Sage Transform '22 news review - the context behind the top stories

(Sage Transform - opening press conference)

There's a tradition at all enterprise shows: deluge the media/analyst contingent with press releases. Sage Transform 2022 came through, issuing a flurry of announcements. Most of those showed up in Wednesday's general session keynote.

But it's the context behind the news that gets my attention:

• Why this news, and why now?
• What does it mean for customers?
• Not all "news" is created equal, so what's the biggest story?

My biggest story at an event is rarely the press favorite. Usually, the story with the most customer impact flies a bit under the radar. That is certainly the case at Sage Transform.

As I write this, I've already had the opportunity to hear from Sage Intacct leadership at a press event, followed by a 1:1 with Sage CEO Steve Hare - with more meetings on deck. So, let's go behind a few big news stories, with context and quotes from Sage Leadership.

Sage announces manufacturing vertical play with Sage Intacct - does that conflict with Sage X3?

Up until recently, Sage Intacct has been primarily focused on its classic service industry "cloud ERP" verticals, from non-profit to health care to its strong SaaS industry vertical play. But change is afoot. Sage Intacct has moved into construction, wholesale distribution, and now: distribution manufacturing. Distribution manufacturing was launched in France in February, and in the UK in June. At Sage Transform, this solution is now generally available to early adopters. Update: I have now dug into this solution with product leaders - and am quite surprised by its robustness at this stage. Watch for a separate piece on this.

But hold up - with Sage X3's well-established manufacturing presence, doesn't this present a conflict between X3 and Sage Intacct distribution manufacturing? At the press conference, Dan Miller, VP of Product Management at Sage, responded:

Our focus for Sage Intacct manufacturing is on discrete business industry manufacturing. It's designed to be an easy to adopt solution. One of the real strengths of X3 is how configurable it is. You bring it into an environment; you make it work the way that company wants to operate.

The technology we're using is designed to have flexibility built into it, but designed to be easier to adopt. So we can go after companies that are looking at Sage Intacct as a whole solution. They're the QuickBooks graduates in this market... They're saying, 'I have to grow up; I need to have a set of solutions that's really going to help me to accelerate my business.' 

Miller expects Sage partners could carry both products:

They may be looking at how they bring new customers in, that are in the earlier stages of the company. They want to be able to bring in all-cloud there; that's a candidate for the Intacct platform. Or they may be a process manufacturer that needs complex capabilities. That's a great candidate for X3.

Sage doubles down on Microsoft, with Azure and Teams - what does this mean for multi-cloud?

Sage added significantly to its Microsoft partnership at Sage Transform 2022, on two fronts: Teams-Intacct integration, and plans to offer Sage Intacct on Azure (early in 2023). As you might expect, analysts have pesky questions. Analyst Laurie McCabe put this question to the Sage Leadership team, and I paraphrase:

What are the rules of the road? Microsoft obviously has some competitive products. And as for Teams, a lot of small businesses aren't huge Teams fans. Will you continue to support other messaging platforms?

Later, another analyst asked about Azure, in the context of Sage's multi-cloud messaging. Aziz Benmalek, President of Sage Group, started with multi-cloud:

First of all, let me just be clear. We are a multi-cloud platform company. We are on AWS today; we are going to be on Azure...  We believe in with the cloud, and therefore we are going in that direction - that's really important.

As for the competitive overlap between Sage and Microsoft, Sage leadership told us that they don't see Microsoft in deals against them that often; they believe the partnership opportunities far outweigh that. Benmalek said that the "rules of engagement" on Microsoft-Sage go-to-market, including with partners, have been hammered out. He added:

Microsoft Azure is a platform game... We don't compete completely, there are some areas where we can collaborate, and that's what we are exploring. 

Sage CEO Steve Hare says they want customers to be able to consume/share/discuss finance information from Sage Intacct on any messaging platform, be it Teams, Slack, or Google - and that this is reflected in Sage Intacct's architectural plans. Sage CTO Aaron Harris chimed in:

Just like everything else I mentioned, the Digital Network powers the services that enable these capabilities within Teams. Our design principle is that these services need to be portable to multiple different platforms. So the same capability is able to plug into Slack, just as easily as it is into Teams.

Sage partners with MLB - why? Does Jon Reed care?

Enterprise software vendors have technology sports leagues can use; sports leagues have consumer branding cachet. Sage, practically a household name in Europe - especially in the UK - lacks that brand name recognition in the US. Can a prominent, multi-year partnership with Major League Baseball help? You bet. As we were told during the press event:

Sage is a very well known brand in the UK and other markets across Europe. Sage is known in the US and North America, but we have more work to be done in order to drive the awareness and visibility of the portfolio of products that we have, including Sage and let's say just brand. So we are very excited to announce the partnership with MLB...  It's really exciting, because that will bring Sage to a different level with MLB... both in the insights of what's going on with the game, as well as other initiatives that we are providing jointly from a diversity point of view.

