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How FTSE 100-listed Sage could be a catalyst for the Northern Powerhouse

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Cast your eye over the FTSE 100 and one thing you may not notice is how regionally-bias the list is. Over 60 per cent are headquartered, or have UK operations, in London – a figure pushed up to over 70 per cent if the South East is counted.

Scotland is home to seven FTSE 100 companies, with every other region of the UK home to less than five – if any at all. So, in the context of this feature on the Northern Powerhouse, how many you may ask are in the so-called “north”. That would be two.

Water company United Utilises is based in the North West, while Sage counts Newcastle and the North East as home. What is also perhaps even more remarkable about Sage is that it is one of only two technology companies (alongside ARM) on the FTSE 100, and the only software firm across the 100-strong list.

Having journeyed up to Newcastle to meet with Sage, it quickly becomes clear the company is rather proud of its Northern heritage. Founded in the city back in 1981, it has grown to become one of the most dominant players in the enterprise resource planning software space, and perhaps the biggest when it comes to clients which are small businesses.

It has also decided to take on a rather active role when it comes to the execution of Osborne’s Northern Powerhouse. In a region where the entrepreneurial spirit is high, but prevalence of big business is low, the company sees the contribution of entities of scale as a big part of gaining momentum.

Asking Lee Perkins, EVP & MD at Sage UK & Ireland, whether the business world in the UK and further afield is aware of what is going on in the north, he started by addressing a misconception of what the north actually is.

“I think for many people they think of the corridor between Leeds and Manchester, the M62, as the north. But look at what is going on further north, there’s great skills and entrepreneurs – we need to make sure that talent is represented.

“What we’ve seen with small business startup readiness and enthusiasm is second only to London. So we’re keen that the Northern Powerhouse is truly representative of Northern England, and is more than just transport links.”

Read more about the Northern Powerhouse:

With many small businesses located in remote areas and just in need of a good technologies structure, Perkins believes there is a misconception that transport will sort all problems. “Rural broadband connectivity in theses areas is pretty poor,” he added.

The ingredients for success, he said, lie in creating the right kind of environments for entrepreneurs and encouraging more to take that kind of risk.

He pointed to the example of Campus North, which Sage is a supporting partner of, as a good example of where a location has been created to help many entrepreneurs succeed together. “The critical ingredient of that is not just creating a space, but one where they can work together in collaborative ways. Startups six months old have much more experience than a one month-old one – its critical to share that info,” he explained.

Another key piece to the puzzle, he said, is harnessing the “real passion” that people have to create their own ventures. Aside from necessity from an economic perspective, he stated it is also about being passionate about being ones own boss.

How to make a

“We work with over 800,000 businesses in the UK, and it’s about how we can help champion SMEs. This is our roots, granted, but we’re very keen to make sure all small businesses get support,” Perkins went on to say.

“We are keen to make sure we represent ourselves in a way that is giving generously to the community, whether that is Dynamo [a yearly conference] or stuff at Campus North, there are a number of examples for things people can do there.”

The mentoring issue is one Perkins described as the “million dollar question”. Getting business support of this kind, he hopes, will stop the kind of outward migration that has served as such a brain-drain for the north for so long. Even though he has observed a returning to the north as people mature and decided to come home, Perkins is keen to create opportunities early in these people’s careers so they don’t have to exit in the first place.

This is where he believes Sage is in the unique position to step forward. As the only North East FTSE 100 firm, and only software business in the crop, the buck will largely stop with them when it comes to big business support and collaboration.

Benchmarks are hard though, he stated – but good progress has been made. There are currently 30,000 people employed in the IT sector in Newcastle, with Sage accounting for 35 per cent of those. With big GDP now being produced by the space and region, Perkins wants to now see “tangible action” such as the removal of red tape, reduction the bureaucratic burden and just making it easier for people to get on and do business.

Alongside its work with Campus North and Dynamo, Sage has also set up its foundation – which means two per cent of its entire staff’s time and free cash flow is freed up for initiatives in the community. That equates to 10,000 man hours and volunteer time in the North East a year, a figure which “leads the way” when it comes to the FTSE 100.

I put it to him that it is all well and good for a company of Sage’s size to offer up that kind of support after crunching some numbers to make sure it is not too much of a hit, but how can smaller entities be expected to bear a similar load?

Attending a community event earlier in June, Perkins said was surprised to find that a number of small businesses there as award winners are giving staff unlimited amounts of volunteer time. “With all of these things, there is always a commercial consideration. That has been secondary though. Our people, those we have, are so passionate about it. The more proud they’ll be to be part of Sage, the better job they do. It can be a bit of a false economy, but there are great examples of businesses much smaller than ours who are stepping forward,” he revealed.

On the investment front, Perkins is buoyed by the example of Northstar Ventures, which are showing what venture capital can do in the region. He’s in conversations with a “couple of organisations” now, hoping to find proactive ways to introduce them to networks.

Coming back to the personal, he added: “We’ve got to take responsibility for being a champion to small businesses really seriously. That’s why working with government and leadership organisations around the country is key. We can get an audience with them.”

With lots to be done leveraging the corporate position Sage has as a publicly-listed business posting revenues in the billions, it was perhaps apt that the company was described as the “cuddly face of capitalism” by another member of the visiting group whilst I was in Newcastle.

What is clear is that for the Northern Powerhouse to go beyond government hyperbole, locally-based organisations such as Sage will be key in mobilising the workforce of young entrepreneurs, and the staff they hire, to put the north on the business map.

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