Who is the driving force behind Sage One? Global accounting software company Sage released its cloud accounting program for micro-businesses last year. Like Intuit and Xero, it too has plans to win millions of new customers with its new cloud program.
However, Sage stands out for taking an almost counterintuitive approach. It is making two versions of Sage One. The UK office is developing a Sage One program for the northern hemisphere. South Africa is making one for the southern hemisphere.
Why is that? You could argue it’s a form of insurance. Sage’s first attempt at a cloud accounting program was such a failure that they had to write it off and start again.
Yet the decision is partly driven by personality. The two-codebase concept is championed by Steve Cohen, a passionate accountant-turned software developer who helped start Pastel, a desktop accounting program in South Africa, in the early 90s. (Sage bought Softline, maker of Pastel, in 2003.)
The managing director of small business, Sage South Africa, Cohen decided that his software team could create as good or better product faster than the UK – and set off to prove it.
By 30 May Cohen’s operations had sold their own version of Sage One to 26,000 businesses in South Africa. This represented 40 percent of Sage One’s global user base at the time.
Cohen has since resigned from his SME role after 26 years to take up the title of managing director for Sage One in Australia, Asia, the Middle East and Africa.
I sat down with Cohen to find out what drives one of Sage One’s creators.
Digital First: How did it come about that Sage One is two products with one name?
Cohen: The original entity (Softline) bought by Sage in 2003 is highly entrepreneurial. We still run the southern hemisphere in that way. Being 10,000 miles away from the UK is the best thing that ever happened to me.
Sage’s plan was to have one product for the whole group. But in South Africa we have great, passionate programmers. We have always done our own stuff. If you have a culture in the business where the customers use [your software] it’s so much more rewarding.
Digital First: But why do you want to make this software instead of leaving it to the European division that head office assigned to it?
Cohen: What are we really creating? We are manufacturing. It just happens that my machinery on the conveyor belt, are people, they are programmers. When you write a piece of code and it goes out to 24,000 businesses and you get these beautiful responses, you cannot believe what that does to the individual psyche and that’s what drives us too.
I’ve got to keep that kind of passion alive and to do that within a huge corporate FTSE 100 company I believe is a very difficult thing to do. So the fact that we’ve been able to create this beautiful pocket of excellence in South Africa and I now have the opportunity to move this out into to Asia and Australia is a wonderful thing for the people sitting in that office.
Digital First: So you are driving everything for Sage One in the southern hemisphere? Marketing, strategy, development?
Digital First: Wow. So basically you are a competing division to the northern hemisphere Sage One?
Cohen: No. If you handle it well, let’s call it a healthy kind of competition under the radar. But the guys in the UK are looking at us. I think it’s raising their game. My guys want to keep ahead of the UK. And then having people like Alan (Osrin, Sage Australia CEO) and Lukas (Taylor, managing director of SageOne Australia) and everybody on board here just gives us an opportunity to just make this a more rewarding project.
Digital First: Tell me the story of how you got to 24,000 Sage One users in South Africa.
Cohen: The way it started funnily enough is that about six years ago we were rewriting our desktop software because it was antiquated. It was written in Visual Basic and we wanted to rewrite it in C Sharp and SQL, and our programmers did a fantastic job. Sage admits that it’s the best interface in the group and the thing was stillborn because when we delivered it the cloud had started to take off.
I said to my programmers, Guys, it’s C Sharp code. It’s probably object orientated. Can’t we lift it to the cloud? And I promise you, behind my back these guys went and sat after-hours and in six months (they ported it to the cloud). It must’ve been about five years ago.
Digital First: How were you able to sell so many licences for Sage One so quickly?
Cohen: Now remember we had the momentum of 200,000 desktop users. The brand Pascal in South Africa was as strong as the brand MYOB in Australia. We probably have 80 percent of the market. So we put it out on the web and we track how many days it takes to get to a 100.
At first it took 30 days to get to 100, then it was 25, then 20 and now we’re down to about three days per 100 users that we’re signing up a month. We only started marketing the thing properly about two years ago. We’re now the number one SME cloud system in South Africa.
Digital First: What is it like running Sage One compared to Pascal?
Cohen: The business is so different to the normal desktop business. The guys live and breathe this. You know, when you exit the product you get a happy face, a sad face and a medium face. All of us are onto this. We step over each other’s feet to support the customer because we are so paranoid.
I always say to the guys, you run this side of the business as if Xero, QuickBooks or whatever is coming in tomorrow big time. We’ve got to do this.
Now we’re lucky because you’ve got a group of about 4,000 accountants who run accounting practices and advise their clients. So we constantly are saying guys, if you work with your clients in this way, how much easier is it than driving out and getting a backup and doing an audit. I’m just spreading the word and that cliché of the tipping point I think is starting to become a reality for us.
Digital First: So obviously you’re getting a lot of feedback on Sage One. What are the things that people like the most?
