Latest / The Accounting Podcast / Transform #1: The Future of Sage with Aaron Harris, Walid Abu-Hadba, and Steve Hare

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Transform #1: The Future of Sage with Aaron Harris, Walid Abu-Hadba, and Steve Hare · The Accounting Podcast

• Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! Blake Oliver: [00:00:00] This episode of the Cloud Accounting Podcast was recorded at the Sage Transform Conference in October of 2022. It features two interviews with Sage executives. First, we spoke to Aaron Harris, chief technology officer, who was joined by Walid Abu-Habda, chief product and development officer. In the second interview, we spoke with Steve Hare, CEO of Sage Global. It's an all star lineup. We talked with Aaron, Walid and Steve about the future of Sage, both from a product and a strategy perspective. I hope you enjoy. David Leary: [00:00:38] Here we are at Sage Transform 2022 in Orlando World Center Marriott. This is The Cloud Accounting Podcast. I'm David Leary. Blake Oliver: [00:00:45] And I'm Blake Oliver. David Leary: [00:00:46] And today we have two guests we have returning from last year. Aaron Harris. He's the global CTO of Sage, but you are the founder of Intacct. Aaron Harris: [00:00:55] I was one of the founding team. I don't want to take that much credit, but I was there at the beginning and I was writing a lot of code in the very early days. David Leary: [00:01:04] Actually writing code. And then we have Walid Abu-Hadba. I said, All right, I got it perfect. You just call Walid. Walid Abu-Hadba: [00:01:10] You just call me. David Leary: [00:01:10] Walid. Walid That's the easiest. And he is the chief product and development officer at Sage. So I think tomorrow, Aaron, you're doing your keynotes going to be kind of the new stuff. Yeah, so. We want to get this out until after tomorrow. So can you fill us in? Like, what's new? Like, what's happening? What's gone on since the last year? Fill us in. Aaron Harris: [00:01:30] So the big focus of of my of my session tomorrow is is going to be on AI and what we're doing with AI to both drive more automation in accounting workflows, but also using AI to create more trust and confidence in in the business. And the other big thrust of the session tomorrow will be focused on actually what do accountants need to be successful with all of these workflows. The industry hasn't done a great job providing tools that are actually sort of where the accounting works, whether in email and spreadsheets and whatnot. And so we have an opportunity with a product called Inbox that takes all of this activity that's coming in to the accounting team through really sort of unmanaged ways. Organizes it and creates a way to kick off AI powered workflows from from those inbound communications. So it's all about the job of of an accountants and how we can use AI and and other emerging technologies to make them more effective. David Leary: [00:02:39] And so if I captured this correctly today. I saw it. Yes. You have an inbox. There's a lot of apps. Have you have an inbox? Even we even have for my own company, I have like AP at some burrow app stocks. But basically, if I have multiple companies, multiple entities, you're giving me one email address for everything and then you're just being smart like, Oh, this is for entity A, this is rent to DB the sovereignty and you're routing it to whoever it needs to go to. Aaron Harris: [00:03:02] We're giving you a web based workflow management tool that originates everything from your accounting inboxes, right? You may have multiple AP inboxes, maybe for different businesses, but ultimately you want one central place where the accounting team works on all of the workflow that's associated with these emails. So I. David Leary: [00:03:25] Still have lots of email addresses, but you're you're consolidating to one view and then I process it to. Walid Abu-Hadba: [00:03:31] Where it goes beyond just consolidating to one view. One thing is it's really important to kind of explain what Aaron and his team built the accounting system. The accounting world is ready for its rich of data, number one. I mean, it's the data. It's the heartbeat of all all the businesses today. And it is it's really ready for an AI disruption model. And if you look at what Aaron and his team built around the operating models around our AI, it's world class. They built a they built by far the best the ops environment around AI. They their ability to deploy create models, deploy these models and create models and deploy them in a real products really, really easy and simple for us. So what was what Aaron was talking about in terms of the workflow is we're going to take his ideas around what we call a unified workflow environment. Think of it beyond the inbox. It's inbox plus plus OC, back to C and C plus plus environment. It will allow us to take all the workflows away from existing products and put them into an environment that that that will apply a lot of AI to that environment and allow you to write things in a more seamless way and actually solve them before they even come to, to, to the environment in there. So that's kind of the future. So, so the. David Leary: [00:04:48] Inbox is really the it's not just this little tool for EPI, it's a platform you built that's going to eventually have other inputs wherever those inputs come from. Aaron Harris: [00:04:56] If the way all accounting workflows happen, whether you're working with your suppliers, your customers, maybe with with some some some regulatory agencies, there are many, many times those workflows are kicked off because somebody in accounting received an email. That email may have a bill attached to it. That email might have a request for information that's related to accounting. When are you going to pay me sort of things? What is my balance? But ultimately, all of these emails flow into the accounting team, launch these workflows, and there's not a product today that actually organizes and manages all that and seeks to take these emails, understand the nature of the emails, and kick off the appropriate AI powered workflow. Blake Oliver: [00:05:42] It's really interesting to hear you talking about this because we do have a product similar to this in the accounting firm space. Small accounting firms are a lot of them are using a tool called Carbon Now, which is around an email inbox that consolidates everybody's emails into one workflow solution. And then you create a task based on those emails, right, and tick off processes. Walid Abu-Hadba: [00:06:02] This is carbon is a good product. It's a story, but this is a platform to it's not actually just a product. Blake Oliver: [00:06:08] So tell me what that means. Walid Abu-Hadba: [00:06:09] It is for for us, it's going to be extendable. It's going to have an object model that allows you to it's going to be API driven and you could actually extend the API yourself. So we'll have ISV, you're going to