Going International: X3 vs. Intacct with Steve Howe of T3T

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Doug Lewis: Welcome back. The UN Sage podcast. Another episode, guys and girl. Sorry, Emily, this one is very exciting because we're going international. First time we're taking this thing abroad with with our guests today. So this is, uh, this is kind of exciting. Matt, I know you've talked about your South Africa presence before at your organization. [00:00:30]

Emily Madere: Every episode. You can.

Doug Lewis: Bring.It up.

Matt Lescault: Oh, okay.

Doug Lewis: And this is your time to shine, Matt. Uh, you'll be a little bit outshined by our our guest today, but that's okay. I understand there's a little bit of history there. All this fun stuff. That being said, Matt, I'm going to let you take the intro to our esteemed guest, our international superstar here today.

Matt Lescault: Well, I appreciate that, Doug. Um, we're here joined by Steve Howe from treaty or 4 times [00:01:00] three technologies in South Africa. They have offices both in Joburg and in Cape Town. If I'm not, if I'm not mistaken, and in Durban, and I'm not going to do the entire introduction here. But I met Steve actually before I acquired the firm in South Africa, and I've had a chance to spend some time with Steve on numerous occasions, the last one being in London for a South Africa versus England rugby match. [00:01:30] And I don't know, we're going to get too much into all of the fun that we had there. But, uh, it was really good to see you there, Steve. Uh, tell the audience a little bit about yourself.

Stephen Howe: Yeah, thank you very much. Uh, really appreciate the opportunity to to have a chat to to everybody here. So, yes, myself, Steven Howe from Timetree technologies. Um, yeah. Myself. What do I do? Everything. Um, we we not a pretentious organization. We're an organization that only looks after Sage. We don't do [00:02:00] any other products. Our core focus for probably the last, uh, let's call it ten, 12 years has been focused on on ERP. Um, about four years ago, we got into the HR payroll space. Um, yes. Myself, uh, started off as an accountant. That's that's where I started in the business. And yes, myself and my partner, actually, we we started times three technologies 16 years ago. We've been rather successful. Blessed. I would [00:02:30] like to say. Um, we've grown the business from a very small organization. We probably in the region of about 75 odd people today. Um, head office in Cape Town. A lot of people, when they hear Cape Town, that's an area they would love to, to visit and, and experience, uh, a punt for us here. We won the best city of the, the, the year last year. So great place to to tour to enjoy some wine and all of those nice things that said. Yeah, [00:03:00] our offices are in Johannesburg and in Durban. Our core focus, as I said, had been on on ERP and we predominantly worked on x ray. So x ray was our core focus. And then as I said, we started about 4 or 5 years ago with some HR and payroll and Intacct was released into South Africa. So that changed our business.

Matt Lescault: And that was released. 2020, 2021.

Stephen Howe: Yeah, 2020, [00:03:30] 2021 somewhere in that that area.

Matt Lescault: So I like to mention this T3T1 the Executive Partner award this year, which is for the top partner in Africa middle East. Congratulations, Steve. Thank you very much.

Emily Madere: Congratulations.

Matt Lescault: Now, I'm a little frustrated about this because I want to.

Doug Lewis: Put a little more framework around that. Because you won this award, roughly how many people were you up against?

Stephen Howe: So put it this way the award ceremony [00:04:00] was held two weeks ago in Tromso, Norway. There were 14 partners there, um, us being one of them. Uh, that was for all regions other than the US. Uh, the US had their own separate, uh, session. So I guess in Africa, Middle East, we've probably got 400 other partners. Um, and globally, there's 12,000, 14,000 partners that vie for this, this award. It was. Yeah. [00:04:30] It was really special. Really a nice thing to go and experience. And for us. Yeah. As I said, we're not pretentious at that. But for me, it was nice to take it back from you, Matt, because I know you won it last year, but we'd won it the three years prior to that. So we we've had it for four out of the last five.

Matt Lescault: So this is a fun part here. So like I come into this, uh, region in South Africa. I meet Steve, and then, you know, we get the partner thing. He's like, [00:05:00] Now, Matt, I'm coming back for it. I think he came up to me at the at the award ceremony, said, congratulations. Wait till next year. Exactly. But it's a it's a friendly competition. And I mean, it's one of the great things, one of the things about Sage, we keep talking about it being a really a partner led organization. And one of the things that I like to throw out there is like when I saw Steve in London, when we did that, that was a partner, uh, experience that Sage did for the top partners, uh, that came from South [00:05:30] Africa. And it was a group of us. And it was just this, this great time to get to know one another. And it wasn't about who's the better partner, who does more, who's more important. It was really about a chance to get together, know each other, talk through things, have a roundtable. Actually, we got to meet with Steve Hair on that roundtable. And, uh, it was a really it was really good fun. And I can say, Steve and I don't always agree, but we always, uh, always respectfully challenge each other?

