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Sage and Microsoft account for luck

SAGE HAS finally relented to pressure from consumers and will invest in a serious online offering for its many customers, partnering with fellow IT giant Microsoft.

It hopes to produce cloud-based financial software that will allow customers to choose between an online and on-premise product by 2013. Both Sage and Microsoft have had their fair share of false starts in the UK accounting IT marketplace, but will a combined effort prove more fruitful?

The FTSE 100 company previously dipped its toe in the market with Sage Live in 2009. Although it was never rolled out on general release, it was piloted and pulled after less than a month following security concerns – never to be heard from again. It was the company’s first foray into an internet-based system, aside from various free online add-ons. Microsoft also gave up on its Office Accounting software product, handing its customers over to Mamut after just two years in the market.

Sage product development manager for UK Mark Spencelayh explained that the market is heading towards online offerings, and Sage must make a decisive move.

However, given Sage’s recent past in producing online and offline products, it hasn’t had much luck. Last year, it launched SageOne, an online accountancy package for accountants and micro-businesses. It showed a snapshot of a company’s health, including outstanding invoices and taxes, and other financial data. But the product was criticised for being much too basic for many businesses, amid claims it would fail to revolutionise accountancy practices – although Sage recently launched a masterclass for users to get more out of the product.

Sage also faced criticism when it introduced new tax software, iXBRL, that was dogged by various problems. IT companies around the country were forced to create iXBRL technology that allowed financial data, such as tax returns, to be filed online, highlighting specific terms and references for easier comparability.

However, just weeks before the implementation date, Sage announced its software would fail to be fully iXBRL capable, stating it would have some – but not all – of the tags required by HM Revenue & Customs. In the meantime, it would use rival Thomson Reuters’ ONESOURCE as a filler before ditching that product in favour of its own offering only months later.

Match made in heaven

Given their recent history, the latest partnership could be a match made in heaven. Wedding Microsoft’s online platform with Sage’s capabilities could be just what the two titans need.

The Sage 200 software is mainly aimed at larger businesses and accountants. The new partnership should allow Sage to target a wider spectrum of its customers with online capabilities, from micro-businesses to medium-sized businesses – something SageOne is currently unable to do. As part of the deal, Sage will also be able to use Microsoft’s datacentres. These centres hold clients’ data, so they can be accessed online.

While Sage customers will already be users of Microsoft products, such as Excel, the potential interoperability between product lines may prove beneficial, claimed ICAEW IT faculty head Richard Anning.

However, he warned that competition in the online space is already strong.

“The market for similar online products has well-established suppliers, so differentiation from existing systems will be important to gain market share,” he said.

The pilot is due to take place this month. However, Sage’s Spencelayh remains unsure how many companies will use the pilot, on what the subscription model will be based (yearly or monthly), and how the support for online services will work. But he is still keen to stick to the game plan of releasing the finished product in the first quarter of 2013.

A partnership between Microsoft’s online product Microsoft Office 365 and Sage could, in the future, bring the two products together – making it easier for businesses to transfer data in Office products to Sage offerings. However, this is not set in stone, said Spencelayh.

But while the tie-up is an exciting one, success is not guaranteed.

“Although getting into bed with Microsoft makes sense as Sage will not have to reinvent the wheel, it remains to be seen if it will work given their history,” said Cloud Associates director Richard Messik.

“Hopefully, it should work, with Microsoft’s expertise. But if they just produce an online version of Sage without generally modernising the product, it might turn out to be a damp squib.”

Whether successful or not, Sage is right to embark on providing software for the online market. But Anning warned that “Sage will have to make sure it works – and with a partner like Microsoft, failure is not an option”.


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