Bigger than Man United

At its annual conference in Birmingham last week, Sage unveiled a Windows version of its Line 100 accounting package, but received a subdued response from delegates, some of whom voiced concern over the direction of the company following its recent international acquisitions.

Formerly known as Sovereign, Line 100 has taken four years to make the transition to Windows. Sage dominates the accountancy software market, but needs to strengthen its portfolio of client/server Windows products to fulfil its ambition to move upmarket.

The company claimed the new version of Line 100 will give users the enhanced functionality of 32bit Windows while retaining the ease of use of the old DOS version. The Windows version, available now, includes euro functionality and a job-costing module and can carry out different processes simultaneously.

Graham Wylie, Sage’s managing director, said Line 100 resellers could upgrade the DOS program to the Windows version in a matter of seconds, using tools the company acquired this year with its US subsidiary, State of the Art.

The product drew a negative response from some Sage resellers. ‘This is not a Windows product,’ said one, who asked not to be named. ‘Line 100 operates in Windows but looks just like the old DOS system. It will satisfy most DOS users, but most of them are very happy with their existing software anyway.’

The dealer added that the 32bit Line 50, which provides the bulk of Sage’s revenue, offered superior Windows functionality. ‘Line 100 will look good to old customers but I’m very reluctant to sell Line 100 to any new users, particularly when there are true Windows products on the market.’

The move from DOS to Windows has been the dominant trend in the accountancy software market. This week, for example, Sage’s arch rival Pegasus unveiled its mid-range Windows accounting package, MPower.

Pegasus communications director Chris Leak commented that while Sage leads the pack in the Line 50 market, Pegasus has outsold Line 100 in the market for larger firms.

‘Line 100 has a Windows front-end but it’s the same old DOS system at the back end. It’s just a bit of lipstick on a very old product,’ he said.

Some of the questions raised about Line 100 reflect concerns over Sage’s policy of acquisition. In the past year, Sage has bought State of the Art in the US, PACS and its Audit 2000 software in May and cashflow forecasting specialist PASE last September.

In spite of Wylie’s boast that Sage is becoming an international brand name, with German, French and US subsidiary offices, some delegates worried that the company’s baggage of different software families was slowing its development efforts.

Wylie said absorbing the recent acquisitions would take priority in the next few months. ‘We’re still looking for acquisitions around the world but it’s more important to consolidate recent acquisitions,’ he said.

He also pointed out that the $283m acquisition of State of the Art had brought the company a network of 10,000 resellers.

Wylie explained the rationale behind Sage’s reorganisation earlier this year, which saw former PACS managing director Gavin May, experienced in developing and selling the Audit 2000 accounts preparation package, put in charge of the professional accountants division.

The new structure showed the company was rationalising its products and channels, but another reseller who wished to be nameless commented: ‘They seem to be restructuring each year. We hear all about changes at the top, but what about changes in sales and middle management?’

Discontent among UK resellers is mild compared to the situation in Germany, where Sage KHK has been locked in a legal battle with two of its partners over the termination of maintenance contracts and changes in licence terms for entry-level products.

Searles, head of Sage’s software division for new sales, dismissed criticism that internationalisation was weakening the company’s focus.

‘That’s rubbish,’ he said. ‘Sage consists of individual companies with local management tackling local issues. As the dominant force in the market, any new growth tends to be by acquisition.’

And pointing to the recent crop of disappointing financial results and job cuts from high-end enterprise resource planning companies such as SAP and Baan, Wylie argued that the demand for accountancy software from small companies would hold up in the face of an economic slowdown. ‘Few people will switch off their accountancy software packages and revert to manual accounts,’ he said.

A few dissenting voices won’t worry Sage unduly and its market lead will not disappear overnight. Questioned on the conference podium by broadcaster John Humphrys, Wylie boasted: ‘We are the 137th biggest company in the UK. We’re 70 times the size of our nearest competitor and three times as large as Manchester United.’