Thought Leaders In Cloud Computing: Klaus-Michael Vogelberg, CTO Of Sage Group Plc, Newcastle (Part 2)

By Sramana Mitra and guest author Siddharth Garg

Sramana Mitra: What is the architecture of your offering? Sage has been around for a long time, so I am sure you are coming from the older shrink-wrap software architectures and client server architectures. Where you today, and what is the status of cloud computing adoption and your deployment of a cloud computing model?

Klaus-Michael Vogelberg: We help small businesses to manage their accounts, payrolls, and invoicing processes with customer relationship processes.  In the U.S., household names in that area  would be, for instance, Peachtree or ACT. We also have more recent editions such as online payments services – Payments Services Division in the U.S. or Sage Pay in the UK. In terms of technologies, most of the core businesses started in early and mid-1980s.  The first technology wave was at the dawn of the PC era and the shrink-wrap era. Those were the first generation of Sage solutions, general shrink-wrap DOS-based solutions, and of course later in the 1990s came Windows, and followed by Web-enabled applications.

By the way, before I get too much into this technology, let me give the CIO perspective. I think one of the things that is important to bear in mind is that we typically serve businesses that don’t have a dedicated IT function and certainly don’t have a CIO. One of the things I thought for this interview was to answer some of technology questions from an SME perspective because this is what Sage does: provide that capability to small businesses.  When we talk about cloud computing technology, which we as a business and I personally am very passionate about, we look at it from the perspective of how it can transform how SMEs do business.

What cloud computing does is make capabilities available to small businesses that they would not have been able to afford previously. If you think about how Amazon does business, I do appreciate that you have an entrepreneur who started that company, but by and large a lot of the techniques that big business can afford would not be affordable to small business were there not democratization of technology through the cloud computing movement.

SM: Yes, there is no question about that, and if you read my cloud computing coverage over the past three years, you will see that I have discussed this shift extensively, and we are extremely interested in it. In fact, right now because of cloud computing, because of the SaaS (Software as a Service) and all the variations in infrastructure, service data, and service, all these different models have come about, both from a business and from a delivery point of view. The democratization of technology in general through cloud computing is happening in a big way, and technology has become available and affordable to use by a much larger mass of companies, SMEs being the greatest beneficiaries of that movement. We are completely on the same page on this.

KMV: Exactly. Our mindset is around diversity, serving an incredibly diverse and entrepreneurial market around the globe. So, our mindset was never one-size-fits-all. Openness is in our DNA and we respect, for instance, that we provide certain capabilities to small businesses but not all capabilities. Of course, this implies that cloud computing actually brings in new processes or new aspects that then need to be integrated into our products. We see this as a certainly a nonexclusive area, and I think we later can look a bit into standards. That is of course why these are so important. Specifically, the way we look at how we can help SMEs embrace the benefits of cloud computing is threefold. A simple and straightforward way is that we think we can deliver a different customer experience by applying cloud technologies to support our products and services.

SM: And that is in the area of ERPs [enterprise resource planning], CRM [customer relationship management], and so forth, right? It is an area, however, where you face significant competition. CRM has been the place where cloud computing almost grew up. The concepts of cloud computing were best promoted and best marketed by Salesforce.com and Marbania. So, I guess the question there is, What is special about what you are doing in cloud computing as Sage compared to the rest of the CRM or ERP market? Even in the ERP market, there is a lot going on in cloud computing right now, especially on the SME side.

KMV: Yes, the ERP side is a very compliance-centric business, which makes it a little different, and that is kind of where our heritage is. Of course, we are also in the CRM space, so how do you deal with VAT, sales tax, payroll legislation, and fixed assets? All of that drives what we deliver to customers. You have run many businesses, so you know what I am talking about. Being in compliance and keeping up with legislative requirements as a small business is an area where cloud computing certainly helps us to create a more satisfying customer experience.

For instance, one of the old things in the shrink-wrap model was simply making sure that your payroll software was up to date, if it changed several times a year.  In the old model it was a very expensive process to provide a good customer experience and not rely on the customer to constantly check whether there were any updates available. Of course, now we have something where we can deliver a much-improved customer experience. That’s one area.

The next area is what we call connected services, which is where you bring in new capabilities to the existing installed base. There are obvious examples, such as online payment services, e-filing services, customs declarations, and so on. Another important area that is natural to the Web is collaboration. For instance, collaboration between small businesses and accountants.  There are tremendous opportunities specifically because of the cloud computing as it makes it very inexpensive to deliver those capabilities. For example, Amazon S3 provides an inexpensive and secure way of exchanging data between two parties.

This segment is part 2 in the series : Thought Leaders In Cloud Computing: Klaus-Michael Vogelberg, CTO Of Sage Group Plc, Newcastle
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