Economic uncertainty may spur digitisation of SMEs
THE boss of North East FTSE100 company Sage says the software giant is poised to capitalise on a growing tide of SMEs turning to digitisation to counter the impacts of economic uncertainty.
Steve Hare, CEO of the accounting software giant, said firms emerging from the pandemic are tightening up processes and want the type of financial visibility that Sage products offered.
Speaking to The Journal following a robust set of half year results, in which the firm saw organic recurring revenue grow 8% to £866m, Mr Hare said those SMEs to make it through the pandemic felt resilient and were searching for efficiencies.
He said: “There are some macroeconomic forces, inflationary forces and potentially recessionary forces but what’s important is that when we talk to small and mid-sized businesses we can see that technology remains really critical to their growth and efficiency.
“Accounting and HR, payroll software are the top areas where they’re continuing to look to invest.
“That’s because investing in digitisation and investing in technology is a bit of a counterbalance to those inflationary forces because it makes you more efficient and better equipped for the future.”
Mr Hare added: “They feel that they became more resilient during the pandemic so they remain confident about the future, but they’re looking at ways to become more efficient and productive and you have different categories.
“There are some small businesses where their adoption of digital technology is relatively low, and in places they may not have any, through to other businesses which are a bit bigger where they have some digital technology and they may have accounting software but they’re looking to see how they can expand to capture more benefits of digitising their business.
“And the other thing is, particularly with small businesses, you’re now seeing a push by accountants.
“They want their clients to use software because they don’t want their clients to be coming to them with that infamous shoebox of receipts.”
Last week Sage said organic operating profit – which excludes contributions from disposed businesses – beat expectations rising by 4% to £184m.
Mr Hare said the performance was the result of several years’ investment in sales, marketing and development etc, which was starting to pay off.
At the same time the firm announced its latest acquisition – the UK cashflow software company Futrli – and Mr Hare said Sage continues to be “in investment mode” and on the lookout for cloud technology targets that it could integrate into its network. He said: “The UK does have good technology.
“This is a good country in terms of start-ups and we have a good track record in the UK in terms of innovation in early stage start-ups.
“As well as Futrli, last year we acquired GoProposal – another UK software company supporting accountants.
“We’re obviously looking globally, we’re looking in Europe and the US but there is good technology in the UK.”
And in response to the rise of remote working Mr Hare said Sage remained committed to growing its global headquarters at North Tyneside’s Cobalt Business Park.
He said: “I’m a big fan of human collaboration.
“Although I’m completely in favour of flexibility – we don’t need people in the office every day – the big global hubs are very important.
“Our site at Cobalt is our biggest campus globally and I’ve spent a lot of time there – I’m very committed to expand and have more people there.
“We’re not going to scale back our recruitment in the UK, quite the reverse.”
We’re looking in Europe and the US but there’s good technology in the UK Steve Hare