on consistency across add-on capabilities so the same components for payroll, business intelligence reporting, HR management, planning, and fixed-asset-management will work with all Sage ERP systems. What's more, the vision is for capabilities now offered only as on-premises modules will be available as cloud services, with, where appropriate, per-transaction pricing options similar to those currently offered for payroll, payment, and tax-filing services.

"We're in the process of researching with our customers what are the most common and useful use 'connected services' that could be provided in a subscription- or transaction-based approach and that would connect with on-premises deployments," Langner told InformationWeek.

There's no firm data on when the vision will become a reality, but Sage appears to understand that cloud-deployment models, consistency, and interoperability and integration across multiple products are qualities that customers are looking for.