The Real Channel

7 Posts tagged with the sage tag

It's a question worth asking after Sage Vice President of Channel Management Tom Miller talked about Microsoft losing touch with its partners.

 

So who is Doug Burgum and why does he matter? Burgum spent 18 years as the chairman and CEO of Great Plains Software, the enterprise software business that Microsoft acquired in 2000 in a $1.1 billion stock swap deal. Burgum then became a Microsoft Senior Vice President working feverishly for six years and five months to make sure the Great Plains partners were well cared for before he decided to step aside in 2007.

 

It is worth noting that Miller, a 28-year channel veteran, had his own Great Plains solution provider business for six years, then went to work for Burgum and Great Plains, and then on to Microsoft after the acquisition. Miller took the top channel job at Microsoft rival Sage after being recruited by former Microsoft Vice President Jodi Uecker-Rust, now president of the Sage Business Solutions division.

 

Great Plains gave Microsoft a crown jewel that would have been nearly impossible for the company to build from scratch, namely a midmarket enterprise software solutions channel that was the envy of competitors. That was in no small part due to Burgum and his team's obsessive focus on making sure its partners had enough margin to build a healthy and robust business so they could provide exceptional service to customers.

 

Burgum had a passion for the entrepreneurial skin that Great Plains partners had in the game. He thought of them as stewards of the company and treated them like customers. Yes, customers.

 

One reason for Burgum's passion for partners was his own experience as the steward of a family agricultural business that was founded in 1906 and whose mission statement speaks mountains about the man and the company:

 

To provide superior goods, services, markets, and knowledge to our customers at competitive prices. To aid and assist our customers to prosper in business.

To make a reasonable profit so we can provide: services to our customers, jobs and opportunities for our employees, and an adequate return on investments for our owners.

To be environmentally responsible. To be proactive in the communities where we do business.

 

That mission statement could be adopted by any solution provider. It is, in fact, the basis of any sound business. Most solution providers fail because they don't keep right at the top of their mission statement that ability to make a reasonable profit so they can provide services to their customers. Think of how many solution providers failed because they gave away their services.

 

When Burgum gave his official farewell to partners at the Microsoft midmarket partners show, he talked about growing up in North Dakota and his parents, grandparents and great grandparents. And how he bet the family farm on Great Plains Software -- literally. Needless to say, there were more than a few partners that had tears in their eyes. Can you imagine any partner today getting choked up about an executive's departure?

 

The Burgum experience is instructive in the current economic environment where more than a few companies are trying to cut their way back to health on the backs of their solution provider partners.

 

Miller says that Microsoft has plainly and simply lost the personal touch with partners that characterized the Doug Burgum era. That personal touch and trust, he says, are at the heart of the Sage channel philosophy, a philosophy shared by Uecker-Rust and Sage Executive Vice President of Sales Paul Johnson.

 

Miller, who has logged a lot of channel miles, is making a lot of changes to make sure that Sage partners can build a healthy and profitable business. No small part of that is what he calls the basic tenet that partners are customers. That sadly is not always the case in this day and age.

 

So do you think Microsoft has lost the Doug Burgum partner Mojo?

1 Comments 0 References Permalink Tags: microsoft, sage, great, plains, doug_burgum, tom_miller

Sage Software has finally gone on the offensive with a 1,058-word letter from Sage North America Executive Vice President of Sales Paul Johnson insisting the vendor's "partner community is diverse, vibrant and strong."

 

The letter, sent Monday to Sage's 5,000 North American channel partners, comes three weeks after the death on July 6 of  MIS Group of Dallas, Texas, Sage's North American Partner of the Year for the last two years. The demise of the MIS Group, which shut its doors without seeking Chapter 11 bankruptcy protection, has sparked a feeding frenzy as rivals Microsoft and NetSuite try to woo Sage resellers and customers with special offers.

 

Johnson in his letter hits on four major points (Our Business, Our Market Strength, Our Products and Services, and A Strong And Diverse Channel). Three of the four major sections contain data points including financial data, third-party analyst rankings and reviews of its products.

