Sage struggles in subdued market [Archive]

stugster

5th February 2009, 06:51

Mister B

5th February 2009, 06:55

Excerpt:

"Although the weak pound helped sales it did not help debt, which grew. Net debt was £649m on 31 December 2008 compared to £541m on 30 September 2008. But Sage remains within its banking covenants and has financing in place until 2011."

Original article here: http://www.channelregister.co.uk/2009/02/04/sage_trading_update/

Almost seems to be a little bit of an oxymoron this...I associate accounts/accountantants with prudent financial standing. Obviously not the case...just like a few well known banks:eek:

Mister B

Business News

5th February 2009, 06:58

SAGE is only carrying large debts because every time a decent sized competitor grows in 'their' market they buy them out. Maybe if they did more innovation and at a more reasonable cost for what is pretty ordinary software and grossly overpriced support they wouldn't need to buy their leadership position in the market.

Simon-M

5th February 2009, 07:16

That a company can exist with that much debt is a reflection of the poor direction and management of the business. I wouldn't give too much wieght to them having finance in place till 2011 either. The way the banks are at the moment they could pull the rug at any second.

Business is about profit not loss! Get it!

Simon

GaryMc

5th February 2009, 08:05

Philip Hoyle

5th February 2009, 08:15

Debt is not necessarily a bad thing in a business - Sage has a positive balance sheets so its assets exceed its liabilities and it also saw an increase in cash in its last full financial statements. Not the signs of a company in trouble

No, but falling market share is a definite sign of a company in trouble. When times were good they could borrow to buy out competitors. If they can't borrow money anymore, innovative competitors will grow at their expense. Sage is yesterday's product - people only buy it because of inertia - it is the system that people know and the main system taught in colleges etc. Its product development and customer service/support are abysmal. I'd not be in the least surprised if they weren't in existence in 10 years time.

Simon-M

5th February 2009, 08:17

Debt is not necessarily a bad thing in a business - Sage has a positive balance sheets so its assets exceed its liabilities and it also saw an increase in cash in its last full financial statements. Not the signs of a company in trouble

If their credit lines dry up, where would this leave their business? Nobody is buying assetts. Nobody is refinancing.

Debt in a boom is not bad because credit flows freely. Debt in a reccession is not good as your credit lines are under constant threat.

AOB

5th February 2009, 08:38

Sage is yesterday's product - people only buy it because of inertia - it is the system that people know and the main system taught in colleges etc. Its product development and customer service/support are abysmal. I'd not be in the least surprised if they weren't in existence in 10 years time.

I'm really interested in your views on a better alternative. I've not looked around and am quite out of touch with the market. I'd also be interested in your views on good forecasting software (again have primarilly used or recommended Sage). Thanks.

Derby Financial Services

5th February 2009, 08:41

Good article

Comspec

5th February 2009, 08:45

Between Stu & Duane they are gonna put these guys out of business ;)

Unreal to be carrying that amount of debt, and little wonder companies are folding as a result of the economic crisis.

stugster

5th February 2009, 08:47

Between Stu & Duane they are gonna put these guys out of business ;)

I keep joking with Duane about a PHP alternative SaaS product. Maybe it's not a bad idea at all.

Duane: Once Sage are gone, I'll be your new competition :D Just for the banter ;)

GaryMc

5th February 2009, 08:50

If their credit lines dry up, where would this leave their business? Nobody is buying assetts. Nobody is refinancing.

Debt in a boom is not bad because credit flows freely. Debt in a reccession is not good as your credit lines are under constant threat.

Although the threat is not as great if you are making a profit and a positive cash flow.

Sage exists on recurring maintenance fees rather than new contracts so is able to reasonably predict its cashflows meaning that it is a safer bet

@PhillipHoyle - agreed that dropping market share is not good but on less market share they made more profit - not a bad result?

But I wouldn't be sad to see them go given that it would benefit me directly :D

garyk

5th February 2009, 09:06

As someone who works as a Sage consultant I have yet to see signs of any dimishing sales in the ERP sector I work in, Sage 1000 is typically purchased by companies turning over £10mill+ and sales of the product, from my experience and of dealing with the biggest business partners in the UK, is that sales are still very buoyant.

I wouldnt write them off just yet, they have massive market share and a huge base of existing users, sure their lack of innovation will have detrimental effect but I think thats a longer term issue and one which if they address now they could resolve.

Gary

KM-Tiger

5th February 2009, 09:49

I keep joking with Duane about a PHP alternative SaaS product. Maybe it's not a bad idea at all.

If you could live with Perl and Postgres, ledgersmb (http://www.ledgersmb.org/) is waiting for you to develop it further.

ken_uk

5th February 2009, 09:58

The problem with Sage buying out most of the competition, as they like to, is once they get their hands on a company, there management style (or should that be, lets party and bully people, stop research, and blow everything on marketing) will come into effect.

