Accounting professionals and many of their business clients have been trying to absorb the dramatic July 25 announcement of the Sage acquisition of Intacct. To help make sense of how this major development is likely to impact the accounting technology marketplace, Accountex Report spoke with five thought leaders in the field to get their impressions.
First, however, let’s recap the key details underlying this deal. The $850 million acquisition merges two major players in cloud accounting and financial management software — UK-based Sage, which has struggled to gain traction in the critical North American market in recent years, and San Jose, California-based Intacct, which has provided cloud financial management solutions in the U.S. market since 1999.
While Sage is a provider of small business management and accounting solutions, Intacct’s customer base is midsize, large, and global companies, so the synergies here are not hard to grasp. Going forward, Intacct will be known as Sage Intacct, and according to a fact sheet released by Sage, Intacct’s “experienced senior management” will remain in place, including CEO Robert Reid.
While the Intacct acquisition is its largest to date, in 2017 alone Sage has acquired Fairsail, Compass, and North American Payments Disposal as part of its strategy to expand its payroll, HR, payments, and accounting services.
As Sage CEO Stephen Kelly noted in the company’s public announcement, “The acquisition of Intacct supports our ambitions for accelerating growth by winning new customers at scale and builds on our other cloud-first acquisitions, strengthening the Sage Business Cloud. Intacct opens up huge opportunities in the North American market, representing over half of our total addressable market.”
Thought Leaders’ Analysis
To drill down into what this merger means in practical terms, we interviewed five long-time thought leaders in the accounting technology field.
As Randy Johnston, Chairman & CEO of Network Management Group Inc., notes, “The expansion of Sage’s line by acquiring Intacct is a wise move to expand their offerings with a mature SaaS offering. Further, the relationships developed with Intacct will be nurtured by the Sage management team and nurtured for many years to come.” Intacct currently has 11,000 customers for its enterprise resource planning software in North America.
Brian Tankersley, Director, Strategic Relationships at K2 Enterprises, LLC, also points to the powerful synergies behind the acquisition. “Sage has extended its mid-market cloud strategy by adding one of the top independent cloud-based accounting packages on the market. Since Intacct is primarily a U.S. product, this is similar to the NetSuite/Oracle transaction where the acquirer’s legacy business adds a significant additional international sales channel for the acquired company. The Intacct transaction is a significant milestone in CEO Steven Kelly’s quest to remake Sage from a legacy, on-premises software company into a company whose cloud products are leading the industry.”
Greg Lam, who has written for many years on accounting technology products for Accountex Report, points out that “Sage never really built a product that delivered online what their desktop product could do, so they never gained traction in the North American online accounting market. Intacct is a complex product that provides Sage’s desktop users with a lot of the tools they need, which will allow Sage to transition them into the online world.” Lam also makes the point that the acquisition allows Sage to stand out in relation to some of its historic competitors, since the acquisition “also provides Sage with a product that is in a different niche from competitors like QuickBooks Online and Xero.”
Hannah Munro, Senior Business Technologist at itas, a UK-based Sage Business Partner, notes that the merger reflects larger changes in the accounting technology landscape. “This acquisition not only shows Sage’s orientation towards cloud but also recognizes the transition and change in the industry as a whole. The focus is now not only cloud but also developing the automation of back office functions — a journey that started with Sage Live several years ago. There is also a drive toward fully integrated systems with best of breed platforms such as Salesforce, with both Intacct and Sage Live having a powerful inbuilt connection to it.“
“Sage’s developing cloud portfolio is designed to not only support the existing base of customers who want a more agile solution,” Munro adds, “but to appeal to those customers who may not have previously considered Sage as their provider. I think this acquisition of Intacct and Sage’s focus on innovating within the AI space means that they are now at the forefront of the rapidly evolving market of accounting technology.”
Tankersley agrees that the Intacct acquisition is a powerful move to attract users who would previously not have considered Sage: “I think this means that Sage has a much stronger range of solutions for accounting needs, and it fills a need they had for a native cloud product to create a more complete set of offerings.”
Along similar lines, Johnston explains that “Sage has only had a low-end accounting software product with Sage One and an exceptionally high-end product with Sage X3 that were able to run in a browser. All other products in their line except Sage Live (which is relatively new) were hosted. While hosted products can be perfectly acceptable, and in some cases superior, there are companies that want to choose a SaaS option. Acquiring Intacct allows Sage to own the most dominant SaaS product in the U.S. market.”
Shayna Chapman, Owner, Shaynaco LLC, points out that Intacct is an AICPA Preferred Partner. “For Sage to get into that market is huge,” she explains, “opening up not just accounting and bookkeeping services but also CFO level and controllership functions. This level of service allows translation of business data to make the customer more profitable, and Sage can now expand into the cloud-based higher-level advisory services that Intacct is already providing.” Chapman notes that as a user of Sage products, following this acquisition she would be much more likely to “make the jump from Sage 50 to the new Sage Intacct” when seeking a more robust and mature accounting technology and financial management product.
As Tankersley notes, the acquisition will be a process. “Accountants can expect a transition period as Intacct’s team is integrated into Sage’s global product management infrastructure, but if the press briefing slides online are accurate, we can expect Intacct to be one of the products which Sage pitches first to growth-oriented mid-market companies. Their addition of this solution will likely do quite a bit to help global accounting superstar Jennifer Warawa and Sage North America President Nancy Harris stabilize Sage’s channel partners, which have been in transition since the company moved its North American headquarters from southern California to Atlanta a couple of years ago.”
Sage’s July 25 press release succinctly summarizes the stakes involved: “As customer demand moves to the cloud and away from traditional monolithic ERP suites, the acquisition strengthens Sage’s position as providing the first and last cloud Financial Management Solution a customer will ever need from start-up to global enterprise, whilst integrating seamlessly with their other enterprise applications. Sage partners will now be able to grow their own businesses fully in the cloud with Sage.”
Accountex Report will continue to follow this exciting development and provide our members with ongoing in-depth analysis as events unfold.