CEO Guy Berruyer continues to make his presence felt at Sage, the UK?s biggest software company and its only global top-10 business applications provider. When M Berruyer took over as CEO a couple of years ago, one of his biggest decisions was to exit Sage?s north American healthcare business ? a business line which had long been criticised by investors and media as a bad fit and strategic cul-de-sac for the company. He has now ? more surprisingly ? divested Sage of its well-known CRM products, ACT and SalesLogix, which are to be sold to Swiftpage, an email marketing company (and Sage 2012 partner of the year).
Sage paid $260m for Interact Commerce, the ACT and SalesLogix owner, back in 2001, but is getting rather less than $100m back (precise figures were not released): it could fairly be said that its venture into CRM has not been a great success. Since the CRM products were acquired, the world has moved on ? in particular, embracing the Cloud. Sage?s online version of the once-ubiquitous ACT contact management system was not a great success, and its Cloud version of SalesLogix was never rated as highly as newer SaaS products ? overshadowed by the mighty Salesforce.com and Microsoft?s Dynamics CRM, in particular. Sage does have other CRM products still in its portfolio.
At the same time ? clearing the decks, it seems ? Sage announced it is also disposing of another US business line, Sage Nonprofit Solutions, which sells systems for charities, to PE firm Accel-KKR; and it has sold a clutch of minor product lines in France and Spain to Argos Soditic. Incidentally, and slightly confusingly, both Accel-KKR and Sage are also investors in Swiftpage.
At last years? investor strategy meeting, Berruyer and CFO Paul Harrison explained how they were re-evaluating Sage?s sprawling portfolio, built over the years and described by one commentator as resembling the periodic table of chemical elements.
The approach was to identify core and non-core business lines, in terms of fit with Sage?s core functions ? described as accounting, payroll, ERP and related products (and it seems CRM is outside that core, in Sage?s worldview ? something that might surprise its competitors) and in terms of value creation potential. They would then receive investment in R&D and marketing in three tiers of priority:? ?invest? for those of high potential; ?sunset? for those of low potential; and ?harvest? for those in the middle.
In PAC?s view these disposals are unlikely to be the last, as the company refines its offering in its efforts to double its organic growth rate by 2015.
[Clients of PAC?s SITSI Research Service should note that our profile of Sage?s worldwide business is currently being revised and the new version should be available shortly].
Source: http://blog.pac-online.com/2013/02/sage-exits-crm-businesses/
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