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I read the interview that Enterprise Times did with Sage CTO Klaus-Michael Vogelberg.

Tech talk with Klaus-Michael Vogelberg, Sage CTO

One thing I really saw which seemed interesting / new is the Sage X3 continued integration with Salesforce.

When you talk API and developing all these connections to your core accounting – whether it’s X3 or Sage Live – I believe there are two spins that large ERP companies attempts:

  • API’s are great and they let us extend our product and reach a wider audience
  • (unstated) API’s are great because we don’t have to put any more money into adding functionality to our product because third-parties have developed add-ons

In my opinion there are a few flaws with the second argument,

  1. For a customer, adding on several third-party integrations is costly – each integration is per user / per month $$
  2. Potentially leads to finger pointing (when bugs appear)
  3. Can lead to “abandonware” if the third-parties aren’t selling enough to keep up their product
  4. Lets the original core product (ie Sage, GP/Microsoft) grow fat, dumb, lazy as they add nominal features to the product and rely on subscription “lock-in”.
  5. Relying on third party integrations for significant portions of industry related features leaves your core product very vulnerable – for example, if I make industry specific software for cabinet makers and it integrations with Sage X3, Epicor, Netsuite, QuickBooks Online all equally well then what is Sage or GP/Microsoft “special sauce” that keeps a subscriber on their accounting?

I think we’ve seen that the initial wave of software buyers in Y2K purchased strong products like Sage and Great Plains primarily because the third-party industry specific stuff was so lacking in core accounting. Over time that lacking went away and the third-parties got better while Sage and Great Plains/MSFT accounting stagnated and relied on lock-in/maintenance fees.

In essence, there is a very real danger that the Sage and GP of the world become “dumb pipes” which means they perform the generic behind-the-scenes accounting function in mostly a similar and undifferentiated way. If they’ve relied on third-parties to build out industry niche solutions which then integrate back to their accounting what happens when the integration is just as good for all the current accounting.

In my view the danger with the API mindset – let’s let other third parties build to our core accounting – is that over time the core publisher (Sage/GP/MSFT) is not seen as mission critical to most company’s usage as the company is mostly buying the niche software (ie – estimating or job costing or shop floor control or warehouse management). And these niche software packages want to integrate to as many core accounting as possible and once they do where does that leave the core accounting other than looking quite generic and commonplace (ie dumb pipes).