ERP SOFTWARE INDUSTRY BUZZ
Sage On The ERP Channel Defensive
Facing a combination of value added reseller (VAR) company failures and partner defections, UK-based Sage has found itself implementing a defensive strategy designed to keep its VAR channel from further eroding. While several Sage VAR's have failed to weather the difficult economic climate, the Sage business partner channel was shocked when earlier this month top VAR MIS Group in Dallas, Texas, seemingly deep in debt and negative cash-flow, closed its doors with little warning. According to Sage, the MIS Group was highly leveraged, had made a number of acquisitions and was operating a capital-intensive business that included software and hardware. Sage indicated it had been aware for some time that MIS Group was struggling and had been working with the partner to help with its cash flow problems. However, the MIS Group ceased operations on Monday, July 6, and Sage indicated it became informed only the evening before.
The business failures of MIS Group and other Sage VARs have raised questions about the financial health of Sage's business partner channel and sparked competition from rivals Microsoft and on-demand ERP software provider NetSuite. Microsoft has implemented VAR recruiting campaigns for those existing Sage VARs who according to Microsoft are "concerned with the stability of the Sage Software Inc. channel." NetSuite's recruiting campaign is focused on getting the Sage VARs out of the stagnant on-premise accounting and ERP software market place and into the high growth accounting software as a service market.
Today Sage responded by sending a letter to all VARs and business partners. Written by Paul Johnson, Executive Vice President of Sales, the letter acknowledges some of the turmoil. "In recent days, several of our competitors have used the business closure of one of our large partners to try and stir fear in the marketplace about the stability of the Sage partner channel ... As a Sage partner, you know as well as I do that our partner community is diverse, vibrant and strong."
As for the aftermath of the MIS Group, the partner had between 2,000 and 3,000 customers, most in Texas but also clients in every US state and several countries abroad. According to Johnson, about one-third of those clients have already begun transitioning to other VARs and Sage is working to pair the remaining clients with other solution providers.
Permalink | Tags: Sage | Posted in ERP Channel | July 27, 2009
Shane Co Blames SAP For Bankruptcy
On January 13 Shane Company, one of the largest jewelry retailers in the United States, filed for Chapter 11 bankruptcy citing the combination of a slowing economy and a failed SAP project that ballooned from $10 million to $36 million. The jewelry retailer told a U.S. bankruptcy judge that the company's decline was triggered in large part due to excessive delays and cost overruns associated with a run away SAP implementation project. According to court papers filed by Shane, the SAP ERP system took approximately three years to implement instead of the proposed one year and costs 'ballooned' to $36 million from a projected maximum of $10 million. Further, Shane claims that the company became "substantially overstocked with inventory, and with the wrong mix of inventory" and that the SAP ERP software "adversely affected sales" through the prior nine months leading to the company's bankruptcy. The complaint cited that the SAP system did not become "stable and functional" until the fall of 2008 and the ERP application still does not operate as initially planned. Shane continues to employ eight contractors to modify the SAP system in order to "bring it to full functionality." SAP spokesperson Saswato Das commented by telephone that SAP was "assessing the situation" and could not provide additional comment.
Permalink | Tags: SAP | Posted in ERP Implementation Failures | January 13, 2009
Oracle Acquires Salesforce.com?
Rumors of Salesforce.com approaching Oracle in order to be acquired have circulated since about February 2008 when industry guru Tom Foremski and the Silicon Valley Watcher network first reported that Salesforce.com was looking for an acquisition buyer. While Oracle needs a credible SaaS CRM solution in a bad way and while Salesforce.com and Oracle share a similar corporate culture which would seem to suggest a relatively straight-forward post-acquisition integration, Oracle is seemingly controlling any acquisition opportunity. Oracle's Larry Ellison is an M&A sage, believes that Google has no competing acquisition interest in the software as a service CRM company (despite Salesforce.com's best efforts to appeal to Google) and if desired, he can probably purchase the on-demand CRM software company on his terms and schedule.
Fast forward eight months. Today, Ellison said his company may look to take advantage of the slumping economy and acquire other software companies at a buyer's price. According to Ellison, "Acquisitions that we have been looking at for some time may now be more attractive." Combine Ellison's new found acquisition appetite with Salesforce.com's massive decline in stock valuation as well as predictions posted on the Industry Standard and elsewhere that the SaaS CRM giant may disappoint analysts twice in a row when they announce their next quarterly numbers and you have the makings for a perfect storm scenario whereby Oracle gets a bargain buy for Salesforce.com and finally gains credibility in the high growth SaaS CRM software industry.