have customers, you're going to have other people who actually will be able to add workflows to it and extend the workflows beyond just what we are doing at Sage. So it's actually a full workflow environment and a platform that sits on top of AI, but it's all driven by also AI, you know, the the powering engine. Underneath it is the AI engine that Erin has built in Sage over the last three or four years into it. And that's really the power behind. Blake Oliver: [00:06:48] Very exciting. We've also got, I think, you know, one, two, three, four, five, six different press releases that we've been handed today. Yeah, your your PR team marketing team are very busy, but clearly you've been putting out a lot of different features and products. Aaron Harris: [00:07:03] We were just talking about just how prolific our our development teams have been this year in getting more products to market. It's just it's, it's actually been a lot of fun to have board working with me. He's just like pumped so much energy into our development teams and gotten them so focused on shipping lots of great new products. Hence you've got six press releases sitting in front of you. Blake Oliver: [00:07:26] Yeah, what else? What else is really exciting? Like what? What do you, what would you do. Walid Abu-Hadba: [00:07:29] Think is having him built the best product bar none in the industry. And by the way, I have experience in Microsoft and I worked at Oracle and I worked at ANSYS. So I have a broad experience and I know software the only. Two things. I know in my life. I told everybody is food and software and it shows. So in that sense, what Aaron and his team and mainly Aaron really led within Sage and outside Sage when he wasn't intact, he built the most powerful extendable platform and this is the areas from early on. Aaron emphasized the API model and API driven development that allowed us to create business models. So my job is really in a lot of ways really easy. When I came into here, it's really nothing to do other than just align the resources to deliver on the vision that he built. That's really all I did. Now let me tell you what we're excited about. I'm really, really excited about the vision that earned created around the digital network. This is an unbelievable vision. Nobody has it in the industry but us. It's number one. I'm very excited about the products that we're releasing, our acceleration of product releases right now. In the last 12 months we released more products and more code than we released. And as far as I know, actually, I agree. David Leary: [00:08:41] I think between your acquisitions in the park releases the last 18 months, you guys been steaming? Yeah, it's compared to historical, you know, to dictate to your bank feeds. Right. Aaron Harris: [00:08:52] I actually hadn't seen the video they showed, like the recap of the last year. I hadn't seen that until just now. And I got to say, I got it was moving. David Leary: [00:09:01] So when you talk about APIs, right, Aaron, you like you you always believed in that having developers build through APIs to get their data into the accounting system. Yeah. The thing that got the most applause today was basically a tool to import CSV files in Excel files. So and me coming from a developer background, right, and running a developer development team in the APIs team, every time I see a tool that helps people take CSV data and get it in something easier, that just gives that other product that's creating that dump of CSV data. Another reason to still not integrate through an API. So how did you guys like, did you just forget it? Like, why, why did you build this? And obviously they want it because that had the biggest ovation out there. Aaron Harris: [00:09:44] There's always a moment in time where you have to say to yourself, I've been trying to get them to do this for the last 15 years. I still absolutely believe in it. But you know what? I'm going to have to listen to the customer and give them the solution that they need today to solve what's driving them nuts today. And so when you see an audience applaud so much for something like that, it's it it shows that they've been wanting this. And the solution that we've given them now is so much better than what they've been using before. And by the way, the capability that Aravinda showed today sits on top of the APIs. Yes. Walid Abu-Hadba: [00:10:27] And that's the most important thing. It's not like we are going around the API or we're creating something access to the system that's different. It's actually just a tool on top of the API that that you actually designed, Aaron. Early on in the in the intact space. Blake Oliver: [00:10:40] And to give our listeners an idea of what we're talking about, what I saw on the screen, correct me if I'm wrong, is is I import my file, my Excel file, and then I get to now map and validate the columns and the data so I don't have to go like get an error and then go and re fix my file. I can do it in the app. Is that. Aaron Harris: [00:10:58] Right? Yep. Yeah. So you don't have to work with predefined templates. Right. And and a lot of accounting records are pretty complex and have lots and lots of fields. So some of these templates might have 150 columns and you've got to have the. Blake Oliver: [00:11:13] Exact right pattern. David Leary: [00:11:15] And don't put a semicolon. Aaron Harris: [00:11:16] Somewhere else in there. Blake Oliver: [00:11:18] Or you got, you got one invalid row and now you've got to go find the row. Aaron Harris: [00:11:21] And yeah, so now I just takes a look at the file, you upload it right and it gets really smart about saying what's the meaning of each, each column. And it does a first pass at mapping human takes a look. Am I happy with the mapping? I can make little adjustments and then I hit go. David Leary: [00:11:35] Yeah. And I think everybody and the reason I got all this, everybody has some legacy app in their text that they can't get rid of because it's the only app that does some special for construction and they have to have it and it just dumps out bad data. And yeah, so you're right, you kind of eventually have to listen to the customer or maybe these developers don't even exist anymore. They're just on this old software that just keeps running, right? And there's there's no there's no company anymore that runs on that software. It builds that software. So they're never going to build an API, right? I think that's interesting. So you guys baseball big announcement. So you are now are you just sponsoring Major League Baseball or is the power of your. I like doing stat stuff and is MLB's are they. Aaron Harris: [00:12:15] So so I mean first of all. Blake Oliver: [00:12:18] I mean, we should we should David, we should preface this by saying Sage is now an official partner of Major League Baseball. And this is your this is Sage's first North American Sports Partnership. Walid Abu-Hadba: [00:12:27] Correct. Blake Oliver: [00:12:28] So. Yep. Okay. And yeah, the part that got our attention was you're going to help MLB do data analysis of some sort. But I was kind of vague on what that exactly means, like. You know what that is yet. Aaron Harris: [00:12:41] So so we've we've connected our data scientists you know, with with Major League Baseball and we're exploring some ways that we can, you know, help provide some some some AI powered insights. Blake Oliver: [00:12:54] But I'll tell you what's good, because baseball fans are the biggest stats nerds of any sport. Aaron Harris: [00:12:59] We did our homework here, right? You know, the sport that CFOs like, the sport that accountants like is baseball. Right. They want to like at the end of the day, they want to go sit at a baseball stadium and just unwind. Right. And and relax. So the thing that's the most, I think, impactful about this is that the intact product as a platform has a huge ecosystem around it that depends on brand awareness. Right. So a reseller is not going to be as effective at selling Sage Intacct if the customers are trying to reach. Don't know who Sage is. Right. An accounting firm is not going to be successful convincing clients to move on to, you know, the accounting platform if they don't know who Sage is. And so it's just a show. It's a real show of commitment to all of our partners, all the ecosystem around Sage that we're making a really, really meaningful investment in brand. You know, it's not just the Major League Baseball investment. It's also everything you've seen with with the new brand launch that we've been doing over the last year. Blake Oliver: [00:14:03] Exactly. Well, maybe you can use some of that AI to, like, figure out which teams are cheating. Walid Abu-Hadba: [00:14:09] I am not sure that that is anybody could do that yet. David Leary: [00:14:12] Well, no, because that one team did cheat and they were tracking it all in an Excel spreadsheet because we think we cover that for the show. I know. So now you guys can just make of that. Blake Oliver: [00:14:20] The Astros. Aaron Harris: [00:14:21] Maybe we're going to want to stay away from controversy. Exactly. Blake Oliver: [00:14:24] Exactly. David Leary: [00:14:26] So can you speak about so I know you guys have had some announcements of Microsoft. You're partnering with Microsoft. It's is it Microsoft teams only type stuff or are you guys you're moving to Azure? Does that mean you're not on us? Like, what's what's that announcement? Walid Abu-Hadba: [00:14:37] So the deal with Microsoft has four main components to it. Okay. And we're still actually good partner with AWS. We're partnering with Multi Cloud. We're committed to a multi cloud architecture for us. So we're never going to commit to just only one cloud implementation that doesn't really work anymore. So we have a great relationship with AWS, but our deal with Microsoft has four components to it. Number one is Azure hosting environment. So we will be actually using more of Azure to host our own intact implementation and some of our new product offerings like active other product, active usage, active and in Europe. So we will be using that element in there and they're going to help us to go in there. Microsoft offers a really rich environment in Azure secure environment and a very, be honest with you, also incredibly attractive pricing structure. So that's number one. Number two, which is something we're very excited about, is the technology integration. Look, Microsoft is the productivity company on the planet. They have Microsoft Office and not just teams, but the Microsoft Office is the number one productivity tool. And for us and every single accountant that I know of on the planet uses either Excel Word or PowerPoint or a combination of those three. But I don't know of a single accountant who does not use Excel as an example on the planet. So imagine more integration between Sage products and Microsoft products, and their teams is only the first channel. And actually the champion of the team channel was Aaron. Aaron actually had a vision where he said, Look, why do we take the accountant out of their way to approve RPO or approve a particular invoice or do a particular workflow? We could just if you're sitting in an office and you have teams, we could just pop up a message that says basically approve this or should we take you to the workflow? So that's so the teams is the first implementation and the integration. Walid Abu-Hadba: [00:16:30] You're going to see more integration work coming up with other Microsoft products and online. Third is is go to market. They are Microsoft has the broadest reach of any software company on the planet. Look, I used to work in Microsoft and I can tell you there are more more customers in in Zimbabwe, in Microsoft than are, you know, some big companies have across the entire universe. So that's the reality of it all. So having us align with them, we are the number one in small, medium sized accounting firms on the planet. They are the number one productivity company. Aligning our product offerings together will give us a leverage of how to go to market more effectively and reduce our cost of sale and increase our selling. Last but not least, is a tying to a marketing message. Having Microsoft wonderful company. So so Amazon really wonderful company with Sage tying our brand to their brand Tying our brand to a brand is something very powerful and allows us to actually drive our customer awareness and brand awareness across the globe. So those are the four dimensions for us, why we did the deal. David Leary: [00:17:38] And then I don't know if you have anything else. I know I have one more question, but I don't know if you have anything else. Blake Oliver: [00:17:42] I was just going to point out some of the specifics of the team's integration because it's it's it seems. Yeah. Like so being able to submit and manage expenses directly inside a. Walid Abu-Hadba: [00:17:52] Team like teams. Aaron Harris: [00:17:53] In a conversational. Blake Oliver: [00:17:55] Ui. So I'm a manager, my employee submits expense, I just get a pop up in teams. Walid Abu-Hadba: [00:17:59] And I say approve or disapprove. And another thing is imagine in the future we're going to integrate our Sage h.r. Capabilities. So you actually within teams, you could say, you know, my payroll change my change my deductions and that sort of thing. So we want to make it really easy for our joint customers to actually do just remove all the friction. Aaron Harris: [00:18:22] From the system. So one of the biggest pains in the neck for accounting teams is that they depend so much on employees, you know, to get their stuff done right. You know, the month end close isn't the month end close until they've chased everybody to get their timesheets in their expense reports in until they've asked everybody, you know, how much of this purchase order should I accrue? And, you know, the entire history of the business has