Sage has strapped on its boxing gloves and is planning to enter the lucrative mid-market arena with a strong right hook.
But the competition is no pushover, with heavyweights such as Microsoft, SAP, Oracle and PeopleSoft all packing a mean punch.
As revealed earlier this month, Sage has trained well for the bout ahead by splitting into two dedicated divisions - one focusing on SME business and the other on the mid-market.
Sage has also appointed Nick Brown, its own 'channel champion,' who previously worked for Microsoft's Business Solutions (MBS) division.
Paul Stobart, managing director of Sage UK, told a gathering of the vendor's top channel and ISV partners at the Sage Visions 2003 event in London that the firm is willing to stand up and blow its own trumpet about its product offerings, and needs the channel more than ever before.
He said the vendor will concentrate on areas outside its traditional accounting perimeters, including CRM, business intelligence (BI) and reporting software.
"Sage is looking very introspectively at itself to make sure it is the best service provider. We have a strong channel, but there is a lot of work to be done," he said.
Stobart claimed there is £2.5bn worth of business in the mid-market that has not yet been won, and said his intention is to steer the Sage ship directly at it, with the channel as its main driving force.
"The accounting and payroll market is a replacement market, but we have a huge opportunity to migrate customers who are currently using entry-level software to a higher product," Stobart said.
"There are significant opportunities in the CRM, BI and reporting space and we are looking at vertical industries such as agriculture, retail, transport, construction, manufacturing and services.
"But we need to make sure our software is packed with features and functionality that no one else can match."
Stobart added that Sage has the edge because it is a UK company and is run by people who know how a UK business works.
But how well is Sage going to fare against the likes of Microsoft and its dedicated MBS division, which has an aggressive mid-market strategy and is set to launch its long-awaited CRM suite on 1 December?
The Redmond giant has already told CRN that it will be clashing with Sage in the SME space and is confident of continuing success in the mid-market sector.
Jon Hughes, director, authorised partner group at Microsoft, said: "MBS has for many years been well established in the mid-market space, with our Great Plains, Navision and Axapta products driven by a well-established partner base.
"One of the priorities for our investment in the mid-market is in our partnering strategy, both in terms of helping existing partners and recruiting new ones that want to capitalise on the MBS business strategy."
Similarly, SAP is also gunning for the mid-market, and last week announced that it intends to push more business through the channel as part of its mid-market push with its Business One software strategy.
Tim Osman, head of SME at SAP UK and Ireland, said: "Providing support to the mid-market is fundamental and we have spent a lot of time helping our resellers focus their business on a vertical basis.
"One of the advantages of operating in global markets is the fact that not all of the firms Sage and Microsoft approach are in the UK. They have sales and manufacturing offices in other countries. We think being able to provide international capabilities gives us a leg up over Sage.
"Sage will always be a major UK competitor, but mainly in the SME sector, rather than the mid-market."
Clive Longbottom, service director at Quocirca, agreed that Sage has its work cut out. "Sage has done well in the past because there has not been any competition out there, and since it bought Interact it has not really done much with its SalesLogix CRM product," he said.
"Now Sage has Microsoft coming along with its offerings from Great Plains and Navision the competition has heated up, especially with Oracle and SAP already in that space. Sage will find the going tough, but it is making the right noises."
Duncan Wyeth, sales and marketing director at Sage and SAP VAR Serion Logic, said there is plenty of room for all the major vendors to get a sizeable slice of the mid-market pie.
"In the next three years there are going to be three main players in the market, Sage, SAP and Microsoft, controlling about 80 per cent of the market between them, with the other players scrabbling over the remaining 20 per cent," he said.
Wyeth said all the vendors' channel partners need to work together. "What I don't want to see is what happened in the hardware market, where margins decreased by 90 per cent over three years due to partners undercutting each other.
"Resellers should work together to double a vendor's business for everyone, rather than trying to double their own business on an individual level," he said.
"There is plenty of exciting new stuff on the horizon from both SAP and Sage, and there is plenty of room in the marketplace for both vendors."
But Alex Tatham, vice president of software at distributor Ideal, claimed Microsoft will pack the winning punch.
"I still consider Sage to be operating at the low end of the market and I feel its biggest competitor is not going to be the likes of Oracle, PeopleSoft or SAP; I would say it is Microsoft.
"Sage is a great company. Its strategy to push upwards is a good, defensive move, but with $51bn in the bank behind it, it is difficult to bet against Microsoft," he said.
Sage (0191) 255 3000
SAP (0870) 608 4000
Microsoft (0870) 601 0100
Ideal (020) 8286 5000
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