Stephen Howe: Absolutely. And I think that's any relationship, no [00:06:00] matter what or where. Um, if you just agree with everybody all the time, you you're not going to get anywhere. And I think the the benefit and a shout out to Sage. Um, that's not the first time that we've done one of those type of events. And to take people away from their natural environment, people sitting around an office or on a team message or teams call or whatever it might be to to go and actually sit around, have a discussion, be together for 3 or 4 days. Uh, you learn a hell [00:06:30] of a lot more about somebody, um, and your collaboration. It goes beyond just a business relationship. You become friends with the with your partners that you also fight against when you go out for business. Um, and, and then you end.

Emily Madere: Up on their podcast. Crazy how that works.

Stephen Howe: It is. Hey, I was I was very surprised. I thought maybe this is an April Fool's joke, but, um. Yeah. Not.

Emily Madere: Well.

Matt Lescault: When when when? Becky, my director of marketing, mentioned that we were doing it on the 1st of April, I [00:07:00] said, you know, that's April Fool's. I don't know if Steve's showing up. I also want to give Steve a call out on something else I thought was was brilliant. So in South Africa, uh, they built what we call I think it was a business partner council. And, uh, Steve, actually, uh, is the president or the head, uh, the leader of that organization. It's really about how we operate as partners in fair play. Kind of talk a little bit about that, Steve, because I think that's such a wonderful thing for partners to [00:07:30] be engaged in, uh, in so many ways.

Stephen Howe: Yeah, I think it's still early days. So creating a business partner advisory council, uh, the term that we, we going by, um, there's 11 partners across the region. And I think at the end of the day, to be able to to grow the ecosystem, Them to ensure fair, transparent, um, can add all those those nice, wonderful words to it. But to ensure that business [00:08:00] is conducted in a manner that we all want to see it conducted in and healthy competition, uh, amongst partners. So yeah, it's been quite an interesting period so far. We've only been going for about six months now. Um, to try and get consensus amongst 11 partners has not been the easiest thing so far. But, uh, a shout out to all the partners involved. Everybody has literally put their own, uh, egos aside and thinking about [00:08:30] the, the broader community to try and create a, a, let's call it a framework, a common goal, a ethos, a way of operation to, to, to work together. So yes, it's been led by ourselves. Uh, Sage has been involved, although Sage has has said it needs to be a be 100% business partner led. So that's where we are now, uh, finalizing the the frameworks behind it to then get Sage to [00:09:00] to agree and commit to it. Um, our, our requirement ultimately is that it becomes part of our partner agreement. Um, and all partners need to live by, uh, one code of ethics.

Matt Lescault: Yeah. Right. I love that, and I think that's so important. You know, we've all seen it. No matter what region we're in, you have the partners that play nice together and support each other. And you have the partners that, uh, don't really have that culture in their organization. And those organizations can [00:09:30] be such, uh, disruptors. Not in a good way, not in the way that we talk about disruption in a positive way, but disruption in a negative way, because we all are. We get in business not to compete, but we got in business to be right, by the way, that we did that. Um, and I want to give a, I want to say that I'm actually copying what Steve and the group did for some of the stuff that we're doing in Canada, and the idea is to create the same type of council in Canada for the new program that we're launching there. So really excited about that as well. So [00:10:00] let's shift to why we actually brought Steve on to this call. Um, Steve's organization has deep, deep experience with X3. And I know this podcast is the unofficial Sage Intacct podcast, but the fact that intact in X3 are the two flagship ERPs within intact the the the the the two true cloud native products. Uh, from an ERP perspective, I thought it was really important for [00:10:30] our listeners to understand the when and why of intact versus X3, the difference in the capabilities of uh, intact in X3. What industries really, uh, drive X3 from a from a fit perspective. And so that's really where I wanted to go, Steve, with this conversation.

Doug Lewis: And Steve, before you jump in and put some color on that, would you mind just giving everybody an idea? So T3, you said you grew from small to large about 16 years, right? How many [00:11:00] people do you have? How many roughly how many clients? The size of clients you work with just to get people kind of the baseline understanding to kind of where we can plug in.

Stephen Howe: Yeah. To put it a little bit in perspective, we 75 odd permanent employees within T3 on the X3 side. Um, we have the the most number of customers in the region on X3. We service guests probably about 150 odd corporates. Um, and I think the [00:11:30] thing to, to bear in mind, a lot of those are listed entities. A lot of those are very, very complex businesses. Our X3 user count is upwards of 80 to 90 concurrent users per customer as an average. So so we're talking fairly fairly big businesses covering not just your finance, your distribution, but full manufacturing or integrations and a lot of those areas. So from treaty side, [00:12:00] that's been our core on an HR and payroll side, it's a local product called Sage 300 people. Uh, there's a couple of other derivatives, but Sage 300 people is the core there. We look after about 500 odd customers. Um, I think we were looking the other day. Our largest customer that we look after from a payroll has got about 14,000 employees. So, again, it can scale upwards to that smallest would be three, four employees. So in that spectrum. And then Sage Intacct it's relatively [00:12:30] new in the market here. Uh, but we probably are 50 to 60 odd customers that we look after on the impact space. Our largest customer on Intacct has 200 and something business users. So again can scale. Can scale to the large size.

Emily Madere: So it's pretty safe to say you're a Sage shop.

