• September 26, 2011
  • Moneyball is a good movie and I recommend it.  The tie in with the software industry is NetSuite whose logo is all over the dugout and prominent in several scenes.  The central character of the drama is Oakland A’s general manager Billy Bean and most of us know his story about actually using statistics in baseball to predict how a team will play.  Based on Michael Lewis’ true story book about the 2002 baseball season it’s a good way to spend a couple of hours and because Brad Pitt plays the lead I had no trouble dragging my wife to see it.

    The point of this short post though is NetSuite.  This is a movie so devoid of product placement that the soda machine, which features prominently in two scenes, is called the soda machine and not the Coke machine.  Nonetheless, because the NetSuite logo is plastered on  the dugout in real life, it’s there in the movie too.  Zach Nelson and the team at NetSuite should get props for being lucky.

    Published: 11 years ago

    A company’s first user group meeting is a kind of coming out party.  It validates the faith its customers showed early on in going with a startup and marks an important statement in the company’s maturation process moving it from kid to adult, removing the training wheels and such.  So I was eager to see how NetSuite would pull off its first user group meeting in San Francisco this week and I was impressed with its success.

    The company is on a two hundred million dollar run rate and has been public for several years so it cannot be termed small any more, though in the classic definition of SMB it belongs there.  What impressed me most was the quantity and quality of the announcements its CEO rattled off in his keynote presentation

    Representatives from 20 countries attended eighty sessions.  Ten thousand companies use the ERP products running eighty different currencies through it.  According to Gartner NetSuite has one of the fastest growth rates 80% over three years in its survey.  Its nearest competitors have growth in negative numbers.

    At the show super cool CEO, Zach Nelson announced new big partners like Qualcomm, partnerships with Accenture, Callidus and Zuora and many others — about eighty announcements in all.  Nelson announced new products for the upper end of his market and technology improvements all around.  Most interesting to me, Nelson told us NetSuite was installing one of Oracle’s Exadata storage devices to further improve perfoprmance and throughput.  Exadata combines small-ish spindles with huge memory and a processor to give phenomenal database performance, but ultimately I think it will be superseded by flash driven machines.  Nonetheless, it’s an important demonstration of the company’s commitment.  It also does not hurt that Larry Ellison owns about 55 percent of the company’s stock.

    All of these things and more paint a picture of a cloud ERP company emerging as a leader in its space and as a challenger to established rivals like Microsoft and SAP.  NetSuite emerges at an interesting time in the ERP market lifecycle.  As I have written before, we’re in the middle of an ERP system replacement cycle when systems installed at the turn of the century to deal with four digit dates are aging out and being replaced by newer, more robust and less expensive solutions.

    Most of all, the prevailing strategy from its competitors suggests a multi-tiered ERP solution that places smaller systems in charge of regions or countries and leaves legacy vendors largely intact in central locations.  This strategy may be good for the customer and it may be good for legacy providers who hope to sell their solutions for satellite systems.  But it is unquestionably good for NetSuite which, by virtue of its cloud heritage and multi-tier architecture introduced several years ago, can compete effectively with the others and due to its more favorable economics will most likely pick off business from its rivals.

    About the only discordant note I can find is the utter lack of focus on CRM — at least on the first day.  I was not able to attend day two and understand that CRM was on the docket then.  I was on a panel with Brian Solis and Paul Greenberg that dealt with social CRM issues mostly at the end of the first day and I think I learned a lot.  These guys rock, pure and simple.  It’s important to know when you are in the presence of greatness and I was.

    CRM is important to NetSuite for several reasons.  First, without it the company is really a financials company and it’s hard to see how it lives up to its name and the rationale that its products are engineered to work together thus eliminating the issues of integration faced by many other cloud vendors.  But that’s only if CRM is real and credible.  I have no data but my unofficial research implies that companies that like cloud computing often take NetSuite for financials and Salesforce for CRM.  A cottage industry has grown up around integration with specialty providers like Pervasive and Cast Iron providing solutions and niche players like Zuora offering integration for a purpose.  Engineered to work together ought to be re-engineered around the concept of design and standards.  If everything is engineered to the same standards you get the result that NetSuite is looking for and more importantly you play nicer in the sandbox.

    My long term vision tells me that solutions like Zuora will become increasingly important not for pure integration reasons though the integrations provide important plumbing.  Instead, I think purpose built integrations between NetSuite and Salesforce, Zuora, Callidus or Xactly and many, many others are important for another reason.  They give the end customer in a best of breed approach the ability to support good, fast and cheap end to end business practices that enable smaller companies to keep up with larger companies that can afford to hire integration houses to build plumbing for older systems.

    I think and expect smart vendors will begin to brand these extended business processes and make the point that their solutions are superior because of the integration rather than offering integration as an after thought.  Salesforce has proven the effectiveness of this approach though few vendors in the AppExchange position themselves aggressively enough, in my opinion.

