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As Zach Nelson kicked off last week’s Netsuite’s Partner and Developer Conference – SuiteCloud 2010 in San Francisco, there was a real focus on the importance of their platform as a way for partners to play a critical part in helping to take his company to the next level.
They kicked of the special launch event that featured a video of some of their key partners including TrueCloud, InsideView (who has been profiled in this blog), Aria, Hein & Associates, PaceJet, RootStock Software and Demand Solutions Group.
I think it is great with companies are building their business around their partners and creating a cool ecosystem where everyone can make money… more on that in a minute.
Zach then covered some Cloud Computing trends;
· Fake SaaS – He compared the NetSuite offerings, which are Cloud-based to Microsoft’s GreatPlains offering which is just a hosted version of their same on-premise offering. Still single tenant, version locked and requires Citrix to make it work like a true SaaS application. These types of business models will find it almost impossible to make money using a Fake SaaS. Other vendors mentioned here were Lawson and SAP.
· SaaS-based Financial Systems Are Popular. He showed a Gartner market slide (from 2008) that showed NetSuite as the fastest growing FMS provider.
· Traditional License Software Firms Are Hurting – This is nothing new because Saugatuck Technologies, Ray Wang from Altimeter and Montclair Advisors have all written about this but this slide says it all…
Customers are moving away from the old software model.
· The Cloud can now handle complex business processes. This has been demonstrated by vendors like NetSuite, Workday (Flextronics), Amazon AWS and SuccessFactors (Siemens) servicing very large and complex clients.
· Customization is no longer the Achilles heel of Cloud applications. In fact, it was argued that customization with NetSuite is now a killer feature of their Cloud offerings.
· Channels are emerging as an important component of a successful Cloud business model.
· The Cloud is getting social. With applications like Twitter, Facebook, LinkedIn, blogs, Fluid, Mzinga, InsideView, applications are more focused on communities and content than ever before.
There was a funny segment that discussed the complexity associated with the development of years of on-premise software, which he called an infrastructure hairball. It is much more cost effective to manage a single architecture, database and system of record. He mentioned that the cost of managing an SAP system (ala hairball) was approximately 3% of a company’s revenues, while operating their system was only 0.1%.
Then Zach got back to the partners and referenced a number of applications that are being built on top of the NetSuite platform – SuiteCloud , like RootStock Software’s MRP application. Other providers who have integrated into SuiteCloud include Amazon Web Services, Google, InsideView and HostAnalytics.
I thought the most interesting part of this session was when they brought IRON Solutions and NewHolland on stage to discuss the vertical application they had built on top of SuiteCloud.
New Holland has approximately 9,800 customers and they wanted to automate and enhance their relationship with their partners/distributors. They started working with NetSuite in 2007.
IRON Solutions is the Kelly Blue Book of agricultural equipment and offered a very complex product configurator along with CRM capabilities that allowed distributors better create and manage pricing and leads. They launched their new products built on NetSuite, IRON HQ for new product promotions, IRON Builder for pricing and lead management, IRON Guides for appraisal and trade and IRON Search for promotion and sales.
New Holland wanted to balance both the science and art of their business to move more of their customers to the web. Darwin Melnyk, CEO from IRON Solutions and David Greenberg from NewHolland whipped out their iPads and demonstrated their new applications.
Increasingly these type of vertical partner applications are going to be popular with customers looking for more tailored solutions for their specific businesses. NetSuite has more than 200 channel partners and sales through their channel has grown by 40% on a compounded annual basis. Which is quite healthy given our recent recession.
New partner announcements included;
· ISV/OEM’s – JCurve Solutions
· Systems Integrators – Hein & Associates (a Top 50 CPA firm), Fujitsu that is forming a strategic relationship for Japan with NetSuite and WIPRO who is building a practice around NetSuite OneWorld.
· BPO – GenPact is building an ERP Outsourcing business on NetSuite
I mentioned at the beginning why working with partners like NetSuite can be really profitable and with their new SP100 program, channel partners can get 100% of their first years revenue when they move older client/server applications to NetSuite.
Overall, it is nice to see major players embrace their partners and give them an opportunity to build their business and help their partner - a real win-win for everyone.
Company: NetSuite
Started: 1998
Located: San Mateo, California
Geography: Global
Market: Cloud Computing Business Management Suites
Products: NetSuite Accounting/ERP, CRM, eCommerce, NetSuite OneWorld, Suite Cloud Platform and OpenAir PSA
Key Customers: SuccessFactors, Smashbox, Solarwinds, Intuitive Surgical, Isuzu Truck, GestureTek, Virgin Money, Six Apart, Cash Edge, Oakland A’s, Ashi Kasei Group, Cartridge World
Website: NetSuite
Blog: Cloud NetSuite
Twitter: @NetSuite
Recent News:
NetSuite OneWorld Strengthens Links at Wireless Matrix
Independent Survey Finds High Satisfaction Amongst NetSuite Customers
I asked Mini Peiris, NetSuite’s VP of Product Marketing a few questions about their business and her view of the SaaS market as we move into 2010.
Did you start out as a Software-as-a-Service company?