Stephen Howe: That's all we do. Wee wee wee. Somebody will always say our blood is green because that's all we do.

Emily Madere: Lime green. [00:13:00]

Stephen Howe: Lime green.

Doug Lewis: How did you like. How did you get to that point? Were you like, were Sage were Sage. Only we're not going to service any other vendors. You know, how did I know? 16 years is a long time. How did you kind of come to that and then stick with that?

Stephen Howe: So again, when we started the business, I've been doing Sage or in its other names, tetra or whatever you want to go by for, for many years before that. Um, myself, I used to run a, a Sage shop within [00:13:30] a big corporate here locally in the South African market. Actually, my business partner, he was one of the MD's for one of the Sage lines at Sage itself. And we both did. The MBO started a very small business. And I guess the, the number one word we can use wire focus. Um, have we looked have we been asked to to support other ERP products, etc.? Absolutely. But at the end of the day, what we do is we focus on what we do and what [00:14:00] we do. Well. Um, for us, that's that's been our recipe to success. And I think at the end of the day, we we've done a lot of developments and a lot of integrations, um, which we've been able to maintain and retain that IP ourselves. So we can go in, we can do SAP replacements because we've done a lot of similar solutions that might not be out the box for those type of customers, but we've built it within the framework. [00:14:30] So yeah, I come back to that one word focus. We focus on what we know, focus on what we're good at.

Doug Lewis: You just you just mentioned, you know, that you you do a lot of replacements for a specific ERP program. And I've, had similar conversations with other guests that we've spoken with. Um, but I'm curious to know, when you go in, Steve, and convert someone to a Sage product, what do you think is the most common platform that you pull them from?

Stephen Howe: Doug, [00:15:00] that is a very, very difficult question to answer.

Doug Lewis: We have faith in you.

Stephen Howe: Steve converted literally the broad spectrum of all the ERP products out there. Um, for, for we've converted from existing Sage products. Uh, Sage has a plethora of other ERP systems, so converted from there. Um, it could be local products. Um, [00:15:30] it could be the Microsoft or the Oracle or SAP. Again, very often if we talk about those type of tier one products, maybe one of us is not necessarily in the right space. Um, but then again, a, an organization that's maybe 200, 300 concurrent users has certain sets of functionality they don't want to pay the the top dollar that they would be paying. The total cost of ownership for one of those tier one products is just astronomical. Um, so that is where [00:16:00] we, we we often are able to to fit the bill. Um, so, yeah, if you were to give me a list of 20 other ERP products, um, we could probably tick every single one of those that we've done a replacement from. Adding to that, one of our businesses, there was a product in the local market and in the UK called Sage line 500 or Sage 1000. That is where we actually started. Before x three was a product in the before Dionex was acquired by Sage. So [00:16:30] we've probably migrated the vast majority of those customers that we've had since the early 90s.

Matt Lescault: And Sage 1000. I've heard of this product, but I've never actually seen it. That's no longer something that is sold. Is that correct?

Stephen Howe: It's not sold. However, um, there's probably a good 800, 900 of those customers still in the UK. Um, Sage did. Not necessarily. They actually have now withdrawn [00:17:00] full support for the product. Um, so customers are on their own. They've got a five year perpetual license to, to allow them to migrate off. But again, it's it's always been a very, very rich product from a functional perspective. It's got deep, deep functionality. It's got a breadth of functionality. So again also very much let's call it product centric organizations. So somebody that is product centric, their their next best option [00:17:30] to to go would be to an X3. Um, yeah. It comes back to a question which Doug, you also said there a little bit earlier. Ec3 has been our core focus in the past. Where have we focused has been? It's called a product centric, an organization which has got product, whether that happens to be wholesale, distribution, manufacturing, anything along those lines, whereas intact [00:18:00] for us is not necessarily product centric. It is more, let's call it service based financial services. Um, it's one of Matt. And our disagreements is we've not focused on verticals only. Um, because our total addressable market here in South Africa is a lot smaller than what you would have in the US. So we've focused on providing a solution to a business that is, let's call [00:18:30] it not, um, product related, that is wanting to migrate into the cloud, that wants the benefits of cloud, that wants to to to be able to have consolidations, all those nice wonderful things there. And I think the biggest difference would be within intact our answer to to to let's call it a functional gap or functional requirement is we can do things like this, like that or this, and we can tweak it in [00:19:00] these various different ways versus an X3. Our answer is yes to anything. Again, there's a cost associated to it, but the answer is honestly yes to virtually any question we can do it.

Matt Lescault: And my understanding that from that perspective is from a very simplified, uh, viewpoint. Sage Intacct is very much a configuration based system where X3 is very much a custom development, uh, [00:19:30] platform. So yes, it has its base capabilities, but you can really customize it in any very unique way for any organization.

