NetSuite beefs up for battle with Microsoft

With Microsoft gearing up to launch its new applications for SMEs, hosted application vendor NetSuite is getting itself ready with new payment options and multi-language versions

NetSuite has beefed up its software portfolio for small and medium-sized businesses with new payment options through PayPal and SECpay as it steels itself to fight the threat of Dynamics, the renamed and revamped version of Microsoft's accounting software.

Dynamics could cause a problems for NetSuite which, until now, has focused on competition from companies like Sage in the SME accounting field, and Salesforce.com in CRM. Now it is faced with accounting systems and CRM software from a Microsoft anxious to capture new ground in areas where it has not really featured before.

NetSuite is hoping to trade heavily on what Zach Nelson, NetSuite chief executive, describes as "the hard work we have put into developing this complete application package over an six-year period".

As well as supporting industry standard payment systems in PayPal and SECpay, NetSuite also announced support for Google's Froogle, eBay's Shopping.com and Shopzilla, a move allowing merchants "to go beyond traditional multi-channel selling to tap online markets". The company also announced support for multiple languages for the first time.

Nelson claims not to be worried about the competition from Microsoft. "Of course they are a threat," he told ZDNet UK, "but we are the only one offering a fully integrated system for the front-office and back-office. Look at [Microsoft] CRM 3.0 and it is just for sales. It can't do back office. It can't even do VAT. We have a complete solution."

According to Nelson, the ability to offer front and back-office accounting will be the key to NetSuite's long term success in accounting financial systems for SMEs.

"We've done the hard work over six years, and it is hard work, " he said. "Look at Microsoft. Great Plains is based on three different pieces of software that Microsoft bought and have to stick together, and Navision is based on two. Then there are other small component and then CRM 3.0 is different software again. All of this is supposed to come together in Project Green but that still means we have at least four years on them or three if they are really fast."

And Nelson does not see much of a threat from Salesforce.com, and has little time for CRM in general. "For a small business most CRM stops at the point where it is supposed to be useful, the customer. You can keep records of a customer, but you can't process a payment."

Nelson acknowledges that NetSuite has been a minor player, with turnover around $70m and 500 employees — including 100 in the UK, its most successful market outside of the US. But NetSuite has influential friends thanks to founder and majority owner, Larry Ellison.

Is NetSuite a takeover target?
Nelson does see one good reason why Microsoft might like to buy his company.

"Microsoft wants to get into the hosting market, I am told, but they have no experience in that area," he says. And on the applications side NetSuite, Nelson says, "has done all the work that Microsoft still has to do". There is a major problem there, of course, and Nelson agrees that it would be difficult to imagine Larry Ellison and Bill Gates staying in the same room long enough to negotiate a purchase.

On paper, Salesforce.com — formerly an Ellison start-up — could be a more logical coupling, but Nelson does not think it likely. "Yes, they are a hosting company but we are very different."

Nevertheless, Nelson says, "we don't rule anything out".

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