Swenson Reworks Sage, Coaches Resellers

Orange County Business Journal, May 25-May 31, 2009 by Tolkoff, Sarah

TECHNOLOGY: CEO streamlines software maker as users put offbuys

Irvine's Sage Software Inc., a unit of Britain's Sage Group PLC, is going through its second major restructuring in the past two years.

Chief Executive Sue Swenson, who started in 2007, has made sweeping changes.

She has cut jobs and streamlined Sage's disparate business units to help bring cohesiveness to the company. She's also hired a handful of executives to set up Sage's power center in Irvine.

The moves come at a time when the maker of business software is stinging from the economic downturn and a falloff in technology spending.

Sage's software streamlines tasks for companies, including accounting, purchasing, payroll processing and other day-today operations.

Many of Sage's customers, mostly small and midsize businesses, are canceling or opting to defer orders of new software licenses, upgrades and maintenance packages.

For the six months through March, Sage's North America operations - headquartered in Irvine - reported $45 1 million in sales, down 9% from a year earlier.

But that doesn't kill Sage's business, according to Swenson, since roughly 70% of its revenue comes from maintenance and support contracts.

Last month Sage said it's set to cut around 500 jobs in North America, after an initial round of layoffs late last year.

"Sage plays in the small business market, where a lot of companies right now are holding on to their cash and deferring payments and purchasing decisions," said Stephen Blythe, cofounder and chief executive of Blytheco LLC in Laguna Hills, the top seller and installer of Sage software.

Blythe, who's been in the business for more than 20 years, estimates he's seen a 20% drop in Blytheco's sales of maintenance and support plans.

"They look at it like insurance," Blythe said, 'if it's not critical to the short term, we will deal with getting it later."

Swenson was brought on to simplify and modernize the company's operations, which are broken down into several large groups throughout the country. Sage had gotten bloated after 20 or so deals - there were redundant positions and the company struggled to get all of its businesses on the same page.

"When you have multiple organizations it can be a challenge," Swenson said. "This makes it much easier for our internal people to deal with."

She also said that having one central communication line made it easier for resellers such as Blytheco.

For the past six months, Swenson has been hiring new executives and centralizing them in Irvine.

"The core of the senior leadership team is in Irvine - we are coalescing here," she said.

New Hires

So far, Sage has brought on three new executives and saw one step down. Swenson hired Motasim Najeeb to be its technology chief and named Marc Loupe finance chief.

Nina Smith, who was president of the business management division of Sage, stepped down last year.

She headed a group of some 2,000 workers and spent more than seven years at Sage after 20 years with Xerox Corp. Sage didn't comment on why she left.

The business management division that Smith used to run was combined with the industry and specialized solutions division based in Beaverton, Ore. The combined group - now called Sage business solutions - will be run out of Irvine and headed by Microsoft Corp. veteran Jodi Ueker-Rust.

The executive shakeup "brings together two organizations that were pretty similar and really makes good use of the talent that existed there," Swenson

Doug Meyer, a longtime Sage executive based in Atlanta, got the title of chief customer officer. Swenson has also laid out new marching orders to Sage's massive reseller network.

She's encouraging resellers to focus more on cultivating new customers and crossselling opportunities.

"We are focusing on cross-selling and presenting a more unified front with a more cohesive approach to the customer," Swenson said. "If we focus on a market as a whole, instead of just products, we'll be thinking about the breadth of our customers' needs."

Swenson also changed the incentive program for resellers and lowered the bar to be more in line with what Sage's competitors are doing.

"What we wanted to do is provide incentives for our channel partners to take care of existing customers but also go after new ones," Swenson said. "We didn't have the right balance before on growing the business. The program encourages new growth - growth that will cause us to be here for tomonow."