Sage and Microsoft seek better luck in accounting launch

SAGE has finally relented 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 so that customers can choose between an online or on-premise product by 2013.

Both Sage and Microsoft have had their fair share of false starts in the UK accounting IT marketplace, so will a combied effort prove more fruitful?

The FTSE 100 company dipped its toe in previously 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 free online add-ons).

Microsoft gave up on its Office Accounting software product, handing its customers over to Mamut after two years in the market.

Sage’s product development manager for UK Mark Spencelayh, explains 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 shows a snapshot of a company’s health, including outstanding invoices, outstanding taxes and other financial data.

However, it was criticised as being too basic for many businesses and wouldn’t 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 tax software, iXBRL, which was dogged by various problems. IT companies around the country were forced to create iXBRL technology which 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 (it would have some but not all the tags required by HMRC), in the meantime it would use rival Thomson Reuters’ ONESOURCE as a filler – although months later it ditched ONESOURCE for its own product.

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

The Sage 200 software is aimed at larger businesses and accountants. With the new partnership Sage should be able 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 be able to use Microsoft’s data centres. The centres are required to hold clients’ data.

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

However, he warns 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.”

The pilot is due to take place this month. However, Sage product development director Mark Spencelayh is unsure how many companies will use the pilot, or what the subscription model will be based on (yearly or monthly), and how the support for online services will work. 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’s. This is not set in stone, says Spencelayh.

The tie-up is an exciting one, but success is not guaranteed.

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

“Hopefully with Microsoft’s expertise it should work, 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 warns “Sage will have to make sure it works – and with a partner like Microsoft, failure is not an option”.

Image credit: Shutterstock

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