The Blog

  • April 6, 2006
  • Suite Warriors Take the Field

    On Wednesday NetSuite made five announcements designed to catapult it into a leadership position in the on-demand or software as a service (SaaS) market.  In no particular order the company announced its version 11.0 release, informed the world that this release is fully AJAX infused, introduced a scripting language for customizing business processes, introduced a vertical market version for wholesale/distribution, and announced an edition directed at services companies.  The announcements were made prior to the New York Yankees defeat at the hands of the Oakland A’s at the Oakland (McAfee) Coliseum making the day a clean sweep for the local kids.

    As if all this was not enough, NetSuite made it plain they were picking a fight with both the on-demand leader,, and much larger rivals like Microsoft and SAP by giving the launch event a “Star Wars” theme complete with a short movie titled “Suite Wars” and requisite costumed actors parading as Darth Vader and other Star Wars icons.

    Such silliness is almost required for this kind of event but behind it all there was real news and one can see the stratification of the on-demand market into segments where several vendors can and will effectively compete.  Taken individually, here’s how the announcements stack up in my eyes.

    With Version 11.0, Paul Greenberg, author of “CRM at the Speed of Light,” told me, “They’ve made their product sexy”.  What he meant was that NetSuite has always offered some very serviceable products, especially considering they have both ERP and CRM fully integrated “out of the box” or more correctly “off the wire”.  Nevertheless, this release has an eye appeal and functionality in abundance that prior editions may have lacked.  The reason for Greenberg’s enthusiasm can be traced to one acronym: AJAX.

    The second announcement in the list may be the most significant because by incorporating AJAX into every part of the applications NetSuite has reduced the functionality gap that has existed between on-demand and on premise applications to miniscule proportions.  Version 11.0 will be known for its richness and usability, it offers role based interfaces with all of the help a user might need.  In most ways users who might be accustomed to a traditional Windows client-server interface will forget they are working with an on-demand solution. 

    Where NetSuite is attempting to open a new gap between itself and its on-demand and conventional competition is in business processes.  The company makes a convincing argument that the foundation for success in any business computing situation is having a fully integrated front to back office suite.  CRM and ERP integration at the database level enables business process integration — what many call end-to-end business processes and NetSuite naturally claims superiority here.  They might be right. 

    At any rate, presuming they already have all of the data and that their system can act as the true system of record for business transactions, they have introduced SuiteScript — a standard Java scripting language for modifying business processes, not the application per se.  Application customization is handled in drag and drop tools for the most part though there are still some tables to fill out in a few spots.  What’s important about this announcement is that there is concentration on the business process for once rather than a bits and bytes discussion of how easy it might be to add a field.

    NetSuite’s CEO and best customer (we eat our own dog food), Zach Nelson, made that point especially well when he noted that many of the accounting functions in his suite were features, and not customizations that anyone could accomplish with the right tools when he said, “These have to be done right, I don’t want to go to jail”.  Point taken.

    That leaves the two vertical market editions for wholesale/distribution and the services company edition.  I am not qualified to comment on the utility of these systems because I have not worked with them.  However, what I find interesting about these editions is that they are areas that fall just outside of conventional CRM’s basic definition and they require an amount of accounting to work effectively and in that NetSuite has chosen its markets well.

    On a larger scale, NetSuite has helped further clarify the market for on-demand computing as well as CRM and ERP.  Market laggards now include Microsoft and SAP which have all of the software but little of the inclination to move it to an on-demand platform in any sense of real time.  Though each company has made announcements and offered a bit of product, there is little evident commitment to the creative destruction each would need to muster to change their models.  At the same time, Oracle also offers a rich suite of front and back office products and its recent acquisition of Siebel including Siebel On-Demand but the jury is still out on the integration angle.  Further, the same question about creative destruction looms over Oracle.

    Other contenders such as and RightNow clearly lack the accounting functionality that NetSuite has in abundance, which brings up an interesting point about segmentation.  There are plenty of situations in which an enterprise might want an on-demand CRM package but not ERP and all of the on-demand CRM vendors will be able to compete there.  While NetSuite can certainly play in those competitions, its strengths come forth when a company needs both parts of the equation.  Typically that means, smaller companies that are willing to put every kind of data out on the Internet for storage and in fact, NetSuite aimed its pitch primarily at the mid-market. 

    However that may be, one’s definition of the mid-market can be quite elastic.  As an example, Associated Grocers, Inc. is a $3 billion company and a customer of NetSuite.  The division that is a client manages retail store accounting for numerous members.  Associated Grocers is located in Baton Rouge and when the hurricanes hit many of its customers stores were flooded bringing to mind the relative safety of storing information off site in case of disaster.

    For the time being NetSuite says it is content to work in the mid-market but you have to look at the company as another disruptive innovation rising from the grass roots and aiming at larger markets.  The integration of CRM and ERP in a single suite along with all of the announcements of functionality and usability is potent and should give other on-demand players reason to question their own strategies regarding ERP.  Next week will make an announcement and it probably won’t have anything to do with ERP but it will, no doubt, attempt to raise the bar yet again on some features or functionality.  It’s a good time to be a customer.

    Published: 18 years ago


    • May 19th, 2006 at 5:09 am    

      “It’s a good time to be a customer.”
      Well, I hope so. I’m _very_ much attracted to Netsuite but as a 1 man band am choking somewhat on the $400 or so _per month_ required for just 1 seat (I need the functionality, the small business version wouldn’t work in my case).
      Also it’s not clear how this will escalate in future with no competition once they’ve hauled me on board.

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