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Thought Leaders In Cloud Computing: Klaus-Michael Vogelberg, CTO Of Sage Group Plc, Newcastle (Part 6)

Posted on Saturday, Apr 9th 2011

By Sramana Mitra and guest author Siddharth Garg

Sramana Mitra: Very interesting! This gives me a lot of insight into how a major ISV that caters to millions of SME customers is thinking about cloud computing deployment and managing all the integration elements and so forth. Now, how are the Sage partners ramping up in terms of cloud computing? Are they, as you just discussed is the case for Google Apps, becoming an increasingly relevant player in the SME marketplace, whether it is e-mail systems or office systems and so forth? What is the status of Sage partners in understanding that movement and catering to its needs?

Klaus-Michael Vogelberg: We have among our partners those who get it, who embrace it, and those who take a little longer. First, it is clear that business partners will remain just as crucial in the future as they were 20 years ago. But of course we have to respond to the sea change within our industry, the sea change we see among SMEs. It is fascinating to think about how, arguably, SMEs never approach technology from the view of, “This is cool, I love it, so let’s use it.” SMEs are very pragmatic. If it is hype, they are not going to use it for the sake of hype. But if it delivers tangible value to them, they can be very quick in embracing that technology. Obviously, the role of a business partner, specifically in the mid-market, is to respond to those needs.

SM: I guess that is my question. Do the business partners see the needs you see, and are they responding to them? If so, how are they responding?

KMV: I think generally Sage partners do, and the reason is that Sage business partners understand the business process automation bits and that you now have business processes crossing company boundaries, and can indeed automate many of the things that were done manually in the past. Now, of course those business partners who are perhaps more reliant on infrastructure, basically just enabling technologies in order to deliver business solutions, clearly find what is happening in our industry a little harder. Having 25 years or so of perspective on our business, I would say that in the very early days, most business partners were absolutely focused on solution providers. They were focused on helping businesses with process automation. In the 1990s, I think there was a shift toward infrastructure. A lot of big system houses got into infrastructure, technology stacks, and support and of course derived a lot of growth and revenue from these. I think what we see now is simply that the pendulum is swinging back. Any partner who has that Sage DNA will do as we all do. I don’t want to downplay the extent to which things have changed at all phases of life for Sage, but for our business partners, it is by and large positive. Those who rely on infrastructure have needed to rethink their business.

SM: As you push through this change, this adoption of Google Docs in your customer bases, are you planning to create integration modules? Let’s say you understand what are the different kinds of integration points that your customers are looking for, and you create extensions of Sage on top of OrangeScape or something like that, on the Google Apps engine and make those available to your integrators.

KMV: Absolutely. And I think also we have to distinguish between two areas. The small business area is where you have online business solutions. I don’t know whether you have seen Billing Boss or SageOne or an equivalent; you have payroll services in various countries that are transforming how they provide these services. They have to integrate into those platforms where it makes sense. Obviously, it is likely that if you run your accounts and billing on a Sage online service, you are probably more akin to Google Docs, and you want to integrate where that makes sense.

When it comes to the mid-market, it is very interesting. From a technology perspective, you cannot be quite as radical as you can be for small business online solutions. Small businesses online solutions, you can afford to actually rewrite the entire thing and give customers choice. You can use either Sage 50, which is the equivalent of Peachtree in the UK, or SageOne, which is the online equivalent . . . when it comes to the mid-market, you find customers who want either an on-premise deployment or an online on-demand option. You have to find a way to facilitate those. What they don’t want are completely separate products and code bases. You may have heard [Oracle cofounder and CEO] Larry Ellison talking about how customers want that choice, and that is exactly what we are seeing. We see customers who start with an online on-demand option then move to on-premise deployment; likewise, we see customers who have started with on-premise deployment and want to move to online.

Now to come back to your question – once you have these hybrid models, you then still have to provide the integration with the Google Apps or even with some of the other players out there which you may, which the market would sort of consider a competitor. Again, SMEs are diverse world, and we are not providing for the entire SME community. We of course integrate; for instance, we have a tremendous online payroll service in countries where we have that. But where we don’t have an online accounting proposition, we partner with a local player. So, we have the integration issue, and I think that is where, in the mid-market, business partners come in because you can’t deliver these things out of the box for all integration scenarios you have to cater to.

This segment is part 6 in the series : Thought Leaders In Cloud Computing: Klaus-Michael Vogelberg, CTO Of Sage Group Plc, Newcastle
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