British software company will focus on its core technology stack for small and midsize businesses.

Gary Flood, Contributor

February 19, 2013

3 Min Read

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British-based accounting software supplier Sage has effectively pulled out of the vital North American market.

The company announced it is selling to U.S. interests three divisions supplying customer relationship management (CRM) software: SalesLogix, Act and Non-Profit Solutions, for a combined $101.2 million (£64.8 million). SalesLogix and Act will become part of one of its software partners, U.S. firm Swiftpage, while Non-Profit Solutions will go to Silicon Valley's private equity firm Accel-KKR.

It also sold four businesses to French software house Argus Soditic for $44 million (£28.6 million). These were the French offices of its C&I public authorities subsidiary, Automotive brand and ATL transport and food market division, as well as its Spanish Aythos public sector arm.

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Sage said that the moves will not affect customers or partners. Sage will retain its eponymous CRM platform and will concentrate on its core accounting and enterprise resource planning systems for small and midsize businesses (SMBs). Sage, in a FAQ for SalesLogix and Act customers, said it is not quitting the CRM market "and has no plans to do so."

"Our vision is to be the most valuable supporter of SMBs worldwide by creating the freedom for them to succeed," it said in the FAQ. "CRM is a key element of this vision, and will be delivered via Sage CRM, our CRM solution which integrates with our Sage ERP solutions."

Nonetheless, commentators said Sage is effectively exiting the CRM market and pointed out that it has struggled to find a consistent strategy in the CRM space. For example, three years ago it created a separate arm for all its CRM technology, then quietly reversed that decision 12 months later.

Analysts see the move as broadly sensible, but there could still be a bumpy road ahead. "The Sage products that Swiftpage [has] acquired are complementary to its existing email and social media marketing products and will allow Swiftpage to deliver a comprehensive digital marketing solutions to its prospects," noted Forrester Research analyst Kate Leggett in a blog post on the divestiture. "However, Swiftpage will have to do a significant amount of work to bring a differentiated value proposition to a very competitive market."

In December, Sage released full-year results for its 2012 operations that showed revenue up 2% year on year, at $2.08 billion (£1.34 billion) in 2012 compared to $2.06 billion (£1.33 billion) in 2011, and pre-tax profit up 1%, to $517 million (£334 million).

The company at that time noted, "North America showed the anticipated sequential improvement in the second half of the year, driven by good progress with Sage Business Care and with Sage Payment Solutions."

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