    But this kind of process branding rather than static product branding might turn out to be important as we proceed.  We’ll have to watch of course, but based on this week I would say NetSuite will be giving us a reason to watch for a long time.

    Published: 11 years ago

    Yesterday Zuora, the billing and payment solution company for subscription businesses did a smart thing, at least I think so.  At NetSuite’s user meeting, SuiteWorld, Zuora chief Tien Tzuo announced that his trademark product is now pre-integrated with NetSuite’s financials.  But that wasn’t what’s smart, only the thing that enabled the thing that is smart.

    You see, Zuora comprehends a business problem that is bigger than the solution it can provide on its own.  Subscription billing is a different animal from conventional billing for products.  It’s as different as a horse and a zebra.  They might look the same through a picket fence but you wouldn’t want to saddle a zebra.

    Subscription billing is like that.  Each type of vendor has to attend to all of the details of the customer relationship that impact billing.  But where a conventional vendor might sell a product and bill in full, the subscription vendor sells a potentially different product every time the customer decides to change the configuration.  One of the powerful aspects of selling subscription services is that by reconfiguring them you can deliver a potentially different branded product — if your billing system can keep up.

    There are subscription costs that we’re all familiar with like the number of seats deployed but that can change at any time.  There are also any number of one time fees and costs that may not fall in the same billing cadence as the subscription.  It goes on and on and it gets funky.

    There is also the little issue of renewal.  The product vendor thinks in terms of cross sell and up sell but the subscription vendor thinks in terms of all that plus keeping the customer — every day.  I have seen data that says that customers base their loyalty decisions in part on how easy their vendor is to deal with and billing is one of the key points of contact post sale in the subscription world.  There are different metrics that need to be tracked too — monthly recurring revenue, total customer value and the just alluded to churn.

    Vendors of all stripes have discovered how hard this nut is and early subscription vendors wrote their own billing systems because there was no other game in town.  But as much as Zuora is a good fit for subscriptions, it still needs support from CRM for effective sales and marketing and back end financials for managing the customer payables and then some.

    So, Zuora’s bit of brilliance on display at SuiteWorld has been its admission that it needs other solutions to deliver to the customer an end-to-end solution and then delivering its part.

    This is very interesting to me.  Several years ago I thought the same kind of convergence needed to happen in sales (still do).  SFA was and is the workhorse solution for sales but it is increasingly ill suited to the demands of this marketplace.  Solutions from a great variety of sales enablement vendors offer help to consolidate an end-to-end process.  But people on both sides of the divide seemed cold to the thought of declaring a process and one’s alliance to it.

    Now, to be fair, just about every sales enablement vendor has integrated with Salesforce and at least some of the other SFA products and in those parts of the world something like an integrated end-to-end solution exists.  But the end-to-end sales process is still elusive in many cases, I think.

    A few weeks ago I gave a short talk as part of a webinar for Sage.  The subject was CRM and why small companies need it, as they surely do.  In it I said that we treat our money very well in business by way of ERP systems.  We know what’s been sold, to whom, for what, when it was delivered and when the money is due.  In contrast many companies still track future money — a.k.a. the sales process — on random scraps of paper and in idiosyncratic documents.

    The Zuora-NetSuite announcement is important because it goes after that discrepancy.  Zuora, with its new connector as well as its Z-Force connector to Salesforce offers the promise of uniting front office processes in a choice of Salesforce or NetSuite CRM and NetSuite financials on the back end thus delivering the end-to-end process that I crave.  I suspect I am not alone.

    So good on them — all of them — as my Aussie friends might put it.

    NetSuite has been putting on a rather good show at its user, press and analyst meeting and I will have more on that in a separate post.

    Published: 11 years ago

    Announces first annual Short Tale Award™ for Excellence in Video Use

    Stoughton, MA, February 8, 2011 — Beagle Research Group, today announced “The Beagle Short Tale Awards” for 2011.  Beagle gives the annual awards for various aspects of video production and use by front office software companies in sales, marketing, service and education.  Denis Pombriant, Beagle’s managing principal said, “We believe video is profoundly changing the way companies communicate with customers and prospects and this award brings recognition to the pioneers as well as encouragement to those using the medium.”  The award is given for excellence in short videos (typically under six minutes) that are produced during the prior year (2010).

    This year’s software vendor winners include Eloqua, Microsoft Corporation, NetSuite, RightNow Technologies, Sage North America, SAS,, Zuora and a special award to Jess3 a creative agency.  The grand prize for Strategic Use of Video went to, which produced, among others, a video quantifying the effectiveness of its video library as a sales and marketing tool.  Pombriant also said, “At this stage of a trend we often see unsubstantiated claims of effectiveness for a new technology.  Salesforce, provided the needed proof.”