Permalink | Tags: Salesforce.com, Oracle | Posted in On-Demand CRM Software | October 11, 2008
Entellium Execs Charged With Wire Fraud
The plot thickens for CRM software maker Entellium. After a stunning series of events which included the unexpected loss of top executives and a massive staff layoff the following day, we have now learned that the FBI has arrested former company CEO and co-founder Paul (PJ) Johnston and CFO Parrish Jones on at least one charge of wire fraud. A complaint filed Tuesday in U.S. District Court alleges Johnston and Jones "devised a scheme to defraud investors in the company by representing that company revenues far exceeded the actual figures," according to a news release from the U.S. Attorney's Office. Using the inflated revenue figures, the company was able to attract $50 million in private investments, including $19 million from Bellevue-based venture capital firm Ignition Partners.
According to the government’s complaint, an Entellium lawyer contacted the U.S. Attorney’s Office on Oct. 3 to report possible criminal activity by Johnston and Jones. That attorney provided text of an e-mail reportedly sent from Johnston to Entellium board members Pete Solvik and Jonathan D. Roberts on Sept. 30. The text follows:
Jonathan and Pete
This is a very difficult email to write but effective immediately both Parrish and I are tendering our resignation.
We have both made a grave mistake to misrepresenting our revenue reporting to the board. Looking back at the time we thought we would be able to right the wrong and correct our representation, but we have not been able to do this. Revenues have been overstated since 2004 with a delta of approximately $400k a month. All other representations are accurate and no one else in the company was aware of this. Clearly this is devastating news and something we are both regret and are deeply sorry for. Our families are not aware of this and we are telling them now. Clearly this is going to be a very difficult period all around for everyone. My recommendation is that payroll is funded and that you work with the management team in place to conduct a transition and continue to build the business. We will do what we can to ensure a level of continuity. Parrish and I will work through the process to ensure that all investors can continue to protect downside and right the ship. As I said, all other representations are accurate and the business has traction. For the next 24 hours we need to discuss the consequences of our actions with family members and ensure we do what we can to make the best of a terrible situation for everyone concerned. Deeply shamed and sorry. PJ
Permalink | Tags: Entellium | Posted in On-Demand CRM Software | October 9, 2008
Problems at NetBooks
In a move that would question the operations capability of any software company, accounting software maker NetBooks has halted new customer registrations. While the details are not public, the unwillingness to accept new customer orders may indicate significant problems with the accounting software or supporting services.
Permalink | Tags: NetBooks | Posted in On-Demand Accounting Software | October 8, 2008
Industry ERP and CRM blogs are reporting that Entellium has abruptly laid off the majority of personnel employed in Seattle, Washington and Kuala Lumpur, Malaysia. This move follows the unexpected resignations of CEO Paul "PJ" Johnston and CFO Parrish Jones yesterday. After the resignations, Entellium removed any reference to the two senior executives from its website, including a blog written by Johnston and a description of them among the management team.
The 8 year old CRM software company had garnered over $30M of venture funding, however, reportedly ran out of money. Johnston founded the company in Malaysia in 2000, moved the headquarters to Seattle in 2003, secured multiple rounds of venture funding and grew the company to approximately 200 employees. The majority of staff are located at a research and development office in Kuala Lumpur. Entellium's financial backers, Bellevue-based Ignition Partners and Sigma Partners, are now managing the transition plan.
Permalink | Tags: NetSuite | Posted On-Demand ERP Software | October 3, 2008
NetSuite and #1 Business Partner Split
For reasons that are not clear, but most certainly cannot be good, NetSuite and its number 1 business partner for the prior three years, Skyytek, have officially ceased to do business together. The ERPblogger, Phil Wainewright, other ERP blogs and a few insiders report that NetSuite attempted to impose lower margins at a time that Skyytek was extraordinarily frustrated with the software as a service ERP maker using its inside sales staff to directly compete with its business partners.
Permalink | Tags: NetSuite | Posted in On-Demand ERP Software | September 16, 2008
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