Stephen Howe: 100%. And that goes back to, to my point around the fact that the answer is yes. If you want to do procurement in this fashion, you want to do up your own black box magic type functionality. Somewhere along the lines, you can go along and do it because the development framework is in the application, and you can go and [00:20:00] meet the the customer's requirements to literally that 100%. Um, whereas with an intact it's more of a configuration. How do we configure it? How are we going to create your transactions or your transactional definitions to meet what you need it to do? Yes. You've got smart events. Yes, you can go and do. The APIs are fantastic. It's absolutely fantastic. So you can go and integrate can do all of those things. Um, but it's it comes down to maybe how you want to be able to [00:20:30] answer the question. If somebody is prepared to go and use the functionality that's available versus This is somebody that wants to to actually get 100% of their, their, their business requirements. Um, and it also comes down to it muscle within a business. So I like to use that word it muscle. How much are you prepared to invest in the product to support it, to manage it, to maintain it. What is your your internal IT capabilities because that differs [00:21:00] vastly between the products.

Matt Lescault: And to that point, I think what you're what you're saying or I'm assuming is the cost of ownership, uh, ongoing from an intact perspective is less than the cost of ownership for X3. But there's pros and cons to anything. So, um, when we look at it, if you have an organization that really has unique, uh, processes or needs around, uh, around their business model and it doesn't fit into the configuration model, then they need to shift over to something and [00:21:30] the cost of ownership has a return on investment. So it's not it's not a it's not a negative thing. It's just understanding where and when is the right time to bring in each product. I think what is and you alluded to this, and I want you to stop me if I'm wrong at any point here, but, um, I really always looked at X3 as like that. Like you said, manufacturing. If you have strong need for for for really intricate inventory management, product management, uh, you know, Sdmo [00:22:00] is not doing it in the intacct world right now from a, from a manufacturing management. The inventory module that's within Intacct right now is more it does really well for supplies. Inventory can do a little bit more advanced but really doesn't do the full inventory multi warehouse management component and so forth. And so when we talk about this that really does create a industry focus right for for X3. So talk to me just in general. Like if if [00:22:30] somebody walked in the door how you would how you'd sort of go about differentiating when you present intact versus when you present. X3.

Stephen Howe: Cool. I think first off, we don't present x ray. We don't present intact. Our very first process would be to understand the client's business requirements. Um, I think going in there to, to say I'm going to sell this product is the wrong way of doing it. Um, and we need to understand what the client's requirements are down the line. [00:23:00] So the moment somebody says to us that we are looking for global consolidations, we are service based organizations. Uh, we need to integrate transactions coming in. Yes. We will start to lean our discussion and lean our discovery towards the intact realm. Uh, the moment somebody comes in and starts talking around the fact that they might be a manufacturer or distributor of products into the retail space, the telco space, the whatever, then we immediately [00:23:30] starting to lean ourselves towards the the the EC3 environment. I think one of the I guess you can term it challenges that we faced with here in our local market is one of its biggest strengths has been the marketplace. So you've got a marketplace. My understanding, right or wrong, is that us? You probably have on average 2 to 3 marketplace add ons with most of the sites.

Stephen Howe: And here in the local market, um, [00:24:00] we we're not the, um, what's the right way of putting it? Price is a big, big differentiator. So people are not necessarily prepared to go and invest money in marketplace add ons. The expectation is that the the core solution called ERP will will meet it and will be able to do it. We also sit with a very big difference between the rand and the dollar. So marketplace add ons are expensive. [00:24:30] So we sit in a situation where we can't necessarily go and add all these marketplace add ons in, which is where if we look at it on and let's go to an X3, if somebody says to me they want a check module, which is safety, health, environment, quality as a bolt on, typically on intact, you would add that in as a third party, as a marketplace add on. We've developed all of those add ons within X3 ourselves. So when we sell x3 [00:25:00] we are able to go along with we as a business have got probably 40 add ons, um, that plug those typical intact marketplace solutions.

Doug Lewis: And Steve, just for clarity, those are T3T those are proprietary add ons that you have that nobody else uses. You don't license out to any other partners or anything like that.

Stephen Howe: We've we collaboration. There are a few people that we collaborate with and we we are able to go down that route. But again that has been our competitive [00:25:30] advantage up until now. So we've we've built a very strong base in telco in, let's call it, um, suppliers into the retail space, um, into distribution into a lot of areas like that. And that's because of our add on modules. Um.

Emily Madere: So, so, so unlike Intacct where, um, if I have a need, um, Baker Tilly has a, an add on, I can go by and I can, you know, purchase [00:26:00] from Baker Tilly. Um, with x3, I think it seems like it's different per partner. Um, a company tries to work with. Okay.

Stephen Howe: So I think their the biggest difference is the intacct is a cloud native product. Anybody that works with it integrates with it, uses the APIs. And it's very easy to add these these add ons in. Whereas with X3 it's I'm going to get shouted at, but it's not cloud native, [00:26:30] it's cloud connected, which means it is. Let's call a privately hosted, um, so partners are able to do their own customization, their own development. So in theory, if we as T3 T did a customization and development and somebody else did another customization and development, and they both wanted to work with the sales object as an example, we could have a conflict and we could have a, an issue, which has been one of our driving reasons behind [00:27:00] why we've chosen not to go and put it on the marketplace while we've not gone and put it out there. That said, we work. We work because a couple of the partners in the UK where we we collaborate and they've they've got some of our modules and we work together with them in that area. But it's not been our, our traditional market. We are said focus earlier. Our focus is on delivering a solution to our customers. Our focus has not been on delivering [00:27:30] a customized development. Customized development is a component of our solution to the clients. And I think that's also where within the intact space. Uh, where we are finding certain let's call it gaps. Um, where traditionally you might add a marketplace add on. Where we've started to develop our own IP to, to plug those gaps as well. Um, it also means that you're able to control [00:28:00] the, the spend of a customer, because if the customer is not able to purchase something for $10,000, maybe at the end of the day, we can provide it as part of our solution and bundle it somewhere along the line.

