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MIS Group Customers Should Contact Sage For Assistance

July 7, 2009 by Wayne Schulz

mis-group-texas1

If you’re a customer of the recently closed MIS Group you should contact Sage for additional assistance with support or any questions on your next steps for finding a consultant. Sage’s phone number is 866-996-7243.

According to a report by Computer Reseller News Sage is offering 30 days of free support to any customer who did not already have a Sage support agreement.

Here’s What We Know or Have Heard

Over the July 4th holiday we received information that MIS Group was going to close on Monday. At first we thought that meant each of the management level employees would leave with their respective customers. Instead what happened is the MIS Group itself closed for good. The doors were locked and phones were placed on auto-attendant with a message that callers should contact Sage for assistance.

The MIS Group was a big reseller. And they were well respected too. So far I have found nobody to tell me a bad thing about any of the people that work there – and that’s rare.

The last estimates of their revenue that we’d seen was approximately $30 million. They had been twice awarded (2007 and 2008) Sage’s Business Partner of The Year. This means they sold the most product of anyone in the Sage NA channel. They were also number 6 on the Source Media VAR 100 with estimated 2007 revenues of $30 million.

If They Sold So Much Software Then Why’d MIS Group Close Their Doors?

Based on discussions with several different people it seems there had been ongoing issues with financing. This much was also confirmed on the company’s own web site when they closed July 6, 2009. At the recent IT Alliance conference in Atlanta the group was notably absent and rumors where openly swirling that there may be some type of cost cutbacks or financial issues.

Some estimates place MIS Group’s share of the entire Timberline installed base at 40% (a number we’d happily update is someone had better information). If this number is accurate, then the firm had a large exposure to the declining construction market in the United States. To a large part it seems the demise of MIS Group was due in large part to the economy.

Why Not Reorganize Under Bankruptcy?

Good question and we don’t have the answer. Though we can speculate that one possible reason they did not choose to reorganize under bankruptcy may have had more to do with large debts owed to software and hardware vendors.

Let’s just assume that a large debt was owed which a bankruptcy was able to erase. That debt erasure would not assure that a newly re-organized entity would be re-authorized for software or hardware products they formerly represented. Especially not if the vendors lost a great deal of money in a potential bankruptcy.

So, again hypothetically, what could happen is that the parts (individual consultants) becomes greater than the whole (a potentially bankrupt entity that possibly has trouble becoming re-authorized for products they used to sell).

Individual consultants (the real assets of any consulting firm) could take their existing “book of business” with them to a new consulting firm and start anew. An option that might not have existed for a reseller emerging from bankruptcy with a potentially bruised relationship with key suppliers.

What’s Sage’s Reaction?

Sage is in the process of emailing impacted customers and promising that within 30 days they will have some options as to who they obtain as a business partner to manage their accounts. (Update: Read the statement Sage provided to us here).

At Schulz Consulting we’ve reached out twice to Sage offering to help spread the word on what customers of MIS Group can do. If Sage takes us up on our offer we’ll have more to post on our site.

If you’ve been in contact with a former MIS Group consultant then chances are good that you may form a new relationship with that person for support or ongoing consulting. We’ve heard that the consulting staff were invited to contact former clients of MIS Group so long as they do not mis-represent themselves as being from MIS Group.

How Do You Prevent Signing Up With “Another MIS Group”?

One question that we think will arise from the ashes of the MIS Group is how a company can prevent signing on with another reseller only to have them go away without notice.

Short answer is that you can’t.

What we think will evolve from the ruins of MIS Group is that bigger isn’t always better. Simply signing up with the biggest reseller has been demonstrated not to be a safeguard against that reseller unexpectedly going out of business.

Instead we think it makes more sense to select consultants by:
-Industry reputation
-Skill level
-Years of experience in the business
-Responsiveness

Place less emphasis on fancy offices, pretty brochures, extravagant user group meetings, etc.

Will Sage Re-Assign All of MIS Group’s Customers To Another Consulting Firm?

As of now nobody knows. We hope that MIS Group’s customers will be offered a fast response and the ability to select whatever consulting firm they would like. As we learn more we’ll update our web site.

UPDATE: Sage has provided us an official statement on how they are managing the notification and assignment of MIS Group clients. You can read the full text of it here – including the email message that was sent to all known customers.