been, well, they've got to go in to either they've got to put a piece of paper on the accounting team's desk. Right. Or maybe we've allowed them to log in to the accounting product and do that stuff. We're essentially saying just do it somewhere where they're comfortable working. And ultimately the message is for the accounting team, Right? And the message is you're not going to have to chase people anymore because we've made it so easy. David Leary: [00:19:06] Yeah, no, that makes sense. So I think what the new throughout this term, Sage digital network, then two or three other people said it on stage like, what is this Sage digital network? Walid Abu-Hadba: [00:19:15] It's the brainchild of. Aaron Harris: [00:19:17] The Sage Digital Network is a collection of technology services that enable our customers to digitize the workflows that they have across their business ecosystem. So digitize all the workflows with their customers, with their suppliers, with banks, lenders, creditors, regulatory authorities, their employees. And all of these services are connected to a common network that allows us to create the best possible experience that we can derive from all of the activity across all of our products. So whether you're on Sage Intacct, you're on Sage 50, you're on Sage active, all of these products connect to the same network that creates, you know, one giant set of data flows that does two things. The first is obviously it drives really powerful A.I. Right? So, you know, our early customers of our invoice processing capability, they're remarking to us on how the AI seems to be getting smarter and smarter in their mind. They believe it's because we've built an AI like just for this customer that's learning as they add more. The reality is it's learning from everybody, right? So if if customer A is processing invoices from widgets Dot Inc and now Customer B starts to process invoices from widgets studying the network architecture allows us to build models that benefit, you know, all customers that happen to be working with widgets, I think. But the second part of this is we can now start to see across this network how much activity there is for these various suppliers and lenders and banks. And we can start to pinpoint our efforts to elevate those connections from an AI based automation to a purely digital connection. So at the point where widgets start, INX has a couple of thousand customers that are driving tens of thousands of invoices on a monthly basis. We can say to our customers, we're actually just now going to go create a direct digital connection to widgets. Studying gets you connected and now going forward, you won't have to receive a bill via email, you won't have to. So right, it's going to come in directly and. David Leary: [00:21:32] Instead in our terms. So instead of me connecting to my bank and getting my bank feeds, you're going to allow me to connect to all the other things I need to get into my trunk. Correct? I'm not just bank feeds. Aaron Harris: [00:21:41] Or all the stuff you have to push stuff into like your compliance reporting. Blake Oliver: [00:21:45] All right. So it's like, yeah, a lot of accounts are familiar with, say, Bill.com payment connections, right? I connect to my vendor, my customers, and we can now exchange invoices digitally. This is like that. But for all kinds of data. Walid Abu-Hadba: [00:21:58] For all kinds of data, it's really important to understand. It's about not just the data, but the connections between the data. So the general ledger is the heart of any business operation. It's the brain and the heart of any business operation. That's the last thing anybody will turn off. You know, even when businesses go bankrupt, sometimes that's already shut down. The only thing that's left is actually the general ledger and the accounting system. It's just a reality. Okay, So that's how it's sticky. The issue behind it is we come to it from that point of view. So you take the general ledger and then you create all the connections around it. So we have knowledge of everything that happens in your system all the way from your payroll to all your transactions. Ap Are all the connections banking feeds that way? A lot of our competitors are. Of people who are doing, they're coming to it from the lease. They have one piece of data and they're trying to interpolate what that goes. They don't have a full view of the entire graph of connection. So it's about the data, but also the interconnections of the data in there. And we will have that as part of the digital network into it. And what's important to us is our stage ID is. So every one of our customers will have a Sage ID component. So your ID follows with you in the system and it follows you with your data and your connections. And in a secure way, by the way, and you control your own data and information. Blake Oliver: [00:23:14] That's very exciting. I can see a lot of potential just all of this, like you said. So I mean, that really ties into what you were talking about with the inbox, with the automation, because I can see data coming in from my customers, my vendors into that inbox bypassing these insecure email channels. Exactly. Yeah. And now And now it's yeah, that's the. Aaron Harris: [00:23:36] That's the inbox becomes basically the front door to the Sage Digital network. David Leary: [00:23:40] Got it. And then I mean, just just a lot of people send these fraudulent invoices out. See, it's phishing, right? See who will pay that. In theory, you're going to see 10,000 of those come in instantly and shut them down for everybody. Aaron Harris: [00:23:51] Yeah. So I'm going to I'm going to show the audience something in my keynote. So we've we've we've filed a patent on this approach to reading data from invoices that create something like a digital thumbprint for each vendor in the network. And the thumbprint is basically it's not looking at the data on the invoice, it's looking at how they format it, you know, what are sort of the common elements of of an invoice from from widgets. Starting once we have that fingerprint developed irrespective of where invoices come from, our customers, you know, we can train it and make it smarter. But the really cool thing is if an invoice comes in and our eye scans it and it's it's purports to be widgets dot ink, but the fingerprint doesn't match. That is a very fast red flag to the customer that this may not actually be for widget storage. Blake Oliver: [00:24:40] So like scammer fakes and invoice in word, it looks kind of like the one that official invoice you your eye can tell the difference. Aaron Harris: [00:24:49] And so so the next step is now when we get widgets starting fully digitally connected to the network, we will have information about from widget starting, including what are the payment details for widgets starting. So if it fails, you know, the first test, you know it doesn't the fingerprints don't match. We then can look at the data and say, Hey, why