Microsoft is about to release Office 2010 and Sage needs to invest more in R&D, says John Tate.
As we approach the halfway point of the year, news of new IT products continue to hit the press. One that stands out is Office 2010, which will see a full release this month. As Office/Excel is the most widely-used tool by accountants this is worth a look. New features include online versions of Word, Excel and PowerPoint and an update to its mobile productivity suite. It will run on the latest versions of XP, Vista and Windows 7.
Google continues to compete with Microsoft in this space and there is an interesting article on both at www.fsn.co.uk.
In contrast perhaps to news of new releases, last month Sage announced its interim results to 31 March 2010. Pre-tax profits of £159.6m were reported against revenue of £718.9m. Profits increased although revenue was down 4 per cent on the same period last year. In the UK, revenue came in at £122m and generated an operating profit of £44.9m. An impressive profit margin!
Charity users of Sage who are critical of its products often state functional weaknesses in its application. Examples include difficulty in getting SORP-style reports with the required level of analysis at a departmental/cost centre level. Sage users have been commenting on issues with reporting for many years. While Sage drives for the profit margins shown above, one can perhaps understand its reluctance to invest in the level of R&D necessary to address user issues. Competitors of Sage are showing growth in their market share – Kashflow being one example. By contrast, globally Sage’s organic revenue fell by 2 per cent in the six-month period. Sage’s historic revenue growth, as readers of Charity Finance will know, has come mainly from acquisitions.
One big bet for Sage will be the extent to which it delivers web-based solutions in the coming months and years. The view it expresses in its accounts makes interesting reading.
“For the majority of SMEs, we believe connected desktop products will be preferred to purely online solutions – such products being complemented by webenabled services such as online delivery and updates, mobile access, embedded support services and payments functionality. These products are highly secure, functionally rich and offer a high degree of flexibility and control for the user. To meet this market need, our applications are increasingly web-enabled and a number of online services have been launched including payments, payroll, e-marketing and e-philanthropy for non-profit organisations.”
Many accountants will agree with this view. However, the market is changing and there is a view that ultimately all core applications will be web-based. This could leave Sage exposed in the medium-term – although it could always acquire another company in this space if demand for a 100 per cent web-based solution grows.
There is going to be a change of leadership at Sage with its CEO Paul Walker stepping down from the post later this year after 16 years. It will be interesting to see whether there will be a change to the Sage model as a result of this. Looking at the hard numbers a 5 per cent rate of organic growth would generate an additional c. £6m of revenue in the UK. you can do a lot of software development with this sort of budget. I would encourage Sage to look again at providing the additional features charities require and hope the additional revenue they would earn would justify this investment.
Blackberry update
I am now in month two of using my Blackberry. Things are settling down a bit in terms of my behaviour with this device. I am using it less at home outside ‘working hours’ and leaving it at my desk when I go into meetings, to avoid the temptation of sneaky peeks when I am supposed to be engaged with the purpose of the meeting. I find the ability to quickly check emails is very useful. Customers/ suppliers who I work with are starting to assume that people they work with all have a mobile device to check emails. So it is sort of becoming a requirement to have a Blackberry or equivalent device if you are away from your desk for any period of time. Overall I am pleased I have the device but recognise it can be dangerous if misused. If the company I work for was bigger I think I’d look at introducing a code of practice for Blackberry users – including suggesting restricting out-of-hours use.
