In a move to enlarge its share of the PC-based accounting/business management software from the UK onto the continent, Sage Group Plc has been on an acquisition spree over the past 18 months. In Germany, the Newcastle, UK-based company has acquired market leader KHK, while in France it gobbled up three competitors – Sybel, Saari and Ciel – which each held strong positions in the high, mid and low-end of the market. Since acquiring the companies, Sage has acted quickly to establish consistent, well-understood policies for establishing a qualified community of valued added resellers in both countries. For the most part, the move has been well received, since dealers in both countries had long complained about too-liberal pre-Sage licensing policies. In France, it has established a three-tiered ranking system, complete with testing, to evaluate VARs depth of experience. Sage responded to a request we had been making for years about qualifying and identifying competent VARs in a way that clients could easily identify, said one Strasbourg-based VAR. German dealers reported that Sage-KHK is taking additional measures to ensure that its VARs are well-qualified.
I’m optimistic about the future, one VAR noted. KHK has taken a first step in the right direction. Two French VARs, however, noted that the change in VAR-accreditation policy has been accompanied by a decline in the number of sales leads Sage is generating for them. We paid for the contract, passed its tests, and yet we’re less a part of its distribution network than before, with less rebate, said a Lyon VAR. Salespeople have become too administrative, not focused enough on generating sales, said a Paris-based source. Even in the UK, where Sage has stopped recruiting dealers, it has created a Solution Center status, which dealers have to earn. Nonetheless, some UK dealers question Sage’s ability to retain dealers. Some say they are upset because Sage charges them a fee to develop their own applications to work with Sage’s, but they remain loyal because of Sage’s market dominance. Indeed, with its acquisitions, Sage can easily lay claim to market leadership in all three countries, with VARs and dealers in all three countries generally perceiving Sage’s products as the best for the money. There is no competition to Sage for management software costing between FF5,000 and FF20,000 ($800-$3,300), said one Paris-based VAR. KHK is No. 1 in Germany, and it cannot be easily dethroned, said a German VAR. In France, Sage has had to merge the three software editors’ packages. Both Sybel’s and Saari’s software cover all areas of company activity – accounting, human resources, sales management, finances, payroll and credit management. Sybel’s line runs in DOS and Windows, but is not yet available in a client/server version. Saari’s products, which produced over $40m in revenue in 1996, run under Windows, DOS, Macintosh and Unix, as do Ciel’s. Priced at approximately $160 each, Ciel’s products are sold primarily to small and medium- sized business clients, of which it claims to have over 80,000. Sage has created a more homogenous product line and cleaned up certain modules, said a Paris VAR. Only one French dealer referred to waiting to see the promises of massive investment in the products realized. Another Paris-based VAR of Mac-based products, is angry at Sage for issuing new software versions containing bugs not present in previous versions. The company has no sense of responsibility as an editor, he said.
By Marsha Johnston