An interesting article “Sage Turns Page” appeared in the Orange County Business Journal last week about the transformation at Sage North America being led by CEO Pascal Houillon. Since the article isn’t available online without a membership login and presumably a paid subscription, we wanted to provide a few highlights.
Addition by Subtraction
The article mentions that Sage has already done much of the subtraction with three recent deals including sales of the Sage Nonprofit Division along with the ACT! and SalesLogix product lines.
Together, these divestitures have trimmed about 1,700 employees and 10 offices that were associated with noncore business lines (per the strategy announced at Sage Summit last year).
At the time, there were 23 offices in North America and a corporate policy that let acquisitions operate as individual business entities. Pascal is quoted as saying, “Sage had acquired quite a lot of companies, but they didn’t integrate all of these.”
The recent moves helped to bring the office count down to 13, leaving about 2,300 employees in the U.S. and Canada.
“Houillon isn’t through with trimming.” According to the article, he intends to cut 8 additional offices. However, the largest office in Irvine is in line to add employees and the Atlanta, Vancouver, Beaverton, OR and McClean, VA offices are expected to survive the cuts.
It’s All Part of the Vision
According to the article, “adding to sales and profits with a renewed focus on its core business” is a goal that Pascal Houillon had in mind when he took over Sage North America in March 2011.
The recent trio of deals, which closed last month, cleared the way for the next round of consolidation and it appears that Houillon has Sage moving in the right direction according to the article. Sales are up to $325 million in the six months through March 2013 – a 4% increase from the same period last year. Gross profits totaled $81 million.
“All of the work we’ve been doing in the last 18 months is paying off.”
- Pascal Houillon
Sage Moves Going Forward
In addition to other recent moves like hiring a former Yahoo! executive to lead a new division focused on customer support, Sage is pushing to simplify their business software after internal reports showed that customers use only about a third of a given product’s applications. Houillon is quoted “Instead of looking to add more stuff, we want to be sure our customer gets the most out of our product.”
The article also references the transition from a license-based model with annual contracts to a subscription model billed on a per-user, per-service basis.
What is your opinion about the transition and whether Sage on the right track?
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