is this invoice have payment details that aren't going to where we expect payments to go to? Walid Abu-Hadba: [00:25:15] Exactly. And take another element in here widget that it would send an invoice by generally between $500 to 1000 making up stuff here across the entire network. All of a sudden I see something coming in as $20 or $2,000 or something like that. You could those things Digital Network will be able to flag and intercept very quickly and then just eliminate it out of the system before even it gets to you. Blake Oliver: [00:25:42] This is like spam detection for invoices in. Walid Abu-Hadba: [00:25:45] A way, a much better. Aaron Harris: [00:25:46] With very different consequences. David Leary: [00:25:50] Because this happened a lot the last year. I've seen this over and over again where widgets ink somebody will widgets inc se and they'll put a letter at the end like we started. Aaron Harris: [00:26:01] This together on this podcast. David Leary: [00:26:03] Right. And so they'll send out the email with just with a separate domain, but it looks like the email don't get your email signature, do it all in like, Hey, we got a new bank, send the payment to this bank routing numbers now instead. And then people are just writing numbers, but a human's not going to see that in Microsoft. In Microsoft Outlook, that email address difference, you're just not going to see it. But in theory, you you you pick up on that in a heartbeat. Of course, this is not the real company. This is fake domain. Aaron Harris: [00:26:29] That's why the network is so powerful, because if you're doing this just for one company or one product, you're not going to have the richness of data that you need to to make really smart. Blake Oliver: [00:26:39] Ai Right. You've got the payment information. You've got, you know what the invoices look like, You know who their customers are. Walid Abu-Hadba: [00:26:45] You know, in conclusion, at the end of the day, I always make a statement is why do we even have invoices? Why? So when you are connected to this network widget Dot Inc, if you have a smart contract connected to it too, then it's automatic transactions happen from General Ledger to general Ledger. Yeah, think about it. And this is something that Aaron speaks about a lot and this is not going to happen in next couple of years, but it is on the roadmap for us to happen. So when Aaron talks about full digitization where he's not, meaning that just taking an invoice and digitizing that, that's the next step to the ultimate goal. The ultimate goal is when you have all these suppliers and all these customers connected, truly, fully connected to the network, then we could basically think about it as giving them a smart contract between them and the handshaking will be, Hey, transfer money from this account to that account. All you have to do is send in a. Removal from one person versus the other, and it's 100% secure. There is no invoice per se. Right. David Leary: [00:27:47] So so you see that one cross platform. Aaron Harris: [00:27:49] So it has to. David Leary: [00:27:51] Yeah, I was going to. Yeah. Because if somebody if somebody widgets widgets Inc here is on intact. Absolutely. And they're selling to lots of businesses that might be on QuickBooks. Walid Abu-Hadba: [00:27:59] Absolutely. David Leary: [00:28:00] There's going to have to be some work in right. I know right now are all these platforms working together to create. Aaron Harris: [00:28:06] This This is an agreement when when Walid said inbox is is a platform. So so first of all, it's free. Right. So, you know, we want to get it to as many businesses in the world, but it also already has built into it connectors to, you know, all the popular accounting products. So if you kick off that workflow that ultimately results in posting a bill into your accounting product inbox is connected to whatever accounting solution you happen to use. Now, we hope it's Sage, right? But but ultimately, for us to get this network to work the way we need it to, it's got to be open to to customers that are running on other accounting products. Blake Oliver: [00:28:47] And that's important because we've talked to a lot of customers in the past year. And basically everybody, unless they're really lucky, they're running multiple different GL systems because you acquire companies and they're on. Yeah, that's that's really so. So In-box is going to be a standalone product that I could get use or we don't. Walid Abu-Hadba: [00:29:04] Okay. Let me just bring it's going to be our universal UI that we're going to give to people across all our customers and third party customers. When I say a customer, anybody should be able to get the inbox and connect through it. How are we going to look at it in terms of business model? How are we going to do all these things? We're going to make the base product free. There will be services, there will be people building on top of it, workflows and that sort of environment. But really, really think about it in this way. It is a platform. There is the UI for our digital network, Sage Digital network. So it is so you have this huge digital network bunch of services that Aaron talked about and bunch of data and all richness in there. We're going to have products will go directly into them like intact, but then we aren't going to have this inbox, universal inbox. That's not the right name. Potentially we're going to the marketing. Aaron Harris: [00:29:57] We may rebrand. Walid Abu-Hadba: [00:29:58] This. We may rebrand this in whatever name we, you know, comes up in there. But it's going to be a platform that will have developer experience when developers will be able to pick it up and add services to it, add components, and we will be adding components to it. But it's going to be a way for us to connect different systems together. And by the way, it's open. That means my other competitors, more than welcome to come in and we can actually make them happy and we're going to make them first class citizens as part of that environment because we actually will succeed, all of us together if we make this richer environment. David Leary: [00:30:30] Because that's how insane it is right now. So I use text through which which auto entry type product and you guys write out of entry. So I use text and the text is on intact. So they send me my receipt. So I get in my inbox, I forward it back to text the actual product so they can scan it and put it into my QuickBooks. And it's like, that's, that's, that's a whole extra app. And like three extra emails that don't shouldn't exist at all. You should just shove it into my QuickBooks. To me. Walid Abu-Hadba: [00:30:57] Your scenario is the inbox that Aaron talked about. Okay, it's a working title. It's a working name. It's not bad. It's actually we like it. We have. Blake Oliver: [00:31:08] It. It's easy to understand trademark. Walid Abu-Hadba: [00:31:10] That's all we like. We like Sage Digital Network. I