 

Not surprisingly, the big gaping hole in the letter, of course, is any kind of data on Sage's "strong and diverse channel." Johnson offers not ONE single piece of data on this strong and diverse group of channel partners.

 

Johnson does say that the "financial impact" from the MIS Group demise was not "material to the overall business." Was it material to the North American business? And what is the financial impact on the damaged credibility that comes with your partner of the year based on total sales volume in North America, closing its doors because, by its own admission, "we unfortunately are not able to be viable as a business."

 

Johnson says that the closing of a reseller organization isn't unprecedented. No, it certainly isn't. But it certainly is unprecedented for a Partner of the Year for a $2.55 billion vendor to disappear without a trace a mere two months after receiving its big award. And I do mean disappearing without a trace. Can you name another solution provider of this size collapsing without so much as a shred of its remaining assets being sold? This is a case for a financial forensics expert. MIS Group has remained true to form by not following through on a pledge to provide additional customer and vendor information on its Web site "as it becomes available."

Even with this letter, Sage has yet to shed even the dimmest light on the MIS Group demise. The questions remain:

 

 

*Why did MIS Group collapse?

 

*Why didn't MIS Group provide any kind of service plan migration for its existing customers?

 

*What steps has Sage taken to assure this does not happen again?

 

*Will Sage make changes to assure that its Partner of the Year honors is no longer based solely on total sales volume?

 

*How many Sage partners have shut down in the last year?

 

*How many Sage partners are in danger of closing?

 

There's no telling whether Sage truly does have a strong and diverse network of channel partners. To determine whether that is true, Sage would have to answer questions like these and provide some specific data on the financial viability of its roster of partners as ranked by profitability from its smallest  group of consultants to its midsize partners to its largest group of partners. Is Sage one of those vendors that receives 80 percent of its sales from 20 percent or less of its partners? If so, that by its nature is a recipe for channel disaster. The channel changes, and it changes fast. Those vendors that try to make it by sticking with those same big partners will always run into trouble.

 

Sage also needs to look at whether it needs to make a change in solution provider tiering from a pure sales volume formula to net profitability sales model.

 

There's a lot going on in a partner base as complex as the Sage channel ecosystem. But let's not fool ourselves. Just because Johnson says Sage has a strong and diverse channel does not make it true.

6 Comments 0 References Permalink Tags: sage, netsuite, microsoft

If you want to know just what kind of hot water you can get your company in with a faulty channel strategy, then check out the fallout that Sage is experiencing courtesy of the sudden death of its largest partner, MIS Group of Dallas.

First Microsoft and now NetSuite are jumping into the fray to recruit Sage partners and customers. Sage has gotten a channel black eye like you read about and is trying to fight back. It promises to communicate directly with its channel partners early next week. That said, if ever there was a time for the company to go on an all out campaign to all of its constituents (shareholders, customers, partners, press, analysts) it is now.

MIS Group was Sage’s partner of the year for two years running. When your partner of the year closes up shop in the dark of night and leaves town with nothing more than a post on its web site saying that the company has ceased all business operations, it’s not a sign of a solid channel.

If you really want to experience what a channel and public relations mess that MIS Group has gotten itself into with this partner of the year stuff check out this photograph from Sage’s annual Insights partner conference in mid-May.It shows Sage Business Solutions Division President Jodi Uecker-Rust, MIS Group CEO Robert Muir, MIS Group President Greg Boyd and Sage North America Customer Chief Officer Doug Meyer all smiles on what you would have thought would be a celebratory evening. But were they really celebrating in Nashville that evening? Didn’t any of the Sage and MIS Group executives that were playing out the awards scene on stage have a view into what would transpire a mere two months later? Were any of these executives on the stage shocked when MIS Group closed down? Didn’t Sage executives have any idea they had bet too heavily on a partner that was going down? Shouldn’t they have known? What does it say about the company’s channel strategy? All questions that deserve to be answered given what Sage is going through now.

