There’s been bloodletting in the US at Sage Group as the firm parts company with its CEO and finance director.
Ron Verni, the chief executive of Sage's American business, and Jim Eckstaedt, the chief financial officer, have left the firm. A company statement confirmed: “Following a review of its North American business, the board has concluded that a change in leadership is required to realise the full potential of this business.”
It’s the lastest turbulent upheaval for the firm, coming only months after the surprise departure of Andrew Corbin, its head of healthcare software, who followed soon after Sir Julian Horn-Smith, the chairman, left over what the company called "differences in culture and style".
Senior management in North America will report directly to Paul Walker, the group chief executive, until a new regional chief executive is appointed. Andrew Griffith, the group’s director of treasury and mergers and acquisitions, will be acting chief financial officer for North America until a replacement is found.
Walker said a new style of management was required to grow the US division, now that it had become a $1bn revenue business. "As the business gets to this size a change in culture is needed," he explained. "It becomes less about running day-to-day operations, and more about strategy and commercial point of view."
The firm also needs a jump start in the US. Sage’s organic revenue growth in the US was only 4 percent – up to £508 million - trailing behind 7 percent in the UK, 10 percent in continental Europe and 17 percent for the rest of the world.
“We should not be surprised that Sage has taken drastic steps when results continue to be disappointing,” said David Bradshaw of research firm Ovum. “Sage has of course grown considerably through acquisition, but this is becoming far less practical than in the past. Stock prices of software companies have risen markedly, and nowhere more so than in the United States. With such high prices, bargains are few and far between, so the company has to rely more on organic growth - at least until prices cool off.
“Sage also faces far stronger competition in the US than in most other markets. In particular, we see Microsoft Dynamics competing ever more strongly at the top end of Sage's market. SAP is also re-doubling its efforts here. Its Business ByDesign will not have serious customer numbers for some time (if at all...) but it all goes to muddy the marketing water.
“With the wisdom of hindsight, the disappointing results made it inevitable that Sage had to make a management change. But one has to ask to what extent it was the now departed North American management's fault, or simply their misfortune at being in the wrong place at the wrong time.”