mean, we went around several times about what naming to have it we ended up with. Aaron Harris: [00:31:18] Yeah, we actually kicked off some quite intense marketing projects to help us figure out what to name the Sage Digital Network. Yeah, yeah. We came back to Sage Digital Network. Walid Abu-Hadba: [00:31:25] So what we're trying to do here with the Inbox, not to replace your GLS, it's a really important element. People need to understand this is not a product that will replace QuickBooks, right? That's actually not the intent of a. David Leary: [00:31:37] Stoplight or an intersection. It's it's gates and controls. Walid Abu-Hadba: [00:31:40] It's a platform that allows us to streamline the workflows or eliminate those workflows and allow you to if you're living in QuickBooks, but you use auto entry on our side, we're forcing you between us and QuickBooks, to to use two different products. And going through that, we're going to give you the inbox that says, Fine, I'll take the information out of order entry very quickly and put it into your QuickBooks without you having to do spend that extra gyrations of, you know, firing up the application and doing all these clicks. David Leary: [00:32:10] That makes sense. Blake Oliver: [00:32:11] All right. I think that's a wrap, right? David Leary: [00:32:13] Yeah. I think you guys, thank you for joining us. Aaron Harris: [00:32:15] Thank you. Thanks for having me. David Leary: [00:32:16] Next year is always fun. Walid Abu-Hadba: [00:32:17] It's great. David Leary: [00:32:18] And just anybody wants to get a hold of you, what's the best way LinkedIn? Do you want. Aaron Harris: [00:32:21] To. Linkedin's the best way to get a hold of me. However, don't be offended if I don't respond quickly. I get quite a lot of inbounds and maybe. Blake Oliver: [00:32:29] You could fix the LinkedIn inbox while you're at. David Leary: [00:32:33] It. Walid Abu-Hadba: [00:32:33] Let's talk to Microsoft. And by the way, we have actually talking about part of the integrations We're. And our thing is it's going to have an integration between LinkedIn and our stage chat. So that's something we're working on with Microsoft, too. Blake Oliver: [00:32:47] That's great. I've always thought like the LinkedIn's incredible value is as the Rolodex of the world. Walid Abu-Hadba: [00:32:52] It's unbelievable. Yeah, yeah. Unbelievable platform. Yeah. And by the way, our digital network is somewhat similar to LinkedIn in that we're connecting suppliers and customers together on platform, but that's the way we think about it in that context in a lot of ways. And that's what Aaron has and his team are doing. Blake Oliver: [00:33:09] Well, it Aaron, thank you so much. Aaron Harris: [00:33:10] Thanks for having us. Walid Abu-Hadba: [00:33:11] Take care. David Leary: [00:33:12] Thanks, guys. Bye. Blake Oliver: [00:33:22] So Steve Hare, CEO of Sage, you were previously the CFO of Sage Global. That's not uncommon, but it is unusual for the CFO to become the CEO. How did that. David Leary: [00:33:38] Happen? You left one part out, chartered accountant. You actually want an accountant, but you're one of our listeners. Blake Oliver: [00:33:44] Not just the CFO, but an accountant who became a CFO, then became a CEO, which I think actually that's very rare. So how did you end up in the CEO seat? Steve Hare: [00:33:55] Yeah, it is a little rare. And I think, you know, probably in technology particularly, you know, it's it's rare. But remember, our our customers, by and large are CFOs, their accountants, and even even with our smaller business owners, even if they're not accountants, what they're buying is, you know, automation. They're buying, you know, that functionality for their back office. And so I have spent I am an accountant by training. I was, you know, kind of trained with what was Ernst and Winnie at the time, now Ernst and Young. But I spent all of my early career in industry and manufacturing a lot of time in telecoms technology. I also spent four years in private equity, so I have a a very wide amount of experience. I did come to Sage to be CFO, but then when I got the opportunity to become CEO, I think that combination of technology and financial and really understanding what our customers are buying, right? I mean, I said it on stage today, a little tongue in cheek, but you know, I'm passionate about workflows, but I understand the workflows because I've operated. Blake Oliver: [00:35:08] Because you've done it, you've had to deal with. I forget exactly what you said, but you know, too many business systems. Yeah, right. Every time you have to log into an app. Exactly. Logging in. Steve Hare: [00:35:19] And out. And, you know, the thing is, from a technology perspective, you know, the technology exists to be able to make all this interoperability a much better experience for the customers. And really that's what we're trying to with the digital network. What we're trying to do is create a place where we can create that connectivity and bring everything together, and then also create a user experience that allows you to consume things which are both Sage and also Sage partners, Icefields, etc.. But we need to curate that so that when you're consuming that, it's a, it's a seamless, integrated experience. And if we can do that, then you can have that single sign on. You can be in the application consuming lots of different things, and we look after the security again. David Leary: [00:36:05] So your CEO of Global Sage, So this is how many different products and divisions are you guys out now? Steve Hare: [00:36:12] Yeah, So what we've done is actually we've just done a recent reorganization to bring the product offerings into a number of discrete business units. So for example, Sage Intacct is a business unit. We have a business unit for h.r. For payroll, for small accounts. And so we have and one for the digital network. So we have eight in total. And what we're doing is bringing together all of the products within those business units so that we can deliver this integrated experience that I'm talking about. So, you know, what often happens with sage is people will say exactly that. Right. Well, you've got all these different products that are on premise, you know, we all know about in tax, we all know about accounting. But all these other products, Sage 50, 102 hundred and 300, what's you know, what are they all about? What are you doing? And the answer is what we're doing is bringing them all into this connected place, right? So we people will migrate from stage 50 or stage 300 to intact. But what we also want to be able to do is deploy these cloud services like accounts payable automation into those existing customers, even if they don't want to migrate their general ledger. Steve Hare: [00:37:24] I mean, one of the one of the again, advantages of being an accountant is I understand the the effort that it takes to migrate from one system to another because it's different, right? If