NetSuite-Microsoft cloud alliance is a win-win for customers

This week at SuiteWorld, Netsuite CEO Zach Nelson announced a partnership with Microsoft. Satya Nadella was on hand (via pre-recorded video) to comment on the partnership.

The announcement came as a surprise, as NetSuite has always been perceived as a close ally of Oracle. Let's dissect the news. (You can find the press release here):

NETSUITE SUITEWORLD 2015, SAN JOSE, Calif.--May 5, 2015--NetSuite Inc. (NYSE: N), the industry's leading provider of cloud-based financials / ERP and omnichannel commerce software suites, today announced it has entered into a strategic cloud alliance with Microsoft to create new, innovative and future-proof solutions that connect NetSuite's cloud ERP to Microsoft Office 365, Windows and Microsoft Azure, delivering high-impact value, productivity and simplicity for mutual markets and customers. NetSuite continues to make life easier for its customers by forging new and exciting partnerships to help companies deal with the ever-increasing rate of change and a multitude of disruptive factors impacting each and every industry.

MyPOV - It's always good to see vendors listening to their customers. Though NetSuite does not state it explicitly, this may well be a customer driven partnership. Regardless, the scope of the partnership is something that NetSuite needs to work on - as Office365 is a given for its customers. Same for Windows. Azure is more interesting - more below.

"We're at the 'end of the beginning' of the cloud, in that the cloud business model that NetSuite pioneered in 1998 is becoming the de facto standard for how fast-growth businesses are run," said Zach Nelson, NetSuite CEO. "We're thrilled to work with Microsoft to deliver a fluid cloud environment across the key NetSuite and Microsoft applications that companies and their employees rely on to continually improve their day-to-day operations and run their business better and more efficiently."

MyPOV - Promising quote by Nelson: The 'fluid cloud environment' or seamless integration across all cloud properties is, indeed, something customers want to see.

"I'm excited about NetSuite's support for Azure Active Directory for single sign-on, cloud-to-cloud integration and increasing our collaboration across mobile and cloud solutions," said Steve Guggenheimer, Corporate Vice President of Developer Platform & Evangelism and Chief Evangelist for Microsoft. "Our joint vision is all about giving people the freedom to get more done through the broadening set of devices they interact with that in turn helps businesses innovate and grow."

MyPOV - Good assessment by 'Guggs' - Microsoft partner enablement executive. NetSuite is a great partner addition for Microsoft overall partnership portfolio. Kudos to Guggenheimer for being specific about the details of the partnership. More below.

The collaboration pairs NetSuite's cloud ERP suite with Microsoft cloud technology in both the near and short term.

Available immediately, an integration between NetSuite and Azure Active Directory that enables single sign-on (SSO) for customers using NetSuite together with Azure Active Directory, eliminating the need for users to manage and use multiple passwords. The integration also gives administrators centralized control of user authentication and password management while enabling organizations to strengthen role-based approaches to business management. Built using Security Assertion Markup Language (SAML) 2.0, the integration reduces the security risks of user-managed passwords while providing additional protection against phishing and other threats.

MyPOV - Using Azure Active Directory is probably the low hanging fruit here - but it creates value for customers. NetSuite administration costs will go down, and Microsoft will get more enterprises to use Azure Active Directory. Microsoft knows that once AD is in Azure, all things will get easier from there.

In the coming months NetSuite and Microsoft will start cloud-to-cloud integration between NetSuite and Office 365, providing seamless access to both technologies from within a single interface and improving productivity and collaboration across a variety of roles, from financials to shipping, marketing, ecommerce, business analytics, retail store associates and more. Through integration with Microsoft Excel, customers will be able to connect NetSuite data to Excel and Power BI for Office 365 to visualize information and discover new insights into their business. Additionally, NetSuite will migrate its entire employee base to Office 365, realizing significant value in alignment between the world's leading productivity system and NetSuite's cloud business management suite.

MyPOV - NetSuite cannot avoid the demands of its customers using Office365. It's this analyst's opinion that when you have to do something, it's always better to it sooner than later. Last week at Build (my event report here), Microsoft showed simple, elegant ways to integrate business applications (Salesforce and SAP) with Office365. The integration of PowerBI and Excel is a good move for both vendors, and creates BI value for their joint customers. Microsoft wants content for PowerBI and NetSuite needs compelling visualization. Netsuite moving its employee base to Office365 is a nice cherry on top for Microsoft.

By the end of 2015, NetSuite will migrate from AWS and on-premise deployments to leverage Azure as its preferred cloud infrastructure platform and take full advantage of the capabilities of Azure for testing and for developers, independent software vendors (ISVs) and customers to build new software applications and integrations that leverage NetSuite's cloud business management suite and the powerful storage and compute capabilities of Azure offering businesses the significant advantages that are becoming synonymous with world-class cloud computing -- efficiency and flexibility, large productivity gains and dramatic IT cost reduction.

MyPOV - Honestly, I had some trouble understanding this sentence - but my understanding is: NetSuite is moving test and development environments from AWS over to Azure. This is a key win for Azure, allowing it to catch up a little to AWS. This release does not mention where NetSuite runs production - which is a larger and harder engineering problem to address. But Azure runs Oracle, so what is not happening today is something that could happen tomorrow. If NetSuite can offload its datacenter Capex onto a partner like Microsoft, Netsuite products will benefit. We see Infor playing this card successfully (only with AWS).

My Overall POV

A win / win for both vendors' customers. I'm looking forward to seeing how NetSuite and Microsoft will cooperate around Windows (10 we assume). The net: Microsoft gets more AD usage and more Azure load. NetSuite customers get an easier path to test and development environments by avoiding AWS. For both sides, Office users will benefit from a tighter integration between their enterprise system (NetSuite) and better BI and visualization with PowerBI.