Sage CRM software is the only game as company sells two businesses

By selling ACT and SalesLogix, Sage Software stops pretending what it wasn't and can now focus on CRM, according to analyst Denis Pombriant.

Sage Software announced last week it was selling two of its CRM businesses, ACT and SalesLogix, so it can focus on its global Sage CRM system.

A Sage partner, Swiftpage, will acquire the two brands, and says it will continue investing in them. (Swiftpage is responsible for the Sage E-Marketing connected service, and Sage will maintain a 16% stake in the new ACT/SalesLogix operations.)

As social has penetrated deeper into the front office, SMBs have taken up the social challenge, and Sage has needed an answer.

Sage Software Inc. had acquired both companies when it bought Interact Commerce for $260 million in 2001. ACT has more than 2.5 million installed customers and recently celebrated its 25th anniversary, a testament to its staying power and fit for organizations that need contact management but not full CRM.

Mergers and acquisitions happen all the time in business. Sage knows this rather well considering that it's a company that has grown by acquisition. The move makes sense because it acknowledges the market has changed since the 2001 acquisition and because it enables the company to better focus on clear market realities in the CRM market.

There were too many Sage CRM software products, and the overload had become increasingly obvious over the last few years. Sage's attempts to rationalize how the three products fitted into an overall market strategy -- which included integration with its numerous accounting systems -- was, at times, strained.

Unlike its accounting packages, many of which address specialized markets like construction, manufacturing and real estate management, the CRM strategy was based more on company size. In the highly scalable Software as a Service (SaaS) age, that sort of segmentation doesn't work so well. It also saddled Sage with three code sets that needed to be maintained and upgraded, an expensive proposition over time.

By divesting, Sage gains simplicity in the form of one code set and market reach because its remaining product, Sage CRM, is already SaaS based and capable of being installed in a variety of situations, including cloud and on-premises -- a tactic taken by all of the major software vendors except Salesforce.com. So, in one stroke, Sage realized the selling value of its ACT and SalesLogix brands while enabling itself to focus more on core CRM in a way that I do not believe will dilute its strengths.

More on Sage CRM software

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Over the last few years, the CRM market has become inundated with new products that are the best of their type and that leverage social techniques like crowdsourcing and social products such as Twitter, LinkedIn and Facebook. Social techniques are proliferating in marketing and service, but they also have created new niches where companies like Get Satisfaction, HubSpot and Awareness play.

But Sage missed some of the social revolution. Instead, it focused its attention on its partners, its small and medium-sized business customer bases and the front-to-back office business processes that they care most about. Nonetheless, as social has penetrated deeper into the front office, SMBs have taken up the social challenge, and Sage has needed an answer. With a single product and a robust API set, the company will now accelerate in this critical area.

Not to mention, Sage's responses to market challenges have had to first go through its sales and implementation partners. It's a diverse and competent group, but each wants and needs different things, and this reality has imposed multiple competing demands on its three CRM maintenance groups.

CRM was always a specialized offering for Sage's partners; their primary focus has been ERP. While many carried a CRM product, more often when a partner found a CRM opportunity embedded in an ERP need, it had to bring in a CRM specialist partner. The simplicity of one CRM product will be welcome.

This is all good for Sage.

It must have been an especially tough decision because it will mean the loss of employees and some partners changing allegiances, but that's business. Moving forward with a focused Sage CRM software brand, the company can unhesitatingly launch a multi-pronged, on-premises, on-demand, cloud services campaign without worrying about which partners in the other product lines will be adversely affected. Let the innovation begin.

This was first published in February 2013

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