Doug Lewis: I want to circle back to Matt to your initial question of, you know, when you're when you're in that discovery phase with a potential, you know, new client, which, which path is going to make sense in attack versus X3. Can you recall, Steve? And you've been doing this for 16 years on your own? [00:28:30] A long time before that. You've you've been in a lot of these discovery meetings with potential clients. Can you recall a specific scenario in your mind that that just stood out to you that said, wow, this is a train wreck of an organization, the way that their current processes were functioning before. Do you know what I mean? Like, because everyone always talks about the great ones, you know, oh, this is such a great fit for us. We did this so well. This worked out perfect. Can you just recall just one of the worst run businesses that [00:29:00] you that you stepped into and saw, whether you worked with him or not?

Stephen Howe: Yeah, I think that's a I'm not going to mention any names.

Matt Lescault: But I was going to say you do not have to mention them.

Stephen Howe: Yeah. No, it's an industry.

Doug Lewis: Size something that just kind of put some flavor on it.

Stephen Howe: At the end of the day. We've we've dealt with a lot of organizations and I think for, for us, as much as the customer needs to make a decision whether the product is the right solution and whether we are the right fit [00:29:30] to to work together. At the same time, um, if the contrary is true for ourselves, whether we are able to work with the customer, um, and we we able to form and forge a long term, mutually beneficial relationship because that's what it's about. It's not about selling a piece of software and walking away. Uh, whatever we do, it's it's about that long term relationship. So yes, we've had many of those type of occurrences where we've [00:30:00] we've agreed that, you know what, at the end of the day, maybe our two organizations aren't meant to work together. And at the end of the day, I can actually tell you that on more than one occasion, a year or two down the line, uh, we've actually started to work together because that builds trust. Um, because it's not just a case about saying, let me see how I can and take another dollar off you. It's about trying to work together. Build that relationship. Understanding how we can. How we can [00:30:30] work together.

Doug Lewis: That was a very nice political answer, Steve.

Stephen Howe: Very nice.

Doug Lewis: I like it. You wouldn't, you wouldn't.

Stephen Howe: Doug. To to put it in. We've had organizations and I'll put it out there. We've actually sent to a customer that wanted us to to to work with them today. An email to say, listen, we don't think what you're wanting to do is the right thing to do, the right way to to direct your [00:31:00] business going forward. Um, you're going to be creating too many issues down the line. And at the end of the day, they're going to look at one thing and they're going to look at their ERP system. It could be a third party system. It could be integrations. But you know what? At the end of the day, um, why are people putting in a accounting system, an ERP system, a financial system, whatever you want to call it is for transparency and they want information at their fingertips right now. They don't want to wait down the line. They [00:31:30] want to be able to control. And if something doesn't work wherever it is, where does it manifest itself in Sage? And for that reason, we will rather walk away.

Matt Lescault: I was going to say, I mean, it's not like you can make all the expectations up front and set up everything, but if it goes bad, they're going to come back and blame the partner doing it. Then they're going to go to Sage and then we got to. Then we have to play. I'm with you, Steve. I'm the first one to be like, no, we can't do that. No. [00:32:00]

Stephen Howe: Absolutely. It's not the right way of doing things.

Emily Madere: We call it breaking up. We break up with a with a prospect or whoever it may be. And sometimes it's just for the best.

Stephen Howe: Totally agree with you. And yeah, we've had situations where we've had people literally telling us, are you trying to sell yourself out of this deal? And Lauren says, no, we just want to be honest. We want to be transparent and tell you exactly what is possible and if if something [00:32:30] can't work for another 100 different businesses, why will it work for you? If you think something like that is, you know, at the end of the day, there's this thing called best practice. Um, there's industry knowledge or domain knowledge. And I think at the end of the day, all businesses are very, very similar. Um, in terms of the results, what they want to go along and do, how they achieve it is a little bit different within each organization. So there should not be such massive deviation. [00:33:00]

Doug Lewis: It is an interesting way, an interesting way to look at it. And uh, you dropped a little kind of a little nugget earlier. Steve. Um, that I want to I want to get some more detail on it. This might shoot back to Matt or Emily. Um, you mentioned the total addressable market in South Africa. Very different than the US market. Can can you elaborate a little bit on on what that size differential might look like?

Stephen Howe: Sure. I don't have those numbers at my fingertips. But Doug, the.

Doug Lewis: No one's going to [00:33:30] audit you, Steve.

