Sage plans for split vertical future

More industry-specific packages and customers replacing software will be the twin engines of growth for software company Sage, according to its chief executive Paul Walker.

As well as offering more industry-specific software, Sage also plans to build small amounts of it into its mainstream products.

"The mid-market - 50 to 500 employees - isn't a horizontal market at all, it's a set of vertical markets," said Walker, in an exclusive interview with vnunet.com.

"With a large customer base of three million we think that providing more industry-specific functionality is right for customers and part of the growth strategy."

Sage is also developing an integrated platform that will enable customers to share information across its software applications, such as accounting, payroll, cash flow and salesforce automation.

It will provide a central integration point and so replace the need for each software application to be separately linked to the next.

The integrated platform is in an advanced stage of development and is expected to be available towards the end of 2003.

Walker also said the replacement market, where companies decide to replace their software packages rather than upgrade to the latest versions, will be increasingly important.

"In a good economic climate there's a replacement market where companies will replace their software every four or five years. At the moment it's out to six or seven years," he said.

"We are in a strong position to make sure that when they replace software it is with our next product up the scale."

He added that, despite the dire state of the industry at the moment, the future could be rosy.

"In an upturn, where the renewal market is more active, you could see could see software companies like Sage move back into double-digit organic growth."

There has also been some debate about whether Sage will remain in the FTSE 100, but Walker isn't concerned. "It isn't something that occupies too much of my time," he said.

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