Based on conversations within LinkedIn we expect within 30 days most of the customers will have been contacted (or have already arranged) to work with the same consultants that they had a relationship with at the former MIS Group. Many of these consultants appear to be in the process of either setting up their own consulting firms or joining already established organizations.

Does This Mean Sage Or Their Products Are In Trouble, Not Selling Well, Etc?

Not from what we’ve seen or heard. The closing of MIS Group seems to be a case of a company with heavy exposure to construction clients and what appears to have been a high overhead that drained their financial resources. We’re sure that in the coming days more information will come about regarding the firm. For now we see no indication that lack of demand for Sage products specifically played any role in this. A study by AMR actually ranks Sage at #3 world wide in terms of revenues – while Microsoft trails farther behind in #7 place.

Sage Software – 866-996-7243

Filed Under: Consultants, Sage 100 ERP Tagged With: dallas, erg, mas200, microaccounting, mis group, misgroupusa.com, reseller, Sage 100 ERP, texas, var, Wayne Schulz

Why software sales tiers are outdated, dangerous and should be abolished immediately

April 7, 2009 by Wayne Schulz

Sales tiers are the filthiest secret in the software industry.

In case you’re not familiar with how these tiers work, essentially a tier is a sales quota established by a software company. Pretty much all software companies have these. It’s the way they “incent” their channel partners (aka resellers) to sell more.

If a consulting firm sells $ x of software per measurement period – they earn a corresponding commission on each sale.

The more software a consulting firm sells per measurement period (typically a rolling quarterly computation) the higher the commission rate for subsequent periods.

The problem with a sales based tier structure? Resellers earn this reward whether the sale produces a happy customer or not. It becomes tempting to push deals that don’t fit just so that sales volume can increase to maintain a commission structure. Do you see why sales tiers potentially do nothing but hurt the customer, the vendor and ultimately the reseller?

In the struggle to make a certain dollar volume of sales during a measurement period, software resellers are pushed to take on deals that may not be good fits for customers. Sometimes these deals are sold without any services so that the customer flounders trying to install the software and either abandons the product or leaves to find a reseller better qualified to help.

The key problem is reward is linked to one action – selling – and NOT customer satisfaction

Tier is not linked to customer satisfaction. That’s why it’s an outdated tool in an era when everyone who needs accounting software has it.

Within the last six months I’ve noticed a disturbing trend of users who’ve “lost” their original reseller and are looking for someone else to assist with the installation of their software.

The story  is usually the same. Customer buys software at quarter end for a fantastic big bargain discount. Consultant eagerly bundles together not only  software but three or four add-ons  they claim will integrate perfectly and do exactly what customer wants.

Fast forward six months and I start receiving the emails (below is an actual email). While this particular user describes an experience with an add-on product – it’s typical of ones that I’ve received (several times per month). As you read – ask yourself why a consultant would sell a complex software program they could not install?:

Dear Wayne,

I have been a subscriber of yours for quite a while and have found your newsletters informative and entertaining.
We are a large service center that provides service to retail equipment for numerous different product lines. For example, we would service the paint equipment at your local Home Depot, Lowes or your local hardware store, or register belts at the nearby Wal-Mart. We are located in approximately xx states and are closing in on xx technicians to provide this service. As you can imagine, our volume of service calls is quite substantial. We have been a MAS90 user since approximately xxxx. We began with 3.71 and have just upgraded to 4.2 this past summer. In late xxxx, we added the xxxxx module from [removed] to the MAS90 to help in managing our service calls. Currently, we are at a crossroads with our customer needs. Many of our larger customers would like equipment repair reports and online status of their placed service calls. At the current time, we are beginning to build our customer’s equipment file under the [xxxx] module.
Our current reseller is not necessarily equipped to provide specialized help in obtaining what we need. We would like to find someone that knows Automated Service inside and out, and would also take the time to understand our needs to give us direction, input and guidance in obtaining it. Do you know of any consultants in our local area that would be able to help us?
I would appreciate any suggestions or help that you may be able to provide.

Thank you,

Here’s my proposed solution to the tier problem (which plagues all software companies)

Get rid of tier based on sales goals – and instead reward maintenance renewal rates  which are the true measure of satisfaction

You can take all the surveys in the world. Run infinite focus groups. Get bunches of your top resellers together to have fancy dinners and play golf serve on advisory boards.

There’s only one statistic that matters, is easily measured and all parties have an equal control over (software vendor, reseller and customer).