Stephen Howe: No, you could lie. That's fine. So I think if we were to look at it, um, we are probably. 30, 30 times smaller in my mind in terms of the, the typical market segment. I think the one thing to also bear in mind is and.

Emily Madere: Is, is I'm sorry, is this for intact or X3.

Stephen Howe: Or [00:34:00] both? This is for both. I think 30 is probably way, way too too low. It's a lot more than that. Talking to a lot of the X3 partners in the US, for example, um, they literally go down to a micro vertical, whereas that's not a possibility in our world. I think the thing to also note is that traditionally in the South African market, we've had a lot of local products, whether that's been a pastel pastel, [00:34:30] evolution backpacks or whatever they might necessarily be. And those products have been functionally very rich. They've been very good. Um, the cost of ownership of those has not been exorbitant. Uh, so the customers have got an expectation. Um, and that expectation leads to gaps, potentially when we start to look at solutions. So your your typical market. When I was talking to Tom he's now in the US and not in the US in [00:35:00] Australia. Now when he came across and he brought the the product into the South African market, I can't remember what Tom's surname is. I don't know if you remember Matt. Um, but he was talking about the average site in the US, somewhere between 3 to 5 users as the norm within an intact world. Swirled. I guess we are talking within just my space in T3T. We are probably averaging 20 plus users as an average. So it is. It [00:35:30] is different. It is very different. And then we go down to things like, um, certain expectations. Um, I like to still always say that in the US you still like to cut checks. Um, we stopped checkbooks many, many, many, many years ago. Um, so the whole.

Matt Lescault: Against the law. It's against the law to have a check. Yeah.

Stephen Howe: We don't do checks.

Matt Lescault: Really?

Emily Madere: Personal checks. Not that I have personal checks, but nope.

Stephen Howe: We don't. [00:36:00]

Doug Lewis: And that makes it so much more difficult to commit fraud, though. I mean.

Stephen Howe: Let me not go there. You're talking to somebody from South Africa with all our wonderful, um, things going on at the moment.

Matt Lescault: But let me just throw this in here. So I decided to jump on ChatGPT. If we believe it's numbers and everything else. But South Africa is estimated to have about 2.6 million businesses in the country, versus the US having an estimated 33.6 [00:36:30] billion. Uh million, uh, businesses. So the addressable market there, uh, it's a uh it's a big difference. And, you know, I it's something I had to learn going into the market and, uh, and understanding the differences. Now, I would say that, uh, Steve's point here on sort of like the average intact, uh, business, uh, or business using intact in the States is 2 or 3 for business users versus, uh, in South Africa is again, if you [00:37:00] look at the cost of intact in the market, it can shift to a smaller client base here in the US easier than it can in, uh, in South Africa. Um, and we've seen that. And so your, your target market changes per region based on that. Now, Sage did some smart things here in which they discount intact from its US pricing to to to better meet the the South African market. But it still doesn't get all the way there. Uh, quite frankly from a, from a difference perspective. So, uh, [00:37:30] I think those are pretty important things to understand between regions and whether you're talking about us versus Canada. Canada versus UK. Uk versus South Africa. All of them separately. And, um, there's nuances around how, uh, intact is developed and how it's deployed, quite frankly.

Stephen Howe: Absolutely. And I think we we can talk around, let's call it infrastructure. We can talk around cloud. Um, here in South Africa, that's not really an issue for us any longer. We've got [00:38:00] amazing wildfire. We've got amazing broadband, all of those things. So that's not really a typical issue. Uh, but if you move further north into the rest of Africa, then you do start to have certain of those challenges. Um, which is where hosting. If you are sitting in a situation where intact is hosted on in Ireland as an example, and Seacom goes down, which is our main line. Everybody's going to have major troubles in terms of of the connections and [00:38:30] so forth versus locally hosted products. So there are differences there. And then I think adding one step further would be the typical nuances around. It's something that's blown my mind since day Zero is a cash book. Um, a cash book is a major requirement in our local market in the UK. People also talk about a cash book, but in the US it's not something that you ever really talk around. Um, and it's the [00:39:00] way that you do bank recons. So that's probably been one of the things, I guess, Matt, you might know numbers better than me, but we probably have somewhere in the region of close to 300 intact customers now in the local market here in South Africa. And one of the things that that perpetuated the slower uptake is meeting those specific gaps. Um, so those gaps would be having a cash book, having, um, bank feeds, um, having EFTs [00:39:30] automatically back into the banks, those type of things. So that's where Sage has come to the party and has has added those as additional modules, which I think is something that other regions will be able to benefit from. Um, in terms of how you go about bank recons. Yeah. Yeah. It blows my.