Does this kind of branding make a difference with B2B buyers and customers? I have mixed views, but I'll save my opinions for the final section. First - the underrated big news story of the show.

The true big story - Sage's Digital Network. Here's why

My pick? The advancement of Sage's Digital Network. I first reported on Sage's Digital Network via my review of Aaron Harris' provocative Sage Transform 2021 keynote. At the time, I thought the concept was appealing, but amorphous. Now, after a year's time - and some vigorous meetings with Sage product leads - I have a different view.

The Digital Network is essentially Sage's go-to cloud development platform, serving all of Sage's products. Actually it's product-agnostic, delivering API-based cloud services to whatever application might want to draw on them (yes, even a competitor could use it to deliver Sage functionality to its customers).

Keep in mind: I'm writing this piece prior to the second day keynote, where CTO Aaron Harris is sure to add more to this emerging story. The Digital Network will provide developers (including Sage ISVs), with a common platform to build on. Some Sage technicians insist this has been possible before now. Perhaps, but it has not been mainstreamed within the Sage and Sage Intacct communities.

The reason this is a big story isn't any of that, however. It's a big story for two reasons:

1. Now, all Sage applications, including Sage Intacct, can draw on the same cloud services. This provides a global focus across Sage's development teams that simply wasn't there before.

2. For those Sage customers not ready to migrate to a cloud native product like Sage Intacct, now they can begin to incorporate cloud services - no matter what version or product they are running.

If you're surprise to read that Sage might envision something like this, so was I. But then again, never underestimate Aaron Harris, one of the most compelling technologists in enterprise software. During my 1:1 with CEO Steve Hare, he shared revealing details:

There's this huge respect for Aaron throughout the organization, but I remember him coming to me and saying, 'I've been I've been to visit all of the engineering teams all around the globe. And I've gotta tell you, Steve, these are deeply talented people. So I don't want anyone telling you that, Yeah, the only high quality products and engineering people sit in Intacct. We have them all over the place. I have met these amazing people in Barcelona, amazing people in Newcastle, etc. The key now is to get them all coalesce behind a singular mission.'

That's where the Digital Network comes in. Hare continued:

The Digital Network has been a big part of that. This is the way everyone feels they can participate. If I go back to your point about multi-tenancy. In the end, you want as much of the functionality as possible to flow through a singular public cloud environment. So if you think about some of our legacy products, or our older products like Sage 50, or Sage 200, what we're essentially doing now is starting to remove workflows right from those products.

Hare believes cloud-based services will shrink legacy installs - without a major upgrade.

And as we do more and more automation, we will cut them back to be more like a general ledger. Do we want these customers ultimately, to migrate their ledgers? Yes, we'd love them to, but that's where the inertia is. Customers are so resistant to moving that core functionality. So if you say, 'Look, we'll start to do this'  Because it's easy to do, people will adopt it.

I've always believed you need to deliver new services to older releases - the Digital Network architecture provides that option. But it also positively impacts Sage Intacct customers, including access to accounts payable automation, for example - and ultimately access to the developer community that builds around this.

My take

I'm not here to pronounce Sage as "modernized." That's not my job and Sage still has a lot to prove - as does the Sage Digital Network. But there's no doubt that the Digital Network is a story to watch - along with the increasing vertical momentum of Sage Intacct. I believe the future of cloud ERP is in deep micro-verticals. In the past, Sage Intacct leadership seemed to agree when I brought this up - now I'm seeing more proof points.

I picked the MLB partnership for this review because it represents Sage's determination about the North American market. Whether this type of partnership truly influences B2B buyers is a fun debate I can't settle here. But I believe Sage's efforts on diversity and sustainability are a powerful way to foster connections in the US. That's where I would personally double down. Look no further than Sage's support of the BOSS Network:

Of course, Sage is not just pushing their US go-to-market. One of the other big stories of the show was Sage moving into non-English-speaking countries, starting with France. There's more I didn't even mention: a strong focus on automation, including accounts payable automation. That ties into Sage's Lockstep acquisition news from April 2022. I was told by one engineering lead that Sage has done more development in the last 18 months than he can remember - the surge of news reflects that.

In my opinion, Sage needs to beef up its multi-cloud messaging to ensure that the enhanced Microsoft partnership doesn't skew the perception. Based on my talks with execs like Dan Miller, I expect you'll see some shifts in how that's all presented at future events.

Where this will all land is beyond the scope of this review. But I will say that the Intacct acquisition is panning out differently than I thought. As I told Hare, I really thought Sage would swallow Intacct whole, and likely crush it in the process. Then I realized Sage had figured out that Intacct could be the focal point of their go-to-market. Then I worried that Sage was luring top executives from Intacct into Sage proper, losing their mojo. But now it seems that something far more interesting and high stakes is going on: infusing the larger company with the tech leadership of Intacct, and pushing to transform the entire operation - via one tech platform. How that will go is not yet clear, but it is way more interesting to follow than I ever expected.

Next up: a look behind the Sage Intacct manufacturing announcement.