Sage Software intends to expand both its cloud offerings and its customer base in North America.
By submitting your personal information, you agree that TechTarget and its partners may contact you regarding relevant content, products and special offers.
Sage, an ERP vendor based in Newcastle upon Tyne, U.K., is acquiring Intacct, a San Jose-based vendor of financial management software for $850 million, according to the company.
Sage's core products include the Sage X3 ERP system, the Sage One accounting and invoicing application and Sage Live real-time accounting software. The company's products are aimed primarily at SMBs, and Sage claims that it has just over 6 million users worldwide, with the majority of these in Europe.
Intacct provides SaaS financial management software to SMBs, with most of its customer base in North America, according to the company.
The move to acquire Intacct demonstrates Sage's determination to "win the cloud" and expand its U.S. customer base, according to a Sage press release announcing the deal.
"Today we take another major step forward in delivering our strategy and we are thrilled to welcome Intacct into the Sage family," Stephen Kelly, Sage CEO, said in the press release. "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."
Combining forces makes sense for Intacct because the company shares the same goals as Sage, according to Intacct CEO Robert Reid.
"We are excited to become part of Sage because we are relentlessly focused on the same goal -- to deliver the most innovative cloud solutions for our customers," Reid said in the press release. "Intacct is growing rapidly in our market and we are proud to be a recognized customer satisfaction leader across midsize, large and global enterprise businesses. By combining our strengths with those of Sage, we can jointly accelerate success for our customers."
Intacct brings real cloud DNA to financial management software
Intacct's specialty in cloud financial management software should complement Sage's relatively weak financial functionality, according to Cindy Jutras, president of the ERP consulting firm Mint Jutras.
"[Intacct] certainly brings real cloud DNA, and a financial management solution that would be a lot harder to grow out of than the solutions they had under the Sage One brand," Jutras said. "It also has stronger accounting than would be embedded within Sage X3. I would expect X3 to still be the go-to solution for midsize manufacturers since that was never Intacct's target, but Intacct may very well become the go-to ERP for service companies, like professional services."
Jutras also mentioned that Intacct was one of the first applications to address the new ASC 606 revenue recognition rules, something that Sage has not done yet. Sage's cloud strategy has been murky up to this point, but Jutras was unsure that this move will clarify that.
"It doesn't seem any of its existing products -- except their new Sage Live developed on the Salesforce platform -- are multi-tenant SaaS and up until recently they seemed to be going the hybrid route by leaving ERP on premises and surrounding it with cloud services," she said.
The deal should strengthen Sage's position in the SMB market, according to Chris Devault, manager of software selection at Panorama Consulting Solutions.
"This is a very good move for Sage, as it will bring a different platform and much needed technology to help Sage round out their small to mid-market offerings," Devault said.
Getting into the U.S. market
Overall it appears to be a positive move for Sage, both from a technology and market perspective, according to Holger Mueller, vice president and principal analyst at Constellation Research Inc.
"It's a good move by Sage to finally tackle finance in the cloud and get more exposure to the largest software market in the world, the U.S.," Mueller said. "But we see more than finance moving to the cloud, as customers are starting to look for or demand a complete suite to be available on the same platform. Sage will have to move fast to integrate Intacct and get to a compelling cloud suite roadmap."
Time will also tell if this move will position Sage better in the SMB ERP landscape.
"It's early to say, but it puts them in the SMB category with Oracle NetSuite, FinancialForce, Epicor and Acumatica at the lower end," Mueller said.
Sage's developer certifications for Sage ERP X3 add more muscle to its ISV ecosystem.
SaaS can ease the pain of ERP upgrades, but some users like letting the vendor do it.
Read how financial ERP functionality can help provide better insight for more efficient business operations.