Matt Lescault: Mind. I think I think what's important here is that is there is regional nuance, but we see Sage invest in it and it is different. There was when and I didn't really get into the South Africa region until 2022. [00:40:00] Uh, late 2022. Um, so, so I'm sure 2020, 2021 was even a more challenge. But it was like, we're waiting for that regional adoption from Sage when it comes to the development. I see it in Canada. I know I keep bringing up Canada, but I'm sort of knee deep in it right now. But the VAT tax solution that was native to intact didn't work for provincial, uh, tax reporting for Canada. So they had to build their whole their entire tax management module for Canada, [00:40:30] just as an example. And these are things that, you know, a Sage doesn't always see in the first moment of deploying into, uh, into separate regions. But I think this is where, again, business partners are so impactful to the success of these products because it was us. It was Steve. It was other partners who were communicating back to Sage as to what is not working, what is hindering sales and growth, what can what what can be pushed, uh, in the right direction to, to, to, to to win more. And I mean, Steve, I think you've seen [00:41:00] it too. I've seen a lot of investment in into the, the feedback that we've, we've been able to provide hundred percent.

Stephen Howe: And I think yeah. You mentioned earlier estimate that's still very early days. Um, we've got a few clients there, but it's very, very early days, and it is something that we are putting an effort in. Um, it's a it's it's a module which I think will be there for very simple manufacturing, very simple stock. Um, I don't [00:41:30] see it ever competing with the likes of an X3. So for a business for us. Yeah.

Emily Madere: And and just for our listeners, um, Sdmo is Sage manufacturing distribution. And it's tied directly into intact.

Stephen Howe: Yeah.

Matt Lescault: And it's, and it's really specific around process manufacturing. So it's a very distinct component. So it's not all manufacturing.

Stephen Howe: Correct.

Matt Lescault: Steve, you know more than I do on this though.

Stephen Howe: Yeah. No, look, I think Sdmo has its has its mark or has its space. I think Sage are also [00:42:00] in different markets. Talking to the German guys a couple of weeks back. Uh, I think they must have got somewhere in the region of about 40 new sites now where it's tied to a local product. It's not integrated into intact in their market. It can, but it can integrate with literally any product there. But yes, for me, from a Sage point of view, from a Sage strategy, from a, um, all the eggs in one basket you've got intact, you've got intact with TMO still very light. And then [00:42:30] you've got X3 between those two products, adding TMO is a little, let's call it as an add on for now. Um you can cover virtually the entire market. Um I'm not too sure whether you have a similar product in your market. We also have Sage Business Cloud accounting in the local market here, which is a cloud financials. Um, very, very I'm going to call it cheap. It's probably not even 10% of an intact pricing, but [00:43:00] very functionally rich.

Matt Lescault: It's very functionally rich. I've had a chance to demo it. It is similar to your QuickBooks functionality, your Xero zero functionality. Yeah. Um. And is at a price point. That is ridiculous. Uh.

Doug Lewis: Ridiculous. Good or ridiculous? Bad?

Matt Lescault: Cheap? Ridiculously cheap. Uh, it is ridiculous.

Stephen Howe: It's. Yeah, it's got it's built in South Africa for South Africa, but it's now also in the UK. Um, so [00:43:30] for a customer coming for the low end, I know of, um, many businesses that are a couple of hundred million turnover that can run sage business cloud accounting. Um, it covers your your finance, your very simple stock, very, very simple stock. But anybody that is just services based, it's got API's. It's got all of those type of, of little um, niceties within it. So [00:44:00] it's not something that typical service organizations we are service driven business uh, where we will go and implement. We will consult, we will provide support, we will train, we'll do development around it. Um, a business can implement sage business cloud accounting themselves. They don't need somebody to literally help them. Whereas with.

Emily Madere: Very much like a QuickBooks, it sounds.

Stephen Howe: Like a QuickBooks.

Doug Lewis: That's actually that's a really interesting point, Steve, a question I had kind of lined up for you here. So when we look at the differences between the US market and the South African marketplace, [00:44:30] you know, here in the US there's always startup after startup after startup, everyone's trying to compete and come up with these small businesses and, you know, sell the little thing and try to go after the big guys like Sage or Oracle or Intuit or whomever it might be right now. Is that a similar culture in South Africa, where there's a ton of competition at the very small startup level of these companies trying to take down the giants, and obviously most of them fail as they do here in the US. I'm sure Matt and Emily, you've sold against them [00:45:00] or seen them pop up uh, quite often here. Is that similar?

Emily Madere: I actually lost a deal this past week to, um. I don't know if I'm saying right. Voodoo. Voodoo.

Stephen Howe: Voodoo. Yes.

Emily Madere: Yeah.

Stephen Howe: That's the open source. The free.

Emily Madere: Mhm.

Stephen Howe: Yeah.

Matt Lescault: I don't even know what it is. Look at Steve coming up. He's like.

Stephen Howe: Yeah. Look we've also lost a deal or two to to them. Um it's we're we're an organization wants to go open source. They want to be able to have the [00:45:30] they can control it themselves. They can do anything. They're going back, Doug, to answer that question, I think we have got a lot of micro businesses. But I think traditionally those are almost are not using any system. They are virtually on a piece of paper, Excel spreadsheets. They are keeping it at that level. You then go along your 2.9 million businesses in South Africa. Matt, I guess if you you have [00:46:00] a look at them here, we have a thing called be so black economic empowerment. So we have to um, to, to, to to readdress the rights or the wrongs of the past. There's a lot of things that the government has put in place where you need to meet certain be scorecard levels. So an organization that is, uh, beyond 60 million is considered a generic turnover. So it would be interesting to see [00:46:30] the number, but I'm guessing that there's probably only a fraction of that 2.9 million at that level. The rest of them are what we would call um, shacks um, or micro enterprises. Um, so for us, our target market for a typical Sage Intacct is not going to be somebody that's going to be smaller than the, the 50, 60 million. Uh, that's that's not where we're going to be able to go and put it in, um, to justify the cost of the [00:47:00] software, the, the cost of running the solution. So.

