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AIA

Sage ventures into financial services with £184m US deal

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9th Jan 2006
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The Newcastle-based Sage Group announced today that it planned to acquire US credit card merchant services provider Verus Financial Management for roughly £184m in cash.

The deal will move the UK business software giant into a new sector in which it will provide financial services to its SME customers. Sage plans to complete the transaction for the Nashville-based company within the next month, subject to US regulatory approval, and will use it to form the core of Sage's North American Merchant Services Division.

The Verus deal is a big one for sage, the biggest since it bought US CRM software developer Interact in 2001. In the company's news announcement and in subsequent briefings, Sage executives indicated that merchant services represented a big new commerical frontier for the ever-expanding organisation.

Verus has already conducted trials with 6,000 Sage Peachtree users in the US and according to Sage research, customers are demanding merchant services that they can integrate with their accounting solutions.

Sage chief executive Paul Walker commented, "For our existing customers, Verus will provide merchant payment services that can be linked to their existing Sage accounting software. For new customers, these new payment services, in addition to our payroll services and customer relationship management products, further broaden the appeal of Sage solutions beyond pure accounting."

Finance director Paul Harrison told Reuters that in addition to applying the Sage sales and support model to increase revenues from Verus, the company intented to expand its merchant services into Europe.

  • Sage is not the only UK accounting software house to hit the international acquisition trail. Last week, Harrogate-based CODA pulled off two deals, one to acquire bAs GmbH, a CODA reseller and systems house based near Munich, and the other to buy Singular Hungary, an IT services company based near Bucharest. "On the back of this, we also plan to open a satellite office in the Czech Republic early in 2006 to serve our Czech customers. With our recently expanded Tallinn development team we hope to have three offices in central and Eastern Europe where some of our largest customers are based," said CODA Group chief executive Jeremy Roche.
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    avatar
    By User deleted
    15th Jan 2006 08:30

    Maybe a Fix - but not an integrated solution
    From your reply it would seem as though the Sage foray into eCommerce was an abject failure. Moreover to indicate that the product was so far short of an acceptable standard that it was completely unfixable is a fairly damning indictment of any software house (let alone a market leader?)

    Surely there were only two possibilities when the original software was released:

    a. They knew the software was completely unacceptable and released it anyway - questionable practice

    b. They were unaware of its short-comings & failures and released in ignorance - incompetence

    Either way you have a major software house that displayed astounding levels of un-awareness

    What's more these same guys have already stated that they will not adopt the SaaS approach, but almost in the same breath have acquired a payment provider, which is traditionally linked to eCommerce; an area we have already agreed was a disaster for Sage

    I would have to disagree with your final Para about the acquisition being 'perfect sense'. If the client wishes to run eCommerce they should be using a proper integrated solution and not disparate systems that require manual intervention to make them work - why is the market accepting such nonsense at the convenience of the software house (and being charged for it)?

    (taking & retaining credit card number etc may be convenient but has major security implications and should not be encouraged for business without the specialist knowledge to implement the process)

    Using WorldPay is fairly simple and I could post example ASP.NET code (post & call-back) to do it for free - if anyone is interested. All you then need to do is register with WorldPay & include it into your own site

    This raises the issue of liability - any member of the profession who recommends a non-integrated solution (i.e. Sage) with the knowledge that their client wishes to use eCommerce is on dangerous ground. Such a recommendation could be construed as being negligent (duty of care) by failing to provide the best solution to their client.

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    avatar
    By User deleted
    09th Jan 2006 17:22

    Once upon a time - Sage eCommerce Site
    Can anyone recall what happened to the Sage eCommerce offering a few years ago.

    Presumably it is no longer part of the Sage portfolio.

    If it was dumped (outsourced to another provider) by Sage what was the reasoning behind that decision?

    Possibly they were unable to cope with an internet eCommerce solution; in which case does this engender any confidence with Sage and the internet?

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    Dennis Howlett
    By dahowlett
    09th Jan 2006 13:33

    lock-in won't work
    I can see the rationale behind this purchase but I am struggling to see how it will work when we already have PayPal and WorldPay as independent services that can be hooked to any website. It looks like another case of Sage seeking to lock-in its customers - which is fine - except that it is NOT the direction the overall market is moving in.

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    Dennis Howlett
    By dahowlett
    13th Jan 2006 02:00

    Might i suggest
    Paul - might I suggest you consider taking a peek at some of the polemic things I have to say. I've posted these same comments elsewhere on AccWEB when responding to David Carter's 2006 predictions.

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