NetSuite launches SuiteFlex to build out verticals

Summary:It’s been interesting to watch NetSuite and salesforce.com grow up over the last few years.

It’s been interesting to watch NetSuite and salesforce.com grow up over the last few years. The chief executives at the two companies, Zach Nelson and Marc Benioff, share a common heritage of cutting their teeth at Oracle, but have taken different approaches to spreading the SaaS, multitenancy gospel.

Salesforce.com has is roots in CRM and NetSuite opted for a more complete ERP set of modules for running a business. Salesforce.com, a public company, will generate annual revenue in the range of $475 million and NetSuite about $70 million, according to Nelson. NetSuite, which Nelson said is gearing up for an IPO next year, currently has about 7,000 customers, compared to Salesforce.com’s nearly 25,000. Nelson is way behind his former colleague Benioff, but he is encouraged by recent progress in NetSuite's deal size. In less than five years the average sale has gone from $150 per year to about $30,000 per year for new customers adopting the software, he told me.

Clearly, NetSuite has been out-hustled by salesforce.com, but the market for SaaS is big enough for multiple approaches, platforms and ecosystems. We are still in the early stages of SaaS evolution, and it is going through a new round of platform and ecosystem development.

A few weeks ago, salesforce.com opened up its development platform with Apex, a database language with Java syntax. It allows developers to build applications that work with salesforce.com’s CRM platform or to create completely separate applications, such as ERP applications, that run on the company’s multitenant infrastructure. 

Today, NetSuite announced SuiteFlex, its language, based on JavaScript, and platform for programming on top of its multitenant infrastructure. SuiteFlex doesn’t allow developer access to program the host server as extensively as the Apex programming model, but it offers a way to extend NetSuite with vertical solutions and customized business processes.

Using SuiteFlex to spur vertical application development on the NetSuite platform for the SMB market is where Nelson hopes to gain traction. "We want to turn the service industry on its head," Nelson said, "taking out the management of applications and upgrades. Now we are giving something back to service provider with SuiteFlex and SuiteBundler, which will allow service providers, VARS and other developers to make vertical versions and sell them over and over--it's infinitely vertical."

Nelson is interested in cultivating more granular micro-verticals, such as creating a custom NetSuite application for product distribution across different industries. "A SuiteFlex service provider can build, bundle and sell verticals and embed them in NetSuite as a product. If I sell toner cartridges on the Net, give me a solution. The same for a door and window distributor, a floor covering distributor or drug distributor. We can attack more quickly--it would take us 20 years to get to drug distributor vertical [without SuiteFlex and SuiteBundler]. And, we only charge them 70 percent of our list price," Nelson said.  

SuiteFlex includes new capabilities in SuiteScript, including Suitelets, encapsulated Web services,  and UI Objects, which allow users to add new objects, or records, in the NetSuite schema. In addition,  SuiteTalk SOAP APIs provides an easy way to extend NetSuite to other systems and languages, and build add-on features. SuiteBuilder will offer point-and-click tools for personalization, configuration, and vertical customization within NetSuite.  

"[Unlike Apex] NetSuite customers don't have access to the same tools as our developers, but we are trying to simplify it. They have access to all the UI objects and business logic written into scripts in terms of business processes," said  Mini Peiris, NetSuite's vice president of product management. "We've really added the final layer for customizing the entire interface to a vertical industry or business processes of a customer."

The SuiteFlex platform is available today, and is included with the NetSuite subscription at no additional charge. The Suitelets and a UI builder are availabe for application developers. They will be generally available, along with SuiteBundler, in early Q2 2007.  

In addition, NetSuite introduced SuiteSource Directory, a repository of free, open-source Suitelets that are available on SourceForge. As an open source initiative, SuiteSource is at the bottom of the scale, but it's a start.

"Ultimately, we  have similar architectures Suitelets and UI Object puts us ahead, but they will add them to Apex," Nelson said. “The differentiation is in how we tell customer to apply these things. We say use it to extend business processes and workflow for specific problem, not just build anything. Nelson also believes that having an ERP core differentiates NetSuite from salesforce.com, which is built around CRM. “ERP is the brain around which applications are built. There is no brain in salesforce.com model. CRM is not going to be the brain to run a business. It's a system of record versus no system of record," Nelson said. He compared SAP's success versus Siebel as indication of the superiority of having a full suite.

I asked Marc Benioff to respond to Nelson's characterization of salesforce.com's approach:

"The reality is that different customers need different things. If NetSuite had all the brains, then we wouldn't be seven to ten times their size."

I also asked Robert Bois of AMR Research for an independent take on SuiteFlex versus Apex:

I think at many levels, SuiteFlex for NetSuite shares a lot of the same advantages that Apex does for salesforce.com.  On-premises software vendors have found they can most effectively sell against SaaS vendors by talking about issues such as integration, as well as customization.  Historically, SaaS didn’t allow true customization of the code, more like configuration of look and feel, and perhaps some basic workflow. The two recent announcements from both these vendors allow them to overcome that objection.  And most importantly, customization won’t break the upgrade path, which has been the biggest challenge for on-premises software since the first line of custom code was written. 

However, I think due to several reasons Apex is more critical to salesforce.com than SuiteFlex is for NetSuite.  NetSuite is really looking to offer a full enterprise suite to SMB organizations.  And as they roll out micro-verticals, there will actually be significantly less need to integrate and customize. Salesforce.com on the other hand is relying on AppExchange partners to supply the broader footprint, so net new development and integration are critical. As for the two different coding approaches, I think each is probably the right one for each company. 

Topics: Salesforce.com

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.