NetSuite SuiteBundler: Most important software of last ten years?

Along the road to an expected IPO this year, NetSuite CEO Zach Nelson announced SuiteBundler, a new set of capabilities for building and customizing applications with the company's software-as-a-service (SaaS) platform. The major innovation is that customizations and configurations created in one NetSuite account can be reused in another account without recoding or rewriting, Nelson said.

He claimed that SuiteBundler is "one of the most important pieces of software written in the last decade,” and a "Holy Grail for services companies."

I asked Nelson to elaborate on his notion that SuiteBundler is a major milestone. "Talk to any exec at a services company--they dream of reusing code. SuiteBundler is the icing on the cake, with SuiteFlex which allows you to do rich customization. For SuiteBundler to be able to take all the customizations and inject them into another account is mind blowing."

It's hard to make the case that reusable NetSuite components is the Holy Grail of software, but it will be more easy and cost effective to assemble vertical applications.

NetSuite co-founder Bill Bailey demoed the creation of a "bundle" with a visual interface, choosing any object type, objects and contents (such as lists, saved searches, and scripts) that are wrapped up as reusable bundle, accessible by other NetSuite accounts. SuiteBundler checks for dependencies and allows users to set privileges--private, public or shared, for customers accounts that have purchased the bundle.

In keeping with the tradition of creating bold and often cryptic statements to differentiate or define a particular flavor or nuance of software-as-a-service, Nelson has its own: Service as Software, not to be confused with No Software (salesforce.com) or Software + Services (Microsoft). Service as Software, in NetSuite's parlance, means reusable NetSuite components (bundles) without modification.

Nelson claimed that NetSuite is the SAP of the mid-market, in terms of its architecture and providing a system of record, but without the complexity associated with SAP.

He said the mid-market needs highly customizable ERP software, citing NetSuite customer Asahi Kasei Spandex America as evidence. SAP's Business ByDesign, due next year, and is aimed at the upper mid-market and will not be highly customizable for micro-vertical solutions.

Peter Zencke, a member of SAP’s Executive Board and head of R&D, told me in an interview that Business ByDesign is flexible it is from a configuration point of view, but not highly customizable. "The number of customization parameters, which we have in ERP, have been reduced by at least factor 10, in fact closer to 100. The parameterization of the system is limited for the sake of complexity. Let’s not inflate the variations, but be powerful in the combinations of elements so overall it is very powerful," Zencke said.

"SAP is coming down market. It has never worked in the history of software. It always moves from the bottom up," Nelson stated.

Nonetheless, NetSuite is barely a blip on SAP's screen. NetSuite had 72 percent revenue growth in Q107 compared with Q106 ($23.2MM vs $13.5MM) and has about 500 employees. SAP reported $1.92 billion in revenue for the quarter ended Sept. 30. And, Salesforce.com is closing in on a billion dollars in revenue for its next fiscal year.

Nelson dismissed salesforce as a platform for "random application development" that has nothing to do with CRM.

"We have similar capabilities in our SuiteFlex and salesforce's force.com," he said "Our strategy is to build a business management platform, such as running a seaport more efficiently, creating vertical extensions. Salesforce has platform for building applications on its database in the sky, but it is more horizontal. It's a fine approach but has different implications....our stack includes the application itself and is integral to what we are doing. Salesforce (Sforce) used to be built on its CRM application, but now there is no application in force.com." However, developers can choose to use salesforce.com's CRM or other applications in building custom software on force.com.

"We don't have two different strategies, one for the [CRM] product, one for the platform. The NetSuite application is the platform," Nelson added. "Our strategy is a way to get the mid-market gap filled."

Nelson also said that Suite Bundler provides opportunity for many partner companies to become large service providers--the Accentures of the mid-market. It won't be Accenture or the VARs and system integrators who have built businesses on managing legacy systems, but the companies working with SaaS vendors who will succeed, he said. "SaaS provides an opportunity to tap into the under-served $15 billion SMB market," Nelson added. "This the dream of service providers. Select it, inject it...done."

SuiteBundler allows developers to more easily create vertical applications by extending the core Netsuite functionality with reusable bundles. NetSuite announced new verticals targeting media and publishing and one for computer resellers, as well as third-party vertical editions designed for seaport management, point of sale, electronics wholesale distribution, tax automation, warranty management and agricultural equipment dealers.

With this vertical model partners can charge more for NetSuite applications than NetSuite does, Nelson said

NetSuite will open a SuiteSource Bundle Repository for partners creating bundles and for customers to find them. SuiteBundler is available at no additional charge to NetSuite users, except the NetSuite Small Business edition (which allows installation of bundles but not creation or distribution).

Nelson also made the iPhone connection, noting that the complete NetSuite applications runs on the Apple device.