Peachtree 2013 Annual Report Download - page 30

Capturing the technology opportunity
Technology is a catalyst for growth because it helps
us attract new customers and allows us to offer more
features and services to existing customers. The pace
of adoption varies across the SME space, which is why
we focus on offering choice, allowing businesses to
adopt new technology on their own terms. By providing
SME customers with a well-rounded offering that
includes leading on-premise and cloud products,
connected services and support, Sage is differentiated
and is in a strong position to drive growth.
Sage One
We continue to drive innovation to capture this
significant growth opportunity. Sage One, our global
software as a service (“SaaS”) solution for smaller
businesses, is intuitive and easy to use, complemented
by first-class support and is built on a modern
technology platform. This platform supports extension
into new products and the accelerated launch into
new markets, whilst crucially satisfying localisation
requirements effectively.
The model is scaling well, with 22,400 paying
subscriptions for Sage One products at the end
of September 2013 (2012: 6,190). We have seen
strong acceleration in adoption in the UK & Ireland
market, where we have over 21,000 subscriptions
at the end of September 2013, which is an increase
of more than three-fold in 12 months. This progress
has been based on Sage One Accounts Standard
Edition, a solution targeting very small businesses with
relatively straightforward accounting needs. October
2013 saw the commercial launch of Sage One
Accounts Extra in the UK & Ireland, which targets
businesses in the 5 to 25 employee space.
Commercially, Sage One Accounts Extra is important
as it expands our addressable market, has a higher
price point and offers a natural migration path for
Sage One Accounts Standard Edition users. In tandem
with our marketing around the launch of Sage One
Accounts Extra, we have seen an increase in adoption
of Sage One Accountant Edition, with accountants
recognising the opportunity this product offers them
to expand their practices. As at the end of September
2013, over 5,000 accountants had registered to use
Sage One Accountant Edition in the UK & Ireland.
We have also made progress in taking Sage One
to new geographies and it is now available in eight
markets across Europe and North America. It is early
days in continental Europe the number of users
remains low in the US. This is consistent with our
experience in the UK & Ireland market and we would
expect to see the adoption rates in these countries
improve over time, as the product becomes more
established in the marketplace. We have reorganised
in the US to strengthen our product marketing and
we will expand the product portfolio with launches of
Sage One Accounts Extra and Sage One Accountant
Edition. We also launched Sage One in Canada in
October 2013. Sage One is part of our wider SaaS
portfolio of payroll and accounting products for smaller
businesses, with over 35,000 paying subscriptions
across a range of products including, in addition to
Sage One, einfachLohn in Germany, and Sage Pastel
My Payroll Online and Sage Pastel My Business Online
in South Africa.
Hybrid cloud
Expanding our cloud product portfolio for SMBs is also
an important part of our strategy. As with Sage One,
we have developed a robust technology platform, called
Sage ERP Online, which allows us to bring our leading
ERP solutions to the cloud quickly. For the customer,
Sage ERP Online offers the benefits of outsourced
infrastructure, mobility, more flexible pricing models
and a measured transition to the cloud, alongside
market-leading support. Sage 200 Online in the UK &
Ireland market and Sage Murano ERP Online in Spain
are the first of our SMB products to launch on Sage
ERP Online, with Sage 100 in France, Office Line in
Germany and Sage 300 in North America becoming
commercially available in 2014.
Sage ERP X3
Sage ERP X3, our global solution for the mid-market,
delivered organic revenue growth of 12% (2012: 5%),
which meets our double-digit growth target. The
product is performing very well internationally, growing
organically by 34% outside of its home market
of France. Non-French revenue now accounts for
50% of global Sage ERP X3 revenue. North America
performed particularly well, with new customer
acquisition, migration and support from the channel
helping to drive a step-change in growth. The strong
performance of Sage ERP X3 globally demonstrates
our strategy is working, with greater investment and
focus delivering results.
Connected services
Delivering further value through integrated connected
services is a key part of our growth strategy. The value
of integration is apparent in higher customer satisfaction
scores, lower churn rates and higher revenue per
customer. The cross-sell of an integrated payments
solution to existing accounting customers is a
particularly significant opportunity for us. North America
continues to demonstrate good momentum, with over
12,400 accounting customers adopting integrated
payments, which has driven cross-sell integrated
payments revenue growth of 20%. Innovation is a key
factor in this success, with our Sage Exchange platform
differentiating our offering in North America. Sage
Exchange is a market-leading payments platform that
can manage a customer’s entire payments ecosystem.
All our North American accounting-based solutions
are integrated with this platform, which gives us a
competitive advantage and a significant cross-sell
opportunity with our installed base.
Mobility
We see mobility as an attractive future growth
opportunity because it makes the core accounting
and ERP data accessible to both financial and
non-financial users on smartphones and tablets.
Chief Executive’s review continued
2013 performance review continued
28 The Sage Group plc | Annual Report & Accounts 2013