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Sage plans to double growth rate by targeting Microsoft and cloud

The enterprise applications company hopes to increase growth from 3% to 6% over next three years

Sage, a UK-based enterprise applications company, has said that it plans to double its growth rate from three percent over the past 10 years to six percent over the next three years by investing in 'high potential' products, namely cloud and mobile.

Angela Eager, research director at TechMarketView, attended an analyst briefing yesterday, hosted by Sage in Newcastle, where it said it would be reallocating resources away from 'low growth potential' products.

Sage CEO, Guy Berruyer, said that he carried out a forensic review of the business, its market and its portfolio, something that the company had not done before, in order to enable it to make "tough calls" and put it in a position to meet its growth goals.

Sage plans to categorise its products into three groups - sunset (those with low growth potential), harvest (those with medium potential), and invest (those with high potential) - and will allocate its resources accordingly.

According to Eager, Sage has some 270 products, and whilst it is not actively planning to sell off or discontinue the 'sunset' category, she predicts that some will be "heading towards the door".

Cloud-based SageOne, an accounting and business services tool, will aim to deliver the company's entry-level growth, applications built on Microsoft's Azure platform, such as Sage 200, will drive SME growth, while Sage ERP X3 is positioned to push the mid-market business forward.

Eager believes that the SageOne and Azure offerings will deliver growth, but "it's harder to see on-premise ERP X3 making a step change".

However, she also thinks that Sage has "woken up to the potential inherent" in new technologies in the software applications market, such as cloud and mobile, which "run through virtually everything".

Sage has taken the decision that rather than developing its own cloud infrastructure, it is going to align itself with Microsoft and use its assets, which TechMarketView believes is a "pragmatic decision that will help accelerate its cloud portfolio".

Eager said: "Berruyer and his team talked of tough decisions made and of more to come in terms of where to allocate resources and how to run businesses, the need for growth and the need to execute."

"It is down to execution now, but we came away from the event feeling positive."


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