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Sage rolls the mid-market dice with Intacct UK launch

In one of its most important launches of recent times, Sage has rolled out its cloud financial management platform Intacct to the UK market. While Intacct is a major player in the States, how will British executives respond to Sage’s cloud clarion call?

13th Nov 2019
Editor AccountingWEB
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Sage Intacct launch with UK MD Sabby Gill
Sage
Sage Intacct UK launch with MD Sabby Gill

At a launch event last week, Sage announced the arrival of Intacct to the UK market. The north east-based software giant acquired Intacct in 2017 for £650m, and the UK rollout forms a key plank in the shoring up of Sage’s enterprise offering.

Cloud-native from its first product in 2001, Intacct (a combination of internet and accounting) is billed as a multi-dimensional accounting solution designed specifically for CFOs and financial organisations, with a mission statement of making end of period close more efficient.

A $200m business in America with 11,000 customers, Intacct is viewed as a market-leading rival to the likes of NetSuite, serving fast-growing businesses in sectors such as software as a service, hospitality, professional services, non-profit and financial services.

Speaking to AccountingWEB ahead of the launch, Sage’s UK MD Sabby Gill was bullish about the chances of his company’s latest venture.

“We’ve taken the best of what Intacct has learned over the past 20 years in North America with the knowledge Sage has gained over the last 40 years in the UK market. Put the two of them together and we know exactly where we’re going to be successful: which industries, which verticals, where the value of the return we will get. We’ve got a big footprint there.”

In spite of Intacct’s success across the pond, Sage executives insist it will not be a case of parachuting American software into the UK market.

“We’ve been working with the expertise that Sage has in the UK for compliance, payments, statutory financial reporting and so on,” added VP of product Dan Miller. “A good example of that is we will be MTD for VAT-compliant right out of the box as part of the core system from day one.”

Potential upgraders offer a lucrative prize

While the accounting software market has undergone radical change in recent years, Sage’s position in the UK remains relatively strong, with a large customer base and a healthy $2bn profit and loss statement. Added to this is the recent acquisition of AutoEntry, the leading challenger to Receipt Bank in the competitive market for capturing and managing expenses and other accounting data.

While Gill stated that Intacct will not directly replace legacy products, potential Sage 50 upgraders in £1m+ turnover organisations represent a lucrative prize for a business that has placed recurring revenue at the heart of its strategy. If Sage can engineer a smooth migration path to more efficient cloud alternatives, it has a path to maintaining a hold within the changing accounting software market.

Market focus

When asked if the launch marked a retreat for Sage from the battle of the SME cloud accounting titans QuickBooks and Xero in order to prioritise its mid-market portfolio, Gill stated that in fact, the opposite was true, and the move will help to differentiate the company’s offering.

“I’ve got two distinct parts of my business now,” said Gill. “I’ve got a business that operates at the smaller end of the market … but the reason we’re so excited about having a product like Intacct is we have the opportunity to target the upper end of the SME market that we haven’t focused on with the products we’re traditionally famous for.”

Gill stated that he believes Intacct’s targeted focus on verticals, and even drilling down into specific aspects of those verticals, will be where it can differentiate itself from the competition.

Can Sage crack the mid-market code?

Recent months have seen a surge in software interest in mid-sized companies. NetSuite, Microsoft Dynamics, Advanced, iPlicit and new entrant Xledger have all advanced their claims to prise open the wallets of reluctant executives up and down the land. Add to this the launch of QBO Payroll Advanced and Xero’s ecosystem-driven move upmarket and the competition is certainly hotting up.

However, according to AccountingWEB’s research on UK mid-market businesses, investment in cloud products remains lethargic in the face of economic, political and legislative uncertainty.

The proportion of cloud users in AccountingWEB’s mid-market/ERP survey category dropped from 54% in 2018 to 43% in 2019, which suggests mid-market FDs are sitting on their cash

This dip bucked the trend of steady increases in mid-market cloud accounting use in recent years. The government’s Making Tax Digital initiative has stimulated a large volume of online migration at the smaller end of the SME market, but larger companies with more complex financial systems that are harder to replace remain stubbornly hard to shift.

With mid-range companies sitting on their cash in case of rainy days ahead, spending on new finance systems has slowed.

However, market sentiment seems to indicate that if anyone can crack the mid-market code, it’s Big Green. One finance director who spoke with AccountingWEB at the launch event was quietly optimistic (if a little cautious) about the developments. “We’re on Sage Line 50 at the moment and have been looking to move for a while,” they said. “The cost and the disruption of any move have so far put us off, but if we’re able to work with our existing contacts onto a familiar system that might help to get things across the line.”

Is AI out of the trough of despondency?

Some two years ago accountancy was awash with talk of automation cutting a swathe through the profession and sweep aside jobs in its wake. This coincided with a wave of bots hitting the market, with the launch of the likes of Unit4’s Wanda, QB Assistant and, of course, Sage's Pegg.

A bot backlash swiftly followed, with critics labelling artificial intelligence as a marketing concept without a strong definition – something that above all else matters in the world of accountancy.

Two years on, real-world, demonstrable use cases of artificial intelligence in accountancy are somewhat hard to find.

However, this may be about to change in 2020 following three announcements at Intacct’s Advantage conference in Las Vegas last month.

First, there’s the new intelligent time tracking capability, which could prove a major play for the professional services market.

Installed on a computer, the software automates time tracking by recording documents users are working on, emails sent, meetings attended, even pulling client names from PowerPoint presentations users are working on. The tool will then complete timesheets to the best of its ability, saving time for the user and the company.

Secondly, there is the general ledger anomaly detection function. The tool highlights anomalies, identifying them as either high or low risk. A user can then drill down into the transaction to see the underlying issue and correct it if appropriate.

Finally, the firm's VP of product Dan Miller was keen to discuss the forthcoming predictive billing function. “When we did some research with customers, we asked ‘if you could have predictions into the future, what would you want most?’ What they wanted was to understand cash. What will their cash forecast look like so they can make sure they’re going to stay in the black.

“One of the most significant portions of that is their billings, continued Miller. “What will billings look like into the future? The predictive billings capability provides them with that forecast and then recommendations as to how to make corrections if that forecast is off. The engine is telling them that they’re going to be in the red next month – what can they do to solve that? It’s about providing them with the ability to take some action to correct that proactively so it doesn’t occur.”

All three releases are planned for the second half of 2020 and will be available at an extra cost via an additional module.

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