Yes we were founded in 1998 as a SaaS or Cloud-based solution. The company was started Evan Goldberg and Larry Ellison, providing cost-effective business management software for small and medium sized businesses or divisions of large enterprises. We’re now the #1 cloud business management suite, with over 6,600 customers.
Our original focus was on small businesses and over time we have moved up market, . When we started NetSuite, we were based around financial management and we have now developed an entire business management suite across ERP, CRM and Ecommerce. Then in 2008 we launched NetSuite OneWorld for global businesses or their divisions, that are looking for a comprehensive business or financial management suite.
Why do your customers buy from NetSuite?
The value of purchasing NetSuite software is we allow our customers to focus on operating their core business instead of running and maintaining all different types of business management software and infrastructure. Most companies operate a hodge podge of different systems for financials, CRM, support, eCommerce and inventory. This requires substantial initial and ongoing investment, time to manage and resources to upgrade.
Cloud Computing reduces a lot of this IT pain by allowing customers to pay as they go, and eliminating the need to buy, maintain and upgrade expensive hardware, software, and infrastructure. NetSuite offers a fully integrated web-based cloud business management suite, which offers significant business benefits, such as CRM solution that is fully integrated into financials and into inventory, which creates a much more efficient order to cash process. Some of the big benefits include significant ROI because you can do more work with fewer employees and the work is more accurate. Older systems require business analysts who create and maintain sales orders, conduct ad hoc reporting, data management across systems and a lot of re-keying.
Our customers also like that they can centralize their data, centralize their customer data and have a single version of the truth.
NetSuite customers can leverage our standard analytics, run real-time reports, dashboard and fulfillment, without having to try and integrate a hodge podge of information using Excel. All of this all included and completely integrated with our system, so customers don’t have to pay a separate fee.
We typically service companies who have outgrown Intuit’s QuickBooks, struggled with having to maintain Microsoft Great Plains with multiple other business systems, and we’ve even had SAP R/3 customers convert to NetSuite, who have become weighed down by the IT costs, and multi-million dollar upgrade costs.
For example, Asahi Kasei Spandex America moved from SAP R/3 to NetSuite and reduced their IT spend from 3% of revenue to 0.1% of revenue with NetSuite - with NetSuite providing an easier to use, modern, integrated and cost effective completely web based solution. In fact, NetSuite has been shown to be 50%+ more cost effective than traditional on-premise solutions. Our sweet spot in the market is companies with 11-1,000 employees in high tech or software, wholesale/distribution, retail/eCommerce, manufacturing or services verticals, and our solutions are used across the globe.
What do you see as the key trend emerging in the SaaS industry?
A major trend is the enterprise adoption of SaaS. For example, we are seeing significant share of our new business bookings for our NetSuite OneWorld solution, our solution for global companies or divisions of global enterprises.
The increasing media coverage of SaaS and Cloud Computing is definitely a driver, because the significant cost savings and business efficiencies are very attractive to CIOs and they are starting to take a closer look at Cloud-based solutions. Even during the economic downturn, Gartner rated NetSuite for the first time as one of the Top 10 Financial Management Systems vendors in 2008 by market share - and the fastest growing in that Top 10. And IDC recently rated NetSuite one of the Top 10 ERP solutions for sub-1,000 employee organizations .
ERP upgrade cycles are coming up again like they did 3-5 years ago and customers are faced with either upgrading or switching their systems, and NetSuite’s solution provides the ideal solution to slash IT costs, and get off the upgrade treadmill.
Cloud solutions are becoming more highly tailored towards specific industries. NetSuite’s SuiteCloud platform provides the ideal platform for ISV’s to deliver industry specific cloud apps to market. For example, RootStock Software is a NetSuite partner that is building a manufacturing resource planning application on top of the NetSuite platform, because they can take advantage of NetSuite’s native ERP, CRM and eCommerce functionality and their application logic for manufacturers. ISVs can even market and distribute their applications through our marketplace at SuiteApp.com.
Traditional software resellers and solution providers are looking to transform their business models as the traditional on-premise market slows down and buyers become more skittish around large capital outlays. Cloud computing offers the opportunity for resellers to provide truly cost effective and compelling solutions to their customers. This transition is happening worldwide, and NetSuite’s cloud pay as you go solution provides the opportunity for resellers to to build a recurring revenue stream, and better fit with their customers’ needs. With our NetSuite Solution Provider program, partners can leverage NetSuite to make this transition. In fact, we recently announced the NetSuite SP100 Program which enables resellers to get paid 100% of the first-year revenues on new sales of NetSuite.
At our upcoming SuiteCloud2010 event in San Francisco in April, NetSuite partners will be coming together, sharing ideas and best practices and seeing how others have both built natively on top of NetSuite’s platform, as well as integrated with it.
What is your outlook for 2010?
Well, we’re pleased that at NetSuite we just closed out our 2009 fiscal year with record revenues.
In a recent Gartner forecast they are projecting that SaaS ERP/CRM versus traditional ERP/CRM, SaaS will grow at a much stronger growth rate. As Cloud Computing gets more play and enterprises continue to upgrade, this should be good news for us.
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