Microsoft made its play earlier this week to Sage customers and partners “concerned with the stability of the Sage Software channel.” Now NetSuite is getting into the act. What’s different about NetSuite is, it’s a pure Software-as-a-Service (SaaS) pitch. Just to make sure their pitch doesn’t fall on deaf ears, NetSuite is offering a 50 percent revenue share. You read it right:  a whopping 50 percent revenue share. That is an amazing offer. NetSuite has even set up a website to wrangle in those Sage channel partners that screams: “Now’s The Time To Move Your Business To The Cloud. Join The NetSuite Solution Provider Program.”

The ERP market may be hurting. But not the on-demand software market. Gartner forecasts the SaaS market will grow at a compound annual growth rate of 19.4 percent through 2013. NetSuite sales were up 41 percent last year and 22 percent in the first quarter. Sage sales in North America were down 9 percent for the half year ended March 31. What Sage calls organic subscription revenues declined three percent in the first half, while organic software and software-related services revenue declined 22 percent.

The NetSuite offer is the real deal. It’s a whopping 50 percent margin to get into the growing  SaaS market. Sage should be worried. Are Sage Business Solutions Division President Jodi Uecker-Rust and Sage North America Chief Customer Officer Doug Meyer smiling now? Probably not.

3 Comments 0 References Permalink Tags: sage, netsuite, microsoft, mis_group

Given the financial rumblings that Nortel and Sage partners are facing right now, it would be wise for solution providers of all kinds, but particularly those closely tied to a single vendor, to do a financial health checkup on their vendor partners.

Unless you've been living under a rock, you know that Nortel has been in a financial free fall for years and finally filed for Chapter 11 bankruptcy protection in January after years of missteps. Earlier this week, Avaya made a bid to scoop up Nortel's enterprise solutions business for $475 million, as Nortel seeks to sell off all of its divisions to pull out of bankruptcy. More on that later.

At the same time, Sage witnessed its largest solution provider partner, MIS Group of Dallas, close up shop suddenly on July 6 without even filing for Chapter 11 bankruptcy protection.

It is no small matter that Microsoft, in a press release aimed at recruiting Sage customers and channel partners, has decided to invite those "concerned with the stability of the Sage Software channel to consider available alternatives from Microsoft."

You can call the Microsoft play grandstanding if you'd like. But in the global economic environment we are living in, the financial health of a vendor and its partners is a serious issue and clearly VERY HIGH on the purchasing criteria checklist for midmarket CEOs and CIOs.  

A financial health checkup performed by solution providers on their vendor partners would be a wise move given the global economic crisis. Distributors and vendors are surely doing financial health checkups on their solution provider partners and are closely watching accounts receivables.

It's going to be interesting to see just how big a hit Sage took on the accounts receivable line when MIS Group went out of business. Sometimes vendors think a partner is so big it can't fail. And sometimes partners think a vendor is so big it can't fail. In the case of MIS Group and Nortel, that thinking proved faulty.

What's more, given that we are in the midst of a major economic reset, there are likely to be more big trees and small trees that fall in the forest. The sad thing is the big trees take down a lot more people and businesses.

Nortel's failure is rippling through the solution provider community as we speak. Believe me, there are many Nortel only partners that are living right now off support and product sales from existing customers. You can bet that those cases of a company that has never before bought Nortel equipment making a Nortel buy are few and far between. If the Avaya lifeline goes through, it is still going to be a long, hard road for those Nortel partners to transition to Avaya. On the other hand, if you were a Nortel partner and also an Avaya partner, you're sitting pretty, or at least you're more comfortable knowing you and your customers have a built-in insurance policy.

And no matter what anyone says, the failure of MIS Group is going to make life in the sales trenches difficult for Sage partners of all stripes. Customers are clearly going to look more closely at solution providers' balance sheets -- either Sage partners or any other vendor's channel partners.

