Sage chief executive Paul Walker is no stranger to dealing with the challenging environment that is accountancy software. He has presided over numerous acquisitions, fought off stiff competition to corner the SME market and weathered the severely choppy waters of the IT downturn. But still there's no let up.
As the company’s blanket presence at this week’s Softworld Accounting and Finance show in Birmingham proves, Microsoft Business Solutions is now very much in the market for accountancy software. Sage has a battle on its hand to retain its position as market leader. Microsoft’s reach is global and now with the acquisitions of Great Plains and Danish software vendor Navision, it could soon dominate the market. If nothing else it will be a tough competitor to Newcastle-based Sage.
However, Sage is already market-leader in corporate new-entry accounting software in both the UK and France, and number three in Germany. In the US it is number two – but with Microsoft around, it’s unlikely to extend this position much. But Walker is upbeat about Sage’s prospects.
Of Microsoft’s foray into the accounting software market, he said it is now so mature even Microsoft could find its path into the SME market blocked.
Speaking at the Regent Associates conference earlier this year Walker argues: ‘Microsoft has acknowledged that it will take a long time to put a service in place for SMEs because they have already bought software and they won’t change it just for technology’s sake.’
He said the current harsh economic climate was making it hard for new rivals to break into the market.
‘It makes it much more difficult for new companies to enter the market if they are relying on new licence revenue.
‘They will have to sell out at an early point in the cycle to bigger players and that will go on for the next two or three years,’ he said.
As if to emphasise this point, the US operations of UK-based Sage Software, the accountancy software giant, has just been re-organised and renamed under a single brand.
Unfortunately it has not been able to call itself Sage. Instead the company has pooled its US operation – which has been created through a series of acquisitions – under the name Best Software.
This, according to the company, will enable Best Software to go ‘head-to-head with such companies as Microsoft and Intuit’.
The US operations of Sage account for almost half of the company’s annual sales.
Chartered accountant Walker trained with Arthur Young, now merged into Ernst & Young. He joined Sage as company accountant in 1984. In December 2000 Walker was appointed to the Board of Airtours plc as non-executive director.
He is also chairman and non-executive director of gift retailer, the Gadget Shop.