NetSuite attacks SAP: hype vs. reality

A recent NetSuite press release flamboyantly attacks SAP with outrageous tactics, mockery, and misleading implications. Although SAP can be an easy target, scare tactics and innuendo cross the line of acceptability.

A recent NetSuite press release flamboyantly attacks SAP with outrageous tactics, mockery, and misleading implications. Although I enjoy colorful presentations of confidence and SAP is sometimes an easy target, scare tactics and innuendo cross the line of acceptability.

Let's analyze some important aspects of the release.

PRESS RELEASE TITLE

NetSuite Extends 'Business ByNetSuite' Program for SAP Customers Eager to Embrace the SaaS Revolution.

Netsuite plays off SAP's SaaS offering called Business byDesign. I like the 'ByNetSuite' moniker, because it shows confidence, pushes directly against SAP, and is plucky. However, much of the release presents a misleading comparison to SAP's Business Suite 7, as I describe below.

KEY MESSAGE ONE: NETSUITE MAINTENANCE IS CHEAPER THAN SAP SUPPORT

The program targets existing SAP R/3 software customers who are eager to address expanding business software needs without having to increase their capital investment in SAP. The NetSuite program guarantees SAP R/3 software customers at least 50% off their current annual maintenance and support agreement when they switch to an annual NetSuite subscription.

SAP maintenance price hikes earlier this year were unpopular with buyers, and NetSuite was right to push hard against SAP. ZDNet's Dennis Howlett commented on SAP maintenance costs:

While SAP is claiming this as an enhanced offering, it is difficult to see how it will be able to justify this level of fees for customers whose deployments are complete or which do not wish to upgrade.

However, it's important to recognize that costs associated with switching enterprise software platforms can go far beyond support and maintenance expenses, and include losing substantial prior investments in training, system expertise, and so on. Buyers should understand that support costs are only one part of the larger platform-change equation.

KEY MESSAGE TWO: COMPARISON TO SAP BUSINESS SUITE 7

NetSuite's announcement comes shortly after SAP's launch of SAP Business Suite 7, an upgrade to its monolithic on-premise legacy application, SAP 6. This new suite offering still fails to provide existing SAP customers with a viable path to the Cloud that so many have been clamoring for....

Business ByNetSuite enables SAP customers to deploy the complete NetSuite ERP offering at a subsidiary or departmental level as an SAP replacement, or as the top choice for a brand new implementation....

NetSuite is leveraging SAP's Business Suite announcement to its own advantage. That's okay, except the comparison is misleading; SAP Business Suite is intended for large enterprises, while NetSuite sells to much smaller organizations. The differences are significant enough that NetSuite should provide a clear breakdown of apples-to-apples savings for this customer switch scenario.

NetSuite also quotes a blogger suggesting that Business Suite 7 represents a failed SAP attempt to mimic software as a service vendors. Having recently met with senior SAP executives, including CEO Leo Apotheker, I can assure you that is a mis-characterization of SAP's message.

SAP's on-demand strategy revolves around what it calls a "hybrid" approach, where the company delivers software through both on-premise and SaaS mechanisms based on a customer's particular requirements. During the last year, Apotheker has repeatedly stressed this point.

SAP has stumbled and delayed in delivering Business byDesign, the SaaS-based part of its solution, and NetSuite is certainly right to take fierce competitive advantage of those missteps. However, NetSuite's innuendo doesn't withstand analysis, falls to the level of dirty tricks, and only damages the company's own credibility.

KEY MESSAGE THREE: FAILED SAP PROJECTS

While SAP Business Suite 7 may tempt SAP and non-SAP customers alike who are eager to streamline business processes and cut costs, the recent failed SAP implementation at national jewelry retailer Shane Co. should give them pause.

No question about it, SAP implementations are sometimes too long, expensive, and unsuccessful. However, NetSuite has had its own customer deployment problems. In a lengthy diatribe titled, Why we left NetSuite, one former customer said:

The reason we left NetSuite was their business practices. I do not think I can explain it any clearer than here. We had a dispute over what contingent means and as a negotiating tactic they threaten to cancel our paid in full account that was not set to expire for five months.  That is like negotiating with the mafia while they have your head in vise. Who wants to do business with a company like that?  I was actively securing financing for this deal with our bank when we got the first collection letter nine days after the estimate.

THE PROJECT FAILURES ANALYSIS

Although automating back office functions like accounting or manufacturing isn't sexy, it's entertaining to observe enterprise vendors take potshots at each other. In that spirit, look at this comment from Harry Debes, CEO of enterprise vendor Lawson Software, against both SAP and Oracle:

Some SAP and Oracle accounts acquired Lawson for some of their divisions simply because they don’t want the incumbent vendor to dictate the future terms of business to them and for them to have all their apples in one basket. They want to keep their primary vendor honest.

We are the anti-SAP and the anti-Oracle.

Based on all this, I offer the following suggestions:

To NetSuite: Plucky is good; arrogant and misleading are bad. This press release lower standards for direct competitive attacks and doesn't reflect well on you. Next time, offer substantive data rather than rhetoric.

To SAP: Despite the noise, NetSuite makes some valid points. You've done a lousy job articulating your hybrid strategy and on-demand marketing message, not to mention poorly explaining the Business byDesign release schedule. Isn't it time to get it together in this area?

To customers: Base your buying decisions based on hard data, facts, and detailed analysis rather than rhetoric and empty promises. When buying a car, you examine gas mileage comparisons for similar-sized, competitive models. Likewise, ask the software vendor for detailed comparison information based on your specific business requirements, investment time horizon, and appetite to absorb business process change, transition costs, and so on.

And finally, gentle buyer, remember that caveat emptor still holds true in today's world of expensive enterprise software and services.

[Dirty Tricks album cover via Amazon.]

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