On the Scene: Sage Insights ’10 — Sage Succumbs to Cloud Computing

Watch out all you cloud-based CRM vendors, there’s a new—well, an old new—guy in town. Sage, a longtime provider of on-premises CRM solutions (Act! by Sage, Sage CRM, and Sage SalesLogix), made its move to the cloud at this year’s Insights partner conference, unveiling SalesLogix Cloud. Denis Pombriant, founder and principal of CRM consultancy Beagle Research Group, says this was “the announcement Sage needed to make,” a sign that cloud computing has evolved to the point where every CRM vendor needs an on-demand offering.

Sage, however, is planning a different kind of cloud cover than most of its competitors have. Rather than building out the infrastructure to support a software-as-a-service (SaaS) model, Sage is partnering with Amazon.com to host a version of Sage SalesLogix on the Amazon Elastic Compute Cloud (EC2). “A couple of years ago, if you wanted to be good at SaaS, you had to be good at the infrastructural level,” said Larry Ritter, senior vice president and general manager of Sage CRM Applications, at an Insights press briefing. “We have always been good at the applications.” 

Many believe that Sage had no choice but to respond to the growth of SaaS in the marketplace. Bruce Guptill, managing director of Saugatuck Technology, says that approximately 20 percent of firms use SaaS for at least one core business system, a figure that will double by the end of 2012. “Cloud is a reality,” Guptill maintains. “Cloud-based business solutions are already well established beyond the periphery… regardless of [company] size, industry, or geography.”

Sage began buzzing about its cloud strategy at Insights 2009 by introducing the Amazon EC2 plan, beginning to train a few select partners, and running live demos of the cloud-based solution; by August 2009, Sage had trained all partners. In October, testing began with a few customers, and word rapidly spread to other Sage users. In fact, the vendor’s CRM executives say some of its recent on-premises deals were with customers influenced by the mere existence of Sage’s plans—customers excited by the notion of future migration to the cloud. “We’re actually getting a lot of traction just by having the solution,” says Allen Duet, senior product manager for Sage CRM. Sage is planning an international expansion of SalesLogix Cloud later this year. 

Pombriant argues that the SalesLogix cloud solution may not quite fit the traditional definition of a SaaS application. Calling Sage an application service provider might be more accurate, he says, since Amazon.com is doing the hosting. The unusual approach underscores Sage’s idiosyncrasy when it comes to cloud computing. Back in March 2009, the vendor launched SalesLogix Today, an on-premises data-storage appliance promising minimal set-up or support needs. The appliance, now rarely mentioned by Sage, was meant as an in-between step for small and midsize businesses (SMBs) not yet comfortable releasing their data to a cloud-based host.

But SMBs may be finding the cloud increasingly compelling. Nearly 40 percent of SMBs say they’re interested in deploying SaaS solutions, according to a September 2009 report by SMB research firm AMI-Partners.

Sage executives say their company will ultimately become a hybrid service provider for companies using installed Sage products and Web services. In fact, Himanshu Palsule, executive vice president of product strategy and marketing of Sage Business Solutions, said in his Insights keynote that Sage’s very definition of cloud involves “taking the richness of on-premises applications and connecting it to the reach of Web services.”

Guptill says that the value propositions of SaaS keep expanding, and that the industry is now moving into a new wave of cloud-based information technology. Cloud computing may be progressing at an alarming rate, but Sage is moving at its own pace—as it’s always done.