Paul WalkerWhen someone commented about what they saw as Sage's difficulties in being successful for the future, I responded half-jokingly, "What do you expect from a bunch of accountants?" And there's something to be said about the way Sage has operated as one of those accountants prepares to leave his job as CEO.

 

With the Sage Group confirming that chief executive Paul Walker is leaving the company after 26 years, the last 16 in the top spot, it's good to think about what his legacy is, probably more than speculating about who will succeed him. That legacy should shape what kind of person is needed to take the next step. Whether Sue Swenon, CEO of Sage North America, is a good candidate to fill that job (I'd say she is), is something we'll leave for later.

Walker is a chartered accountant, as is, not surprisingly, Paul Harrison, group finance director (CFO in American terms), and also Paul Stobart, CEO of Sage's United Kingdom and Ireland operations. That's half of the company’s six executive directors.

Accountants are also considered cautious; although the way Sage spent money on acquisitions might be a caveat to this. Nevertheless, just after Microsoft acquired Great Plains and then Navision in building what is now Microsoft Business Solutions, there were about two years when Microsoft was struggling. An aggressive competitor would have taken advantage of that and spent to kick them while they were down.

Sage didn't. And I've written my view before that Sage chose to manage to maintain margins, rather than going for the throat, or at least spending for strategic advantage.

It was Walker who explained Sage's acquisition philosophy to me at a luncheon in Las Vegas a few years ago. He said it's difficult to buy a good company that is achieving good profits, because then the way to improving performance is to grow revenue, which is relatively hard. Sage chose to buy good companies that weren't getting the profit they should be and improve margins, a much easier task.

Sage did a good job of sticking to that plan when times were good. Unfortunately, I think it didn't modify its course when it would have helped the company have a clearer product path and a stronger voice in the market.

Last modified on Saturday, 29 June 2013
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Bob Scott

Bob Scott has been informing and entertaining the mid-market financial software community with his email newsletters for 10 years. And he has been covering this market through print publications for 18 years, first as technology editor of Accounting Today and then as the Editor of Accounting Technology from 1997 through 2009. He has covered the traditional tax and accounting profession during the same time and continues to address that as executive editor of the Progressive Accountant.

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