I migrate from, say, 50 or Sage 200 to Sage Intacct, it's not just that you're going to a cloud native product, you're having to change the way you configure your chart of accounts. I mean, one of the big fantastic things about intact is it's multi-dimensional ledger, but to get the benefit of the multi-dimensional ledger, you have to do a lot of work to configure to get the use of that right. And this if you've been using, you know, Sage 50 or Sage 200 for 20 years, there has to be a compelling reason for you to make that investment of time. If we can give you this taste of the cloud services and get you to engage with the digital network, then over time you're really. See the benefit of that. And what you will then do is, you know, over time you will re-engineer your processes so that actually ultimately that migration of a general ledger is easy. David Leary: [00:38:31] So it sounds like it's not the end. I remember when Sage years ago put their stake in the ground. We're going for cloud cloud and I think you worked with that API company. So instead of really trying to get all your users off your desktop legacy old products into your cloud offerings, you're or from a health perspective, like stay on whatever you want. But because now we have this suite of other cloud offerings, you're going to use some of our we don't care what parts of Sage cloud you use, you're going to use some parts of it. That's kind of. Steve Hare: [00:39:01] What what what is important, though, is we want to move the customers so that more of the transactional flow is in the network. So one of the downsides of of having customers with their general ledgers on a desktop product is that they connect when they need to connect, but they're still doing flows that are not through the network. So what we really want is if you're a if you're a size 5200 customer, we do want you to issue your invoices, receive your invoices, those flow, those flows. We really want those to be on the network. Why? Because then we can deploy artificial intelligence or machine learning, right? Those data pools are very valuable in order so they can give customers insights. If we can't see what you're doing, then we can't get the benefit from AI and ML. So we really want to pull more of the flow in so that effectively the general ledger, yes, it's a repository for data, but every time there's a transaction, the transaction is going into the network. Blake Oliver: [00:40:04] So you made a joke today on stage about the dollar and the pound being about the same right about now. What the heck is going on in the UK? Give it to us. You know, I've been I've been hearing the coverage here, you know, on NPR and you know, our local our US reporters. Like what's your take on it? Steve Hare: [00:40:24] Yeah. So I mean, if you look at it, first of all, look at it from a currency perspective, actually, just to be serious around the impact on Sage, 80% of our revenue is outside the UK. So actually when we report our results in November, we'll get a bit of a lift from the fact that the dollar is is strong. But I think what all business people look for is you want you want you want consistency, you want predictability. So to some degree, it almost doesn't matter where the exchange rate is. But what does matter is volatility, because then it's really hard to plan for. And I think if you bring it back to the UK. Blake Oliver: [00:41:00] Well, and so with 80% of your revenue is outside the UK, I mean you're so, you know that's not in pounds, right? So you're okay the exchange rate isn't impacting. Steve Hare: [00:41:07] Yes. So when we report, our revenue will actually be slightly higher because we have more dollar based revenues than we do sterling. But we obviously have sterling costs because we have a lot of people in the UK. So that that consistency, that predictability is important. And I think to bring it back to the UK, you know what, both political parties are really committed to this growth, but they have very different views about how to drive that growth. And you know, we're we lobby both the existing government and also, you know, the Labor Party and and our messaging is, look, if you want the economy to grow two thirds of jobs and probably close to 60% in GDP in the UK is small midsize businesses. So you need to focus on making it easy for small and mid-sized businesses, first of all, to be set up, secondly, to grow. So things like scale up capital and, you know, the the the tax incentives around helping customers to grow super, super important. And if you look at the stats, the UK is fantastic for startup, right? So kind of ranks really only behind the valley in terms of the amount of venture capital that's available for startups. Blake Oliver: [00:42:24] And is that still the case after Brexit? Steve Hare: [00:42:26] The case still the case today, but where where we need to do more work is scale up. So as as businesses scale, this is why, you know, there's always this thing. Why say, is there any big tech company in the UK? Somewhere along the line, as companies are scaling, they find it easier to go into private hands list on the Nasdaq, whatever, because that access to capital, particularly growth capital, somehow is easier to obtain. So I think the big thing for both parties is you need to make this a country where people can scale their businesses, which means you need predictability, the infrastructure, access to capital. They're the kids. David Leary: [00:43:06] That's interesting. So you've been spending money. So you I think you said you guys done at 1.1 billion in R&D and then did you see another billion in acquisitions? Steve Hare: [00:43:16] That includes in tech. But yeah. David Leary: [00:43:17] Okay. Oh, you didn't tap but that was a steal as a seven, $1,000,000 or some. No, that's that's a little bit ridiculous. So what are you guys building? What's all this money being spent on? Steve Hare: [00:43:27] So a lot of it, I think you can see it in some of the releases we were talking about with intact. You know, I think there was there was some skepticism when Sage bought intact as to whether, you know, we would be able to continue to grow at the same rate. Would we be able to bring these kind of to, you know, what, at the time were somewhat different cultures together and get the best out of it. And I think, you know, one of the things I'm very proud of is you could see it today on stage and the amount of innovation that we're driving, continuing to drive through that platform is is really, really high. And and actually somebody came up to me as as I as I was leaving the hall who's been within tech, you know, for 20 odd years. And he said to me, this is my 10th transform. And I just want to tell you, Steve, I have never seen this level of innovation. So that's that's great because we've invested in but we've also invested in the digital network. We've invested in our small accounting offering, which is more relevant really in the