Matt Lescault: So what's interesting that was said here is that only 700,000 of the 2.9 are formally registered businesses.

Stephen Howe: There we go.

Doug Lewis: Wow. Okay. So frauds make a comeback. All right I like it.

Stephen Howe: So 700,000 are registered entities. So the rest are let's call it almost your taxi operator, your spaza shops, your small little businesses out there making a living. [00:47:30] Um, which comes back to why we have a problem with tax revenue. Uh, because there's no tax collected on those. But, um, yeah, for, for us go back to the 700,000. And of those 700,000, you're probably only sitting with 100,000 that are in the top level top bracket. Um, and that is where we need to go along. Goes back to your total addressable market a lot, lot smaller.

Matt Lescault: Yep, yep. And also, [00:48:00] I mean, you know, when you have such a small smaller addressable market. Reputation management is so is so important for partners like us. And so that's a that's another component of sort of that that that business, uh, ecosystem that has to be considered. Why I think the B pack, the Business Partner Advisory Council is so important. Um, and uh, and, and just sort of like the operations of how we succeed in regions like South Africa.

Stephen Howe: Yeah. I think one of the, the to [00:48:30] me, our biggest sales weapon is reference ability. Um, is our customer. Um, we've done it recently here in Cape Town. A couple of months back, we did one in Johannesburg where we had a, a customer day, or rather call it a prospect day, uh, where we had a couple of our clients come in and talk and talk around the benefit talk around, uh, as they, they like to say beforehand, they're going to say warts and all. They're going to tell us exactly what works and what doesn't work. Um, and that is that [00:49:00] is your best selling feature, and that's also something that gives. I use the word trust earlier that can that gives a prospect the ability to start trusting not just ourselves, but our customers, saying what? What is possible, what isn't possible. And hey, wait a minute. Look. And intact implementation is not just a five minute job. There's a lot of work that needs to be done. And guess what, Mr. Customer? That work needs to be done by you. You need to do a lot of stuff to make something like this [00:49:30] work.

Matt Lescault: Yeah.

Doug Lewis: You're annoyingly likable, Steve. The way you answered, I feel like you truly have people's people's, uh, you know, best.

Emily Madere: Is your is your PR person behind the camera?

Doug Lewis: I gotta say, for you, you are you are good at it.

Doug Lewis: And I love that about you. I want to pivot to Elon Musk now. No absolutely not. Let's let's not go there.

Doug Lewis: Uh, but, Steve, I do want to thank you for the time. Um, I mentioned before we started recording, we always end these things with a terrible dad joke, and I always throw it out to our guest [00:50:00] If you if you got something on standby, I would love to hear it.

Stephen Howe: I don't have anything on standby. I want to hear you, Doug. Since you say you've got one ready.

Doug Lewis: I don't have one ready. I just I know a bunch. They're all horrible. And I just try to prioritize where they fall in that level.

Emily Madere: Oh, God.

Doug Lewis: Um. Oh. Okay. What do you call the detective that solves crimes by accident?

Stephen Howe: What?

Matt Lescault: Hold on. What do [00:50:30] you call a detective that solves crimes by accident?

Emily Madere: I don't know the Pink Panther.

Doug Lewis: It's a good guess. It's not it.

Emily Madere: I don't know, Inspector Clouseau.

Doug Lewis: Sheer luck. Holmes. Come on.

Emily Madere: I am terrible.

Doug Lewis: See, we always like to end it on a high note like that. Steve.

Emily Madere: That's terrible.

Doug Lewis: That's why we're here. That's what I didn't say. It was good. It was a terrible joke.

Emily Madere: You didn't. But the fact that you didn't even have a piece of paper in front [00:51:00] of you. And you, like you got that from your brain is is equally as bad.

Stephen Howe: It's pretty good. It's pretty good. Uh, it's not a joke, but I'll tell you, Matt, when you started this discussion, you mentioned the last time that we were together. Um, we showed you how you played rugby. So that's not a joke. It was a good game against the English.

Matt Lescault: It is true. It was a good game. It was my first ever rugby match that I've been to. And, uh, we had a heck of a good time. Um, [00:51:30] and I'll leave it at that because, uh, I actually remember.

Doug Lewis: Nobody needs to get in trouble on this. What happens.

Stephen Howe: In Twickenham stays in.

Doug Lewis: Twickenham. Fun. Yeah. Thanks. Thanks for joining us, Steve. And hope to have you back.

Stephen Howe: It's a pleasure, my friend, and thank you very much. Thanks for the invite, Emily. Thanks, Matt. Thank you for your time.

Matt Lescault: Thank you. Thank you.