The Sage Group A Strategy for Growth Paul Stobart Chief Operating Officer The Sage Group December,...
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Transcript of The Sage Group A Strategy for Growth Paul Stobart Chief Operating Officer The Sage Group December,...
The Sage GroupA Strategy for Growth
Paul StobartChief Operating OfficerThe Sage Group December, 2001
The Sage GroupA Strategy for Growth
Paul StobartChief Operating OfficerThe Sage Group December, 2001
The Sage Group Mission
“To be the leading supplier of business management
software and related products and services to the small and
medium-sized business community worldwide”
The Sage Group’s Strategic Principle
“We enable SMEs to automate their business processes and
transactions”
Key Facts
Listed on LSE since 1989– market cap £3.5bn– FTSE 100 member (North-East’s first ever!)
2.8 million customers
30,000 resellers
5,700 employees
Annualised revenues £500m+
Annualised profits before tax £125m+
Market and Product Focus
We will be market leader wherever we operate
We will cover all sectors of the SME market from entry-level to mid-market
We offer integrated business management software solutions
We will help our customers transition to become e-businesses
How We Operate
We combine global reach with local operations, products, and service
We are marketing-led, providing customers with solutions meeting real business needs
We are channel-driven
We deliver excellent customer service
We believe in maximising customer lifetime value via an installed base model
Sage GroupSage Group
2,000
USAUSA
Sage Software,Irvine, CA
Best Software,Tampa, FL
PeachtreeAtlanta, GA
500
Interact US,Phoenix, AZ
Interact EMEA,Slough, UK
Interact Asia-Pac,Melbourne, Aus
Total
5,700
InteractInteract
Ciel, France
Sage, France
Sage KHK, Germany
Sesam,Switzerland
Sage InfologiaPortugal
EuropeEurope
1,500
Employees :-
Sage UK, Newcastle
Sage Enterprise,Winnersh
Accountants, Manchester
Sage Ireland,Dublin
UK and IRLUK and IRL
1,700
Sage now has over 5,000 employees
In Europe, we occupy three main segments of the SME market:
Customer size: Licence cost:Channel:
Line 30/50Instant, Ciel, PC Kauf’n,
1-25 £5m £150-£400 Retail Direct
Line 50, Line 100OfficeLine
£2k-£20k VAR25-100 £50m
Sage Enterprise Suite
Up to £100k VAR100-1000 £250m
Instant, Ciel, PC Kauf’n
Line 100
No of employees0 10 100 500+ 1000+
Line 50
Line 200
Sage Enterprise
Navision
Cegid
Lexware/Quickbooks
“JBOPS”
Systems Union
Exact
Which gives us market coverage
In the US, we occupy the same three segments of the SME
market
Peachtree, DacEasyBusinessWorks
1-25 $5m $70-$2k Retail/ Direct
MAS90Abra, FAS
$5k-20k VAR25-100 $50m
Sage Enterprise Suite
Up to $100k VAR100-1000 $250m
Customer size: Licence cost:Channel:
No of employees0 10 100 500+ 1000+
Sage Enterprise
Sage MAS
Peachtree
Great Plains
Epicor
“JBOPS”
Quickbooks
Which also gives us market coverage
The Overall Market Environment
The US economic environment was gloomy pre 11/9/01, and is worse now– Large corporates and SMEs deferring IT
spend
Danger this slowdown may spread to Europe…..
Stock markets around the world have declined sharply– Investor confidence in IT is low
Our Market Environment
New competitors are emerging in the US– Entry level: Microsoft Money, Oracle
SBS– SME: Intuit, Microsoft ‘Blue’– Mid-market: Microsoft Great Plains
E-business out of favour…..for now
But, increasingly, customers want ‘one-stop-shop’ for their software needs
But Opportunities Abound!
New business opportunities– hundreds of thousands of start-ups every
year– tens of thousands of SMEs with no
accounting software– thousands of companies switching away
from legacy systems
Marketing products to existing customers– increasing penetration of support
contracts– up-selling through the range– cross-selling additional products/modules
E-business is coming of age
In the new ‘new economy’, traditional players will flourish
customers clear on e-business objectives– ROI– streamline business processes– save costs– enhance communication with partners
our task is to build relevant web apps and web services, and continue to evangelise
Web Apps and Web Services
Web Apps are, quite simply, applications running on the web– e-commerce– e-procurement– supply chain management– e-CRM
Web Services are the tools that allow you to transact on the web– authentication and registration– data storage– app to app connectivity
CRM
Front office applications in high demand– 40% of customers to buy CRM in next 12 ms– 80% happy to buy Sage solution
But high degree of cynicism re CRM– costly to deploy– ROI unproven in many cases
Sage Enterprise Front Office Solutions– SalesLogix fully integrated with SES– Quickstart programme guarantees cost-
effective deployment
Key Strategic Issues Facing Sage
1. How do we sustain growth?
2. How do we manage growth?
3. How do we respond to the emergence of new, stronger competitors?
4. What should be the future direction of our technology strategy?
1. Sustaining Growth
Organic growth through:– primary sales growth– upgrading customers through the range– cross-selling additional products/modules
to existing customers
Acquisitions will provide additional growth:– Add-on acquisitions in existing markets– Strategic acquisitions in new markets– Vertical products/markets
2. Managing Growth
Review organisational structures
Communicate business objectives - ensure everyone in the organisation has focus
Identify key performance metrics, and monitor these constantly
Wholesale review of business processes - ensure we are easy to do business with
Be proactive in identifying and implementing best practice across the organisation
3. Responding to Competitors
Continue to invest in our brands and channel
Broaden our product/service offering to reflect ‘business management software’ positioning
Acquire as many customers/bases as possible as quickly as possible - ‘landgrab’
Establish Sage as opinion leader in SME space - the voice of the SME
4. Technology
Develop a comprehensive forward-looking technology strategy– database migration– next generation architecture– Internet technology
Continue to invest in e-business products
Continue to invest in our own e-business infrastructure– hosting centre in Atlanta
Summary
Sage has strength in depth– fast growing, profitable– financially stable - market cap of £3.5bn– international - market leader in UK, Fr, D, US
Genuinely customer-centric
Covers market from entry-level to mid-market
A leading participant in emerging technology
Top ten global software house
Global resources, but very local implementation
The Sage GroupA Strategy for Growth
Paul StobartChief Operating OfficerThe Sage Group December, 2001
The Sage GroupA Strategy for Growth
Paul StobartChief Operating OfficerThe Sage Group December, 2001