That statistic that matters is whether the end user customer renews their maintenance for another year.

Period. Done. Stop Reading. End of Story

Maintenance renewal is a vote of confidence. It’s the customer saying “I approve”, “I’m happy”, “The software met my needs”.

This is a win win for customers – because they’re using a solution that’s working efficiently and was sold to them by a reseller who made damn sure the solution would work – or they wouldn’t sell it. Under my proposed model a reseller wouldn’t sell a solution that was less than a great fit. Because if the customer were unhappy (didn’t renew maintenance) – the reseller’s commission structure would be significantly impacted.

Doesn’t that sound like a little saner way to do business?

Reward a sales channel for creating satisfied customers!

Wait – wouldn’t software companies lose out because of all the sales resellers wouldn’t make?

Not necessarily. As I stated earlier – the lions share of of a software company’s revenue is made these days from RECURRING SOFTWARE MAINTENANCE.

Therefore – this method of rewarding resellers for satisfied customers is a long term win win for software companies who see a much more predictable maintenance revenue stream.

What about resellers? This is a win win for VARS/Consultants/Resellers who no longer must push bad deals through hustle to meet some arbitrary tier goal by some arbitrary quarter.

The dirty secret of reselling that most people don’t talk about is how small the profit can be on an initial sale. Back out the now enormous overhead of prospecting, lead generation and proposals – and you’ve be surprised how little a reseller makes selling a new system. Many systems are actually loss leaders against future consulting work.

So where’s the profit for the reseller? In the recurring revenue. In the happy customer who renews maintenance and engages the reseller for projects and upgrades year after year after year…

Am I starting to at least make a little sense here?

By measuring the percentage of clients who renew  ongoing maintenance plans you  get a rough idea of customer satisfaction. Require VARS (aka consultants, business partners, resellers) to maintain a 90% renewal rate or drop their commission rate drastically.

This will have several side effects (all positive for the customer).

  • Resellers will spend more time up front making sure that the software is the right solution for a customer.
  • Bad resellers who have a steady stream of dissatisfied clients will be driven out of business.
  • Resellers will no longer sell deals that don’t fit. They won’t want to have a customer come on board that ultimately leaves because that may negatively impact their future commission percent.
  • Resellers will pay more attention to those add-on solutions they sell but “never get around to installing”. You’ll see less add-ons sold unless they’re truly needed and the reseller has experience enough with them to know they can be successfully implemented.

Sage takes the right first step and holds tier at current levels

Kudos to Sage who sent the following email to their partners announcing what I hope will be the start of a trend:

From: Sage Team
Date: Monday, Apr 6, 2009 12:39 pm
Subject: Good News! Product Tier Protection Announcement
To:

Sage North America

Good News! Product Tier Protection Announcement

Dear Valued Partner,
In recognition of the current market conditions, we have changed the April 1 tier measurement period, to be a “move up” only calculation for your product tier. This means that your product tier will not move down and can only move up. Partners who reach a higher product tier hurdle will enjoy the benefits of a higher product margin. This will protect your product tier until the next move up and move down measurement period that will take place on October 1. Note that this does not apply to maintenance and support margins.
We understand the current market conditions are making it more difficult to close new business. However, it is critical that we continue to focus on adding new customers to the family. New customer acquisition is key to the long term success for both our partners and for Sage. As a result, we are protecting your product margin as a way to thank you for your ongoing partnership and to encourage and reward you for focusing on closing new customer sales.
Please feel free to call on the Sage sales team who stand ready to assist you with any of your prospects.
Again, we appreciate your commitment and support. I look forward to seeing you at the Insights conference next month. If you haven’t done so already, please visit the Insights Web site to register and get the latest updates.
Best regards,
Jodi Uecker-Rust, President
Business Management Division

Sage

Sage’s move to hold tier steady is a move in the right direction. Hopefully by late 2009 or 2010 will see the elimination of sales based tiers from all accounting software companies and an adoption of a more customer focused measurement of renewal percentages.

Removing sales oriented goals forces everyone to focus not on moving a  box of software but on establishing long term relationships.

P.S.: Congrats to Jodi Uecker-Rust on dropping the “Interim” title and her promotion to President of Sage BMD!

Filed Under: schulz consulting Tagged With: erp, mas200, Rants and Raves, Sage 100 ERP, tier, var, Wayne Schulz

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