Let me ask you this: If you were a midmarket CIO making a $1 million ERP buy, would you feel more comfortable right now making a Sage MAS 90 or MAS 200 purchase or a Microsoft Dynamics ERP buy?

Sage Group ranks No. 3 on AMR Research's recent list of global enterprise application vendors, coming in at $2.40 billion, well ahead of Microsoft, which comes in at $1.30 billion. But remember, Microsoft, which dwarfs Sage, weighs in at number 25 on the Fortune 1000 list at $60.42 billion.

Microsoft has a lot of cash it can use to make sure it moves ERP solutions to the next generation including Software-as-a-Service (SaaS). Microsoft may not always be first, but it always gets there (look at Bing).

Partner balance sheets are going to come under increasing scrutiny in the wake of the MIS Group collapse. Solution providers should make sure they scrutinize their vendor balance sheets just as closely. It’s a matter of trust for you and your customers.

1 Comments 0 References Permalink Tags: mis_group, sage, avaya, nortel, mis

That’s the view of a top Sage partner who vented in the wake of the failure of Sage’s largest partner, MIS Group of Dallas, Texas.

The partner points to shrinking reseller margins and Sage’s failure to keep its MAS90/200 product current. “They are years behind on the 4.x rewrite and have not added any of the market demanded features like multi-bin and multi currency,” says the partner. “Instead they keep claiming how much money they spend (without any progress). In the mean time they are shrinking resellers margin and cutting the reseller maintenance margin. It’s no wonder that MIS group failed when you add obsolete product to a market where new sales are dramatically off. Expect this to play out for more resellers. Sage is totally destroying its reseller channel at an alarming rate.”

The Sage partner says that even Sage employees are worried and acknowledge the problem, but “no one in management does anything to make it better.”

“They do continue to promise to be profitable by cutting reseller margins but that isn’t going to work,” says the partner. “Their coveted maintenance revenue stream is about to constrict it a manner that will cause a large drop in revenue and there won’t be anything they can do about it because their resellers and probably more importantly the end user customers are fed up with Sage’s bullying behavior.” 

That “coveted maintenance revenue stream” is under fire from both customers and solution providers. “The VAR has to mostly make money from new license sales and implementations - support alone certainly won't keep the lights on,” says another solution provider in a ChannelWeb Connect post. “But the publisher keeps nearly 100 percent of the highly lucrative ongoing maintenance stream- which is where the fat publisher operating margins come from.   When new sales evaporate, the VAR's business model can turn bad in a hurry.”

“I do think that the channel will shift to the subscription model - where the VAR keeps a percentage of ongoing subscription fees forever,” says the partner. “Think about the difference in a VARs business model when you can keep 30 to 50 percent of the ongoing subscription fees of every client you have ever signed up - you'd build a significant ongoing revenue stream, so you could weather a storm like we are having now. Why should only the SAP's, Microsoft's, Oracle's and Sage's get to benefit from ongoing, 90 percent plus margin ongoing revenue streams?” Good question. Sounds to me like a clarion call for a recurring revenue managed services model which begs the question: why aren't more vendors bringing a managed services business model to the channel table?

12 Comments 0 References Permalink Tags: mis, group, sap, microsoft, sage, mas90/200, oracle

It’s a question worth asking given the sudden death of Sage’s largest software partner, MIS Group of Dallas, and Microsoft’s recent partner moves that are taking center stage this week at Microsoft’s annual Worldwide Partner Conference in New Orleans.

David Siegel, a Microsoft and Sage business consultant based in New Orleans, takes on that very question in a blog post in our ChannelWeb Connect Community.

“We have seen recent indications from both Microsoft and Sage that they want to concentrate their channel business with larger VARs,” said Siegel. “In Microsoft’s case, this means firms with at least 50 employees. Perhaps the fate of one of the country’s largest midmarket VARs will lead the channel management leadership at both companies to rethink the ‘bigger is better’ mind-set.

