At Sage Insights, Sage North America’s annual partner conference being held this week in Denver, the company announced its first cloud based CRM product. This is a significant event for the company for a couple of reasons. First, until this point Sage did not have any cloud offerings and second Sage sells through a partner channel which sometimes lags over adoption issues. In this case, over 50 partners are participating in a pilot program for Sage SalesLogix which is an indication, perhaps, of the interest in the partner community.
The offering is hosted on the Amazon Elastic Compute Cloud™ (EC2™) infrastructure which gives partners the chance to sell a hosted offering without most of the deployment issues that would be associated with a conversion to a SaaS offering. According to the press release this offering will be available in June at $65 per seat. Most of the attributes of the conventional SalesLogix offering will be maintained because the deployment will be single tenant. For instance the architecture maintains segregation of company data and control over update release cycles.
This is a big deal for Sage and its partners. For several years the partner community appeared to be lagging the general market in acceptance of the cloud model but recent economic conditions may have convinced some to take the chance. Partners that offer SalesLogix as a cloud-based service will be able to offer a lower total cost of ownership solution and the possibility of additional connected services such as Sage’s email marketing service and other services in the pipeline.
This announcement needed to happen and it is another manifestation of Sue Swenson’s leadership as she tries to update all aspects of the company and products.
Sage Software, North America convened its annual partner meeting, Insights, in Denver today. The meeting is Sage’s chance to speak directly with all of its partners and resellers about the business and its myriad product lines, to educate and to listen to their issues and concerns. It will also be the partners’ chance to receive recognition for sales performance in each of their markets.
Sage has always had a distinct business model, preferring to sell through a partner channel rather than direct and the approach has worked well. For a company with so many ERP and CRM products aimed at the small business and small enterprise markets, it may be the only sensible approach.
This year, the third under the leadership of Susan Swenson, I expect to see many new approaches and changes to the business models that govern the relationships with partners. I don’t expect fundamental changes — the company is not about to scrap the partner model at a time when competitors are discovering it. But I expect Sage will make good on strategies enumerated in its product roadmaps by more fully embracing cloud computing and other new ideas.
Sage had come in for criticism for not making a more emphatic push into cloud computing, for instance, sooner. But the fact of the matter is that it can only move as fast as its partner community. The partners’ proximity to customers has reliably brought back information from the field the information that the end customers Sage’s partners deal with were simply not ready for cloud computing.
I have two observations here. First, cloud computing does not carry the same urgency for ERP that it has for front office applications. Sales people might be on the road frequently and need the flexibility that the cloud offers but the people in accounting are not similarly challenged. On the other hand, and secondly, cloud computing’s cost advantage resulting in better total cost of ownership has put it on many companies’ agendas in the recession.
As a result, this edition of Insights should have a distinct flavoring of cloud computing as the partners come to understand that the path to providing their customers with a better cost profile, goes through a cloud.
The business model change issue is always big when a vendor has to consider moving from being a pure on-premises provider to a SaaS or cloud provider. I think Sage has done its homework and comes into the conference with a set of proposals and programs for its partners that will help them begin the transition. Nonetheless, the details matter and we will all be reading tea leaves later today at Sue Swenson’s keynote.