This is bound to lead to what used to be a good company, turning bad.

Then sage will just end up with a load of companies, that are not really going anywhere, just surfing along on the strength, what is left of it, of the brand.

They are trying desperately to push the brand by the looks of things, hence the sponsoring of the krypton factor...

I cant see things improving for sage, not unless they have a complete, total culture change.....

Philip Hoyle

5th February 2009, 10:22

I cant see things improving for sage, not unless they have a complete, total culture change.....

Absolutely agree. As I had a couple of clients who have to use Sage because of integration with a specialist industry-specific software I tried to join their accountant's club. The only thing they managed to do right was charge my credit card immediately. Absolutely no after sales service at all. The only thing I got from them was an invoice. I had to chase them every step of the way - promised software never arrived, promised literature never arrived - they couldn't even give me a valid login to their Accountants' section of their website. After a month of daily reminders, I made a formal complaint and was given my very own "client manager" to sort everything out. Trouble was, despite him making numerous promises, I never did get a working website login and never did get the promised literature. After 2 months, I asked for a refund which was promised, but then again, it took weeks for them to process it. If that is an example of their customer services, then they have no future.

garyk

5th February 2009, 10:24

If you could live with Perl and Postgres, ledgersmb (http://www.ledgersmb.org/) is waiting for you to develop it further.

I have looked at SQL-Ledger over the years and to me its an exercise in how not to develop an accounting solution. Having played around with it I found the interface very unwieldy and counter-productive. It needs *alot* of development, in fact any form of accounting solution, even for SMEs requires one hell of alot of development work, under-estimate it at your peril!

Gary

KM-Tiger

5th February 2009, 10:38

I have looked at SQL-Ledger over the years and to me its an exercise in how not to develop an accounting solution. Having played around with it I found the interface very unwieldy and counter-productive. It needs *alot* of development, in fact any form of accounting solution, even for SMEs requires one hell of alot of development work, under-estimate it at your peril!

Must agree, it's got a long way to go before being attractive to ordinary users. The main difference to SQL-Ledger is that ledgersmb is truly Open Source and as such it might gain enough momentum in development.

Tom McClelland

5th February 2009, 10:46

I have looked at SQL-Ledger over the years and to me its an exercise in how not to develop an accounting solution. Having played around with it I found the interface very unwieldy and counter-productive. It needs *alot* of development...<snip>

I've taken a couple of looks at it over the years, and it seemed bad enough to me that it would surprise me to hear that anyone other than a dyed-in-the-wool OS fanatic would bother with it. On a related note (though not SaaS) I found Compiere pretty poor too when I investigated it 3-4 years ago.

DuaneJackson

5th February 2009, 12:04

I'm not usually one to defend Sage - but this is only news because of currency fluctuations. The change in exchange rates means that Sages debt has increased by £100m.

That's not going to topple them any time soon. They can quite easily continue to service the debt.

Sage have a *lot* of recurring revenue coming in every year from support contracts (yes, some people pay *extra* for support!)

It's not exchange rate fluctuations that will casue them big problems. It's the emergence of SaaS.

garyk

5th February 2009, 13:37

I've taken a couple of looks at it over the years, and it seemed bad enough to me that it would surprise me to hear that anyone other than a dyed-in-the-wool OS fanatic would bother with it. On a related note (though not SaaS) I found Compiere pretty poor too when I investigated it 3-4 years ago.

Yep agree Tom, compiere is rubbish as well. In fact there is no decent open source mid to large scale accounting solution out there. They all 'claim' to be ERP without really understanding even what an ERP system should do.

Gary

Tom McClelland

5th February 2009, 13:53

Yep agree Tom, compiere is rubbish as well. In fact there is no decent open source mid to large scale accounting solution out there. They all 'claim' to be ERP without really understanding even what an ERP system should do.

Gary

At the time when I was looking at those packages I was quite enthusiastic about OS, and it was good news to me that the OS ERP/bookkeeping/accounting offerings were so poor, because it meant the market was (and is) wide open for a competent rival who would sweep up the market. The demand is there. The problem IMHO is that the better the execution of Opensource business software such as ERP the less money you can make out of it because the better the execution the less people will need to buy any associated services or expertise from the authors. OS ERP Software which worked brilliantly straight out of the box and has been designed to be really easy to implement and use would leave its authors penniless for their efforts. It is a conundrum which no OS devotee has ever resolved to my satisfaction.

credit control service

12th February 2009, 09:09

Anyone had experience of online accounts systems such as e-conomic? There are obvious benefits to an online system and fees are low - e-conomic is less than £20 per month including support.

Jeremy
TAK-Credit Management

Tom McClelland

12th February 2009, 09:20