“There is a role in the marketplace for both the large VAR with broad product/service offerings and geographic coverage as well as for the small VAR who successfully serves customers with five or fewer consultants and deep expertise in one or two solutions (Wayne Schulz, who too modestly calls his firm a ‘small nobody VAR,’ is an excellent example),” said Siegel.

Siegel’s right. Vendors like Microsoft and Sage are trying to focus on fewer midmarket partners. Don’t let anyone fool you. That’s what Microsoft’s much-ballyhooed decision to overhaul its channel partner program -- including doing away with the current "Gold," "Certified" and "General Register" designations in favor of ranking partners according to their competencies -- is all about.

It’s no mistake that at the same time Microsoft announced the partner overhaul it has eliminated  telephone support for thousands of its partners. The changes come after Microsoft laid off an undisclosed number of Telephone Partner Account Managers (TPAMs) who provided sales assistance aimed at helping partners close deals and navigate the Microsoft bureaucracy, sources said.

Some Microsoft partners say the move is a precursor to decreasing its partner base as it moves to a cloud computing model. Microsoft, meanwhile, insists that it has some 640,000 channel partners and wants to grow its partner base to more than 1 million during the next two to three years. Who’s kidding who? One million!  Microsoft may be interested in 1 million consultants around the world. But it definitely isn’t interested in 1 million partner companies.

The fact is both Microsoft, Sage and a number of big players are moving to the bigger-is-better mind-set. That mind-set, however, is code words for cutting partner costs in the midst of the current economic downturn. The MIS Group’s death is a sign of the times. Bigger doesn’t mean you can’t fail. It just means that more people feel it when the giant falls.


What MIS Group’s failure shows is that the bigger is better channel strategy is a foolish play. And for my money, you’d be wise to make sure you have the right mix of big partners and smaller partners. Smaller partners like Siegel and Schulz are more often than not smarter and have more talented technical help than some of the larger midmarket VARs. This is not an indictment of any midmarket partner, just a plain fact that often smaller partners will do a better job than a larger, more scattered and distracted partner.

 

What do you think of the bigger-is-better channel partner strategies from the likes of Sage and Microsoft?

 

3 Comments 0 References Permalink Tags: sage, new, orleans, group, microsoft, mis, worldwide, partner, conference

The biggest question hanging over the sudden shutdown this week of Sage’s largest partner, MIS Group of Dallas, is: Who is the mysterious senior secured lender that is taking control of the company’s assets?

It’s an important question given that the company’s death has left what is a significant portion of Sage’s software sales up for grabs, being picked over by competitors who are using Twitter and paid Google search links to try to pick up clients.

If a bank owns those assets, then their failure to step up and make a deal to get some value out of what is by some accounts a $30 million business bears looking into.  Why wouldn’t the bank have put together a deal to at least recoup some of its monies?

It makes sense that Sage was owed a significant amount of monies. Why didn’t Sage work hand in hand with the bank and other creditors to ensure a smooth transition for customers?

Right now, the customer base of Sage Software’s No. 1 reseller in 2007 and 2008 in sales volume is being picked clean by competitors and ex-MIS Group employees looking to start up their own businesses.

What the hell is going on behind the scenes with this so-called senior secured lender? It begs the question so many solution providers have been asking: Why didn’t MIS Group file for a Chapter 11 bankruptcy organization?

If the company was shut down by the senior secured lender without any regard for the assets, then you’ve got to ask yourself: Did the senior secured lender feel that the assets were for all practical purposes effectively worthless? What does this say about the solution provider business and the value of those businesses?

Right now the value of a $30 million business is evaporating right before every creditors' eyes. That means those creditors are left holding the bag while the company’s top executives walk away--free to go out and start a technology consulting business or staffing firm that could go in and grab some of those old accounts. How could this have happened? What does it say about our bankruptcy laws?

1 Comments 0 References Permalink Tags: mis, group, sage
Steven Burke

Steven Burke

 Member since: Feb 28, 2007

A look at the trials and tribulations of solution providers and vendor channel personnel. What works? What doesn't? And what do solution providers and vendors need to do to succeed.

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