    A full report including links to all winning videos is available at

    About Beagle Research Group

    Beagle Research Group, LLC is an analyst, consulting and market research organization focused on emerging front office software companies.  Beagle Research investigates market trends and provides analysis and insight to vendors and buyers of front office computing solutions.  Our content is presented in articles, blogs posts and free downloadable reports at multiple locations across the Internet.  The Beagle Short Tale Award and logo are trademarks of Beagle Research Group, LLC.


    Published: 12 years ago

    Recessions are always a good time to rebuild your competitive infrastructure and the slow growth/recession of the last couple of years has been no exception.  On the stock market, the technology sector seems to be doing quite well.  After bottoming in the middle of the summer the software companies especially seem to be rebounding.  Microsoft, Oracle, Salesforce, RightNow and NetSuite are all gainers.

    But the drivers for software acquisition remain what they have always been—improving processes, saving money or making money.  Companies whose products can do one or more of these will do well.  And customers will gobble up their wares as they seek out more competitive stances in their chosen markets.  The theme to watch for is replacement as many foundational applications that were implemented for Y2K reach the end of their shelf lives.  Here are some issues to consider.

    • Ten year-old ERP and CRM systems will be more than ripe for replacement.  New business processes and better economics will do the heavy lifting to prove the case for new applications.  Many of the conventional vendors like Oracle and SAP will be there as will newer entrants who’ve proven themselves over the last decade.  Watch for names like NetSuite, RightNow, Salesforce and others to command attention.
    • Cloud computing.  After several years of debate about what cloud computing is or is not, customers are in a great position with lots of choices for solutions.  It doesn’t matter whether you prefer single tenant or multi-tenant solutions, the economics of running software in the cloud are so compelling that you can find a vendor that speaks your cloud dialect.  Virtually every front and back office vendor has a cloud offering or two.
    • Analytics is another solution set that has been in the background for many years.  But new demands in the form of trying to make sense of the mountain of data brought in daily by our social applications makes analytics a necessary add-on.  Analytics solutions are abundant and even SAS Institute, a pioneer in enterprise analytics, has jumped into the market with cloud based solutions for social data.  It is somewhat surprising that Gartner expects only 35% penetration in customer service centers by 2013.  That looks like a great opportunity for differentiation to me.
    • It will also be a year for collaboration and I think collaboration may be the first true business social application type.  Judging from the rapid adoption the Salesforce’s Chatter is receiving I anticipate the broader market will see collaboration as a business process no one can afford to ignore.
    • Integration will be important in the year ahead too.  There are no so many applications and application types on the market that we can safely give up any pretense that a single vendor could deliver all of a company’s CRM needs. APIs and cloud computing make integration more important and feasible.  More vendors will discover that the winning strategy is to do whatever is possible to pre-integrate their wares with strategically important foundation CRM vendors.  It wouldn’t surprise me to see some vendors begin to organize around specific business processes or types such as channel selling.
    • This also implies that many companies will be looking to extend their solution sets with strategic additions.  Any company can optimize its CRM deployment and probably gain competitive benefit by looking at its business processes and comparing their level of automation with the product sets now on the market.  Need a way to keep your sales people in the game?  Try a compensation management system.  It will give them a way to quickly understand their progress in the only way they keep score.  At the same time it will reduce the back office overhead caused by end of quarter commission calculations.
    • If you have an interest in bringing out a new product but worry that a limited marketing budget could limit your success, you might first consider a variety of customer analytics that can help you determine which customers have a need, what that need is and how to approach them.
    • Or perhaps you are looking to improve service and save money but worry about displacing the good but expensive handholding your service group provides with faceless automation.  Try a social service solution that engages your user community to help answer basic customer inquiries through Twitter and Facebook.  Not only will you be able to maintain a person-to-person approach but response times might decline and there’s no telling what positive fallout might happen when customers help each other.  If you’re monitoring the chatter you might discover that a core group of customers has great understanding of your product and does a super job of helping out.  The help can also turn into articles for your knowledge base.
    • The last area for social penetration might be using solutions to analyze your negatives—to identify instances where customers express their displeasure with you on the Web.  It’s much better to deal with an irate customer than to let their anger fester, but first you have to find them.  Social media and analytics can help and it’s a worthy investment.  Our research shows that even the best companies have their detractors but often a vendor knows little or nothing about a problem.

    My analysis

    To summarize, the year ahead in CRM will be important for replacing old systems and for integrating new niche applications that sharpen your game.  The costs of these additions will be relatively low due to cloud computing and the nature of some smaller niche applications.  The recession ended in July of 2009 and while it might not feel like a recovery right now, there is ample evidence of improvement.  You can use next year strategically to improve your stance as a recovery picks up steam.  There are good products on the market and vendors are still hungry.  If you miss this opportunity, I think you’ll be saddled with your old and relatively expensive systems for longer than you might like.


    Published: 12 years ago