Cohen: For me there were two things. Sage One gave us the opportunity to rewrite software and not make the mistakes of the past. In the early ‘90s when we wrote the desktop software it was okay to say to people you need a bookkeeper to run this stuff. Today people say, well if I need a bookkeeper your software isn’t easy enough to use.
So we could rewrite from scratch knowing it’s a beautiful product. That was simple because most users just want to do an invoice, get it paid, get their bank to balance, they are happy. That’s the 80/20 rule.
The cloud itself gives a whole unique host of opportunities. Mobility, freedom to work wherever you want, one version of the truth, no backups lying around, the client intimacy between the accountant and the client. It gives the opportunity for accountants to be proactive and not do the once a year historical stuff.
I think that there’s an opportunity because when you’re on the cloud accountants can become more intimate in that end user’s business. The demographic thing worries me because I think the older generation of accountants, it’s not intrinsically in them to do that. So I’m hoping that the newer accountants will be into this.
Digital First: How is designing Sage One different to your desktop software?
I’m getting thousands of users a month on Sage One and I’m seeing that a lot of them love the simplicity and the ease of use. In the early days of desktop software we were all so competitive that when a person shouts you put the feature in. And what ends up happening is you’re bloating the software for 5 percent of the people who want it and you’re frustrating the other 95 percent. We will not make that mistake again.
So it’s simple. It does the good stuff well. And for the little stuff that people used to scream about I’m saying, well then we’re not for you. Stay on the desktop. A third party program can do that. I think people are so relieved that now for once accounting software is easy to use.
I’ve learnt that businesses generally want to do the very commonsense, simple stuff easily. And in the old software so many people would actually use 5 percent of the software because it’s so complicated and they just used it to do invoicing.
Now they can see with bank feeds and their customers and their dashboards are more in touch. Now they say, for once you guys have understood running a business.
Digital First: How do you see the accountant’s role changing?
Cohen: In the old days because the desktop software was too complicated the off-site accountant did everything. Now we see the business can just do their invoicing – the easy part – and the accountant will do the bank statement import and reconcile the banks and do the VAT returns. So for once it can be shared.
I think the users in South Africa are starting to get that as well, specifically on mobility. You’re getting people out there just doing their invoices, taking pictures of receipts and the accountant is in the background doing their stuff.
What’s also cool now is being able to share the software throughout the organisation instead of just your bookkeeping department using it, which is the legacy approach. Now all of a sudden your sales people are checking out stuff. So it’s now an accounting system that’s useful for the organisation as opposed to just the bookkeeping department.
Digital First: Do you have plans to build a native payroll for Australia?
Cohen: Yes, we do. I reckon it will be ready in about a year.
Digital First: Sage Europe and Sage America are releasing new cloud programs such as the analytics program Sage View. Will you use that or make your own version of that program too?
Cohen: If they do cool stuff around the Sage group I definitely would consider that. So if Sage View turns out to be brilliant then maybe we should use Sage View.
There’s one great group product where it’s an integrated Excel report writer and it’s not just a dump to Excel. There’s a live link so you just refresh and the data comes across. They’re rolling that out for the group I will definitely use that because the language for bookkeepers is still Excel.
And what I want to do mostly with the Sage Group is learn from their experience of what their customers love and share that stuff. So I’m not going to always be like there’s a wall around us, but when they do cool stuff I’m definitely going to get it.
Digital First: What about practice management software? In Australia Sage has Handisoft. Are you going to build that for South Africa too?
Cohen: Well (a basic version) is ready to go. Alan (Osrin, also CEO of Handisoft Australia) is going to help me get going with practice management in South Africa and that’s when you can really get great in operations.
We’ve got 4,000 accountants who recommend our software. I’m hoping that they’ll see this cool cloud practice management software and start using it. I think there’s a real opportunity for us in South Africa to collaborate with Sage Australia to do this thing together.
Digital First: How much of the practice management software have you written?
Cohen: It’s probably already 70 percent of what Xero’s got for Workflow Max (the program behind Xero Practice Manager, its cloud practice management tool). By the end of the year we’re going to get to the bottom of it.
I may not have all the fringes worked out but certainly that streamlined flow that you talk about with all your customers showing on a dashboard, KPIs, time tracking with each customer on their dashboard – we’re definitely going to have that by the end of the year.
Digital First: Do you think accountants can modernise their practices to use cloud software as business advisers?
Cohen: Yeah, but I’m worried about the demographic now. You know when you’ve got a person who practised for 20 years and they’re just used to doing it a certain way, it’s hard for them to change.
I hate going to an accountant and saying, I’ll teach you how to get new revenue streams, because part of me thinks these guys are thinking, who the f*** are you to tell me?
If I say to the accountant, I can help you be a hell of a lot more efficient, and then you can make the call. You know your business better than me but I’m going to help you be more efficient. And that’s where I feel my responsibility is.
Disclosure: Sholto Macpherson has consulted to accounting software companies including Sage.
Image credit: BrainstormMag