Sage at a Fork in the Road
When you get to a fork in the road, take it that’s what Yogi Berra once said and convoluted as it might seem, it’s wise advice. This wisdom encompassed Sage’s announcement today that it was selling off two of its front office CRM solutions, ACT! and SalesLogix to Swiftpage.
According to the press release announcing the sale, “Swiftpage provides digital marketing service solutions for micro and small businesses and, as an existing ACT! and SalesLogix partner providing integrated E-marketing services, is well positioned to advance these products. Sage remains committed to CRM via its global Sage CRM solution and will continue product investments to ensure it meets the needs of our SMB customers.” You can access the full press release here.
Good. I really mean that.
ACT! and SalesLogix have a big presence and loyal customers — more than 2.5 million for ACT! alone. But they’ve become non-core to the business. They’ll do well with a new sponsor as the press release intimated: “Swiftpage has partnered with Sage for years, and knows our products and customers well. With access to new technology and resources, it can deliver even more innovative, and integrated, products and services that help small and medium sized businesses convert prospects, retain customers and grow.”
Swiftpage is responsible for the Sage E-Marketing connected service, and Sage will maintain a 16.1% stake in the new ACT/SalesLogix operations, so the relationship will continue.
Mergers and acquisitions happen all the time in business. Sage knows this rather well as a company that has grown by acquisition. This move makes sense because it acknowledges that the market has changed since these acquisitions took place and because it enables the company to better focus on clear market realities in the CRM market.
Sage has had too many CRM solutions and the situation had become increasingly obvious over the last few years. Sage’s attempts to rationalize how the three solutions fitted into an overall market strategy, which included integration with its numerous accounting systems, was at times strained. Unlike its accounting packages, many of which address specialized markets like construction, manufacturing and real estate management, the CRM strategy was more based on company size and in the highly scalable SaaS age, that segmentation didn’t work so well. It also saddled Sage with three code sets that needed to be maintained and upgraded, an expensive proposition over time.
So with this divestiture the company gains simplicity in the form of one code set and market reach because the remaining product, Sage CRM is already SaaS based and capable of being installed in a variety of situations including cloud and on-premises, a tactic taken by all of the major software vendors except Salesforce.com.
Over the last few years, the CRM market has become inundated with new best of breed offerings that leverage social techniques like crowdsourcing and other social products like Twitter, LinkedIn and Facebook. Social techniques are proliferating in solution areas like marketing and service but also they have opened up many new niches where companies like GetSatisfaction, HubSpot and Awareness play.
But Sage had missed some of the social revolution focusing its attention instead on its Partners and SMB customer base and the front to back office business processes that they care most about. Nonetheless, as social has penetrated deeper into the front office, SMB’s have taken up the social challenge and Sage has needed an answer. With a single product and a robust API set the company will now accelerate in this critical area.
Sage’s response to market challenges in general have to go through its sales and implementation partners. It’s a diverse and competent group but each wants and needs different things and this reality drives multiple competing demands of its three CRM maintenance groups.
So, in one stroke, Sage realized some of the value in its ACT! and SalesLogix brands while enabling itself to better focus on core CRM in a way that I do not believe will be dilutive of its strengths. And as far as the partners are concerned, CRM was always a specialized offering for them; their primary focus has been ERP. While many carried a CRM product, more often when a partner found a CRM opportunity embedded in an ERP need, the partner had to bring in a CRM specialist partner. So the simplicity of one CRM product will be welcome.
So, I think this is all good for Sage. It must have been a tough decision especially because it will mean employees and likely some partners changing allegiances but that’s business. Moving forward with Sage CRM the company can unhesitatingly launch a multi-pronged on-premise, on-demand, cloud services campaign without worrying about which partners in the other product lines will be adversely affected. Let the innovation begin.