8 questions for NetSuite

8 questions for NetSuite

Summary: Next week sees a bunch of Irregulars and other assorted miscreants tipping up at NetSuite's user conference grandly titled: SuiteWorld 2011 User Conference 2011. Vinnie Mirchandani already has high hopes of a fun packed event with quick witted CEO Zach Nelson taking the PT Barnum role.

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Next week sees a bunch of Irregulars and other assorted miscreants tipping up at NetSuite's user conference grandly titled: SuiteWorld 2011 User Conference 2011. Vinnie Mirchandani already has high hopes of a fun packed event with quick witted CEO Zach Nelson taking the PT Barnum role. I have no doubt that our highly personable and jocular ringmaster will be keeping the crowds entertained but this is a user conference, not a sideshow at a fairground.

NetSuite is no longer the scrappy upstart it was a few years back but it ain't in mega vendor territory either. Not by a long stretch. While it jabs at SAP and Microsoft (note that Nelson rarely takes a poke at Oracle but then that company's CEO is NetSuite's major investor) its total revenue for 2010 and 2011 would barely warrant an extra line item in those mega vendors' quarterly statements.

All that aside, the next few years are going to be very important for NetSuite as it eyes the $500 million revenue milestone and starts coming to terms with the fact it faces real competition in the shape of the very companies that it tries to humiliate. They will not retaliate. They don't have to.

In the marketing stakes, SAP and Microsoft can outgun NetSuite any day of the week and in any way they choose. What Nelson forgets is that IT vendors are rarely brought down by competition, they implode by reason of their inability to break loose of ingrained DNA. While Nelson reminds us of the enterprise 'hairball' he is in truth preaching to the choir and not to the unconverted.

Analysts of all stripes have doubts about whether SAP and Microsoft can make the jump to the cloud world, Nelson doesn't need to pour gas on those fires. Instead, I believe NetSuite has to knuckle down on execution. The noises it is making are OK but I have specific questions that need answering. Some are common to the cloud segment of the industry, others specific to the company. Here are my top of mind questions:

1. NetSuite has a reputation for aggressive selling, not always matched by super service support. How is that being addressed for a business that relies upon service as the cornerstone for growth? How does customer satisfaction rate today compared to 2009 and 2010?

2. I still get the emails from customers who feel they have been less than well treated but then which software company truly does an outstanding job in support? Part of NetSuite's problem has been an effort to move away from unprofitable small deals. While that is operationally understandable in the context of the business strategy, how is NetSuite doing in either retiring those customers or keeping with them? How far can it go in say automating the provisioning of those small customers?

3. NetSuite's market positioning is evolving. Potential customers need to know whether they fit the NetSuite profile. So gIven the answer to the last question, what is the profile of the ideal NetSuite customer and does the company expect that to radically change over time? If so how?

4. All cloud app vendors need a sound channel of partners. This is a nascent market and there are many imponderables. We've seen NetSuite take on a handful of marquee names like Baker Tilly. How are those partners performing? Do they have the right business model, including support and development systems in place to be successful? What are the characteristics NetSuite believes are required for success?

5. NetSuite has claimed a Gartner report shows it vastly outstripping local competition in non-US territories. I am struggling to understand those numbers given what I see and am able to verify. Can we get some clarity on how this hangs together? (NetSuite already has a detailed question on this from me as I have a special interest in certain non-US markets.)

6. NetSuite pitches the 'fully integrated' story as a counterplay to the 'hairball' of apps it sees in potential customer landscapes. SAP Business ByDesign can make the same claim in those same potential deals. Microsoft will likely try pull that same card out of the pack at some point. While NetSuite might today describe ByDesign as:

"(SAP) Business ByDesign is the David Hasselhoff of software – it must be big in Germany, but we just don't see it that much in the US.”

...there comes a point where NetSuite has to defend its solution in competitive deals. How is it going to convince me that I should trust it over one of those competitors or, in a manufacturing deal with say a Plex Systems or in professional services against the newly enlarged FinancialForce?

7. We all like to think the market is more mature than it really is. Phil Wainewright has correctly pointed out that the real power of cloud apps in the enterprise is their ability to transform processes and provide companies with new ways of doing business. We have seen precious few examples to date. How is that working for NetSuite?

8. At the last earnings call, NetSuite seemed to be signalling a relatively weak outcome for the full year. What does it believe are the gating factors given it is expanding the partner network while SAP seems to be on a customer acquisition run rate that is not far off that reported by NetSuite? The company cites foreign exchange rates but I am struggling with that one.

I will report back on how NetSuite answers these questions with further thoughts on what customers are saying.

NetSuite are graciously comp'ing my transatlantic travel and hotel costs.

Endnote: As an extra treat and if we have time, Vinnie and I will be facing off against one another about pace layered innovation. It won't be a 15 round slugging match but more like a 3 round amateur match. All to be caught on video. If you follow my Tweetstream you'll know what I'm talking about.

Topics: Microsoft, Apps, Oracle, IT Employment

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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2 comments
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  • NetSuite, SAP, Oracle and what not...

    I love NetSuite, why? Because it's simple to use. I'm in the service industry.
    You just need to ask for a demo to SAP to see their online solution and compare it with NetSuite. Then ask each how long the implementation will take. The value of the support contract. Or even better, ask SAP to create a new custom form.
    I have seen project managers cry and resign trying to implement SAP, long past its project deadline. I never saw a NetSuite project manager miss one unless I changed the scope. (But then there's a new deadline).

    I was thinking of going SalesForce+Financial Force. But I hate paying for integration when I know NetSuite provides it all within 1 software.

    My dream would be to have google release a full app like NetSuite. I know this would kick all the other apps right off the ground.

    Older software have been designed to be server based and hold TCO which are too high. If I lived in the USA, I'd bet on the new businesses, like NetSuite and eventually Google, if they went down the CRM/ERP/E-Comm route. Can you immagine?

    An issue I see when dissin' NetSuite is this: Are you questioning the company or the product? If you dont trust the company, then get the product from someone else and have that business implement and provide the support you are ready to pay for and quality you expect.

    As for the product, it's used by thousands of customers across 5 contients and available in over 10 languages. It's the ONLY multi-subsidiary solution to offer businesses a live view of their business. Yes, that's right, no need to consolidate using spreadsheets and have your global vision only 2 to 5 weeks after year end.

    Keep on with the good work, the industry needs sceptics and people who ask the questions others just keep for themselves.
    wawadewa
  • Still the best ROI

    Hi,
    It's been over a year and I have just run a price comparaison between Netsuite and (Server+Sage Line 100+SalesForce+Business Objects) and NetSuite is still over 4x cheaper than any alternative. Check the Red Cross comparaison here: https://www.facebook.com/photo.php?fbid=497543646954690&set=a.477613598947695.98007.103096946399364&type=1&theater
    wawadewa