UK and Europe than than it is here where, you know, here in the in North America, particularly the US, we are very, very focused on, you know, winning in that that mid-sized business with Intel. David Leary: [00:44:39] And so speaking of Accountants and bookkeepers, obviously in the mid mid-market space, there's the challenge of bookkeepers that support intact. But you guys on the other side, you guys started buying a couple of tools that are just for accounts of bookkeepers. What's the. Steve Hare: [00:44:54] Future. David Leary: [00:44:54] For you? Truly? Yeah. So and then even on an entry, arguably it was more of an accountant's tool as well. Like do you plan on having I know you said you have a payroll division and you have your your human division and you have your midsize. Are you going to have an accountants division? Steve Hare: [00:45:09] So as part of the Small Business Business unit, we have a dedicated accountants group and particularly in the UK, you know, to to win in that small section segment, you have to you have to win through accountants. And and I think what we're focused on is not not just winning in terms of the end user, but focusing on the world of an accountant is changing the way they run their practice. It's changing and actually they're driving quite a lot of digitization because the the smaller accounts are so used to, you know, be quite happy for their accounts, their clients to turn up with a physical receipts and get them to write up their books, etc.. That's not how accountants want to run their business. They want to capture everything digitally. So even if the accountant is doing the books and doing the tax returns, which for a lot of small businesses, they still do, they want to digitize that, they want to collect the information and they want to be reviewing it in a digital format. And then the other thing is governments now are pushing very hard to create that digital interchange. So the UK government has delayed slightly. David Leary: [00:46:23] Making to CD. Steve Hare: [00:46:24] Yeah, right. But but a number of other countries in Europe are now going down the same sort of road saying, right, we want the interaction with us, whether it be taxes, whether it would be, you know, how you interact as a local citizen paying local taxes as well as federal taxes. We want all this to be digital. And so we're using our tools, you know, to to do that, but at the same time help those accountants migrate their own businesses. So we have something called Sage for accountants, which gives them that capability to bring everything in and run their own businesses. Blake Oliver: [00:47:01] Can I bring up a personal gripe? So one of the things that I very much dislike whenever I go look at an app that I'm looking at for my firm or my clients is I go on there and I can't find pricing. And I brought this up last year. I asked why? Why can't I see the pricing for intact as an accountant and why do I have to go through this, you know, request pricing? And I don't know if I'm getting the right price or that sort of thing, like why not make it open and transparent? Steve Hare: [00:47:32] So actually for small business, we do. So we've already with with our accounting suite or our small business suite, we have now priced that into additions and you can see the price for each of those additions on our website. Blake Oliver: [00:47:47] I guess I should say. I mean intact. Yeah, yeah, yeah. Steve Hare: [00:47:50] So we started, we started by doing it with small. So what we're looking at now within the way we do in tax at the moment is each client ends up pulling down a bespoke, you know, package of modules because we don't sell it as an addition, we sell it as modules. So we're looking at that at the moment. We will end up moving more towards and I think Dan talked a bit about it in his keynote where we approach it more on an admissions basis. And so you'll be able to see transparently what's what's bundled into. That addition as opposed to it being built bespoke every. Blake Oliver: [00:48:24] Time I feel like that could really help. You know, QuickBooks is the 90% market dominant GL for accounting firms. And I think part of the reason is that it's just so easy to see the cost. Steve Hare: [00:48:36] Yeah, and I think the other thing as well is if you want if you want digital adoption, right, you know, so that it doesn't require a negotiation with a human being, then obviously you need to do that. Right. And that's where we need to get to because we need to make it much easier for people just to pull down what the what they're looking for and adopt a. Blake Oliver: [00:48:56] Digital I mean, ideally, I never have to talk to an enterprise salesperson ever again. Like that's my dream, you know? And most accountants, I think, would agree with me that, you know, we just want to like, sign up, start onboarding our client, test it out, try it. You know, that's that's the world we want to live in. Steve Hare: [00:49:11] So we're working. So it's not a commitment, but we are working on it. We're looking at these additions. Blake Oliver: [00:49:15] Okay, That's great to hear. David Leary: [00:49:16] Well, there's hope. When the CEO is an accountant, like that's when tech companies, all the tech companies should have accountants, the CEOs. And just like we've been typing this all we want politicians that are accountants now to politicians that aren't accountants that would. Blake Oliver: [00:49:29] Help in the UK. Steve Hare: [00:49:29] Maybe. Well, I don't know if you know, but Liz Truss is a qualified counsel. Blake Oliver: [00:49:33] Well, that makes no sense, right, Because I'm just I'm hearing these stories like, okay, so your your Bank of England, right. Is is pushing the the brake and here's Liz Truss pressing the gas on the pedal. And the markets obviously didn't like that, right? Like what? I don't know. Has she forgotten her accountancy? Steve Hare: [00:49:54] Well, she was actually her first job was also as well as being a qualified accountant. And she also worked for a couple of quite large firms as an economist. So. Blake Oliver: [00:50:05] So even less reason for this. Yeah, it's. Steve Hare: [00:50:09] Politics is controversial. David Leary: [00:50:11] So I'm sure you have other interviews to do. You're very busy. Thank you for taking time with us today. If people want to get a hold of you, then we'll know more about Sage. What's the best way? Blake Oliver: [00:50:21] If you just want to share the like share out the sage Twitter handle or something like that? Steve Hare: [00:50:26] Yep. So you can you can follow me. I think it's at Steve her like I said, isn't it. That's it. Yeah, that's right, Steve. That's Steve. Okay, exactly. Very easy. Blake Oliver: [00:50:38] I'm following you right now. Steve Hare: [00:50:39] Excellent. Perfect. Thank you very much. Thank you. Very good. Blake Oliver: [00:50:42] Thanks, Steve. Great to see you. Steve Hare: [00:50:43] Thanks a lot.