NetSuite slams SAP Business ByDesign

NetSuite slams SAP Business ByDesign

Summary: Not content with lambasting SAP for not being in the SaaS market, NetSuite now thinks SAP is making life tough for the channel. I'd argue quite the opposite. The market is changing and all players need to adapt.


As sure as night follows day, NetSuite comes out slamming SAP Business ByDesign. In a piece on The VAR Guy, Zach Nelson, NetSuite CEO is quoted as saying in email:

  1. It seems that SAP is bringing their old weaknesses (namely weak customization and static locked down business processes) to the SMB market. It appears that they are delivering the worst of all worlds – a non-customizable solution with weak native verticalization.  As a result, customers are forced to use what SAP defines as best practice, not the way the customer feels is best.
  2. A fixed bid consulting offering defined by SAP is horribly “channel-unfriendly.”  The channel is expert in defining services for customers, so again, it seems like SAP is forcing an unnecessary change in the channel’s business model.

Ouch. That's gotta hurt. But is it true?

I recall a conversation with Hasso Plattner, one of SAP's founders who said that in the early days of R/3 they made a breakthrough deal that catapulted SAP from being a mid-range provider to one that allowed it to kick start its march to dominating the Global 2000. The price SAP paid was to allow customizations. In fact, almost all SAP implementations involve customizations. That led to SAP accumulating a catalog of many thousands of 'products' most of which were one off. Plattner said he never wanted to go back to that situation.

The flip side is that 25-30 years on, SAP has thousands of implementations from which it can draw what it terms 'best practices.' Whether you agree with their definition of a best practice is open to debate. Having seen ByDesign on several occasions, my initial assessment is that they've done a good job of implementing a clean and not overly complicated solution, especially on core financials, my main area of interest. I mean - just how many ways are there to enter a debit or credit? There is nothing differentiating about core financials or core HR admin. I'd even argue that SFA is not that special. So why would I as a customer want to hang on to something that doesn't provide competitive advantage? More to the point, why pay for customizing it?

Innovating off those core processes is another matter altogether. NetSuite allows this as does SAP so what's the beef? Yes, SAP's verticalization is nascent but it is broadly complete for core functions. Can NetSuite say the same across all the functional areas SAP is offering in BYD?

As to fixed bid consulting. I wonder if Zach has shot himself in the foot on this one. Hands up all those who want to give a channel partner, SI or VAR a blank check? Anyone?

I've been yelling at SAP for years to enforce a fixed price service from its partners, something it has been reluctant to do. On this occasion I applaud them. As I said elsewhere, they are setting a benchmark for the VAR's to follow. They can offer the channel a different model that provides different revenue streams. The world is changing and customers are no longer prepared to tolerate endless streams of consulting activity. They want fast and cheap. If SAP can provide partners with the potential to develop multiple revenue streams then why would VARs kick up a fuss?

The only way you can do that is through a methodology that will get the customer up and running within a limited timeframe. Claiming between three and eight week delivery is ambitious on SAP's part but it is an order of magnitude more customer cost friendly than traditional ERP implementation. I still think they could do more. And yes - the VARs will scream and shout. Tough. They should have customers needs right at the centre of the engagement, not as a bi-product.

But in the end, what I, NetSuite or SAP say doesn't matter. Customers will be the arbiters. Let's come back in 12-18 months and see where we all are.

Topic: SAP

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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  • Fix bid implementation

    I'm all for fixed bid implementations - was doing it in the 90's and am shocked it has still not become standard in the market.

    That said, I did not dig deep in SAP's announcement, and don't know if it is a mandated fix bid through all channels, or just one for implementations performed by SAP itself. If the latter, it has some market regulating value, but for SAP's sake let's assume their own implementations will be a fraction of all.

    If it is a mandatory fixed price for channel partners, then I agree with Zach, it's channel unfriendly. But then I think it will soon become a not-to-exceed ceiling and we will in fact see price differentiation between SI's.
    Zoli Erdos
    • RE: NetSuite slams SAP Business ByDesign

      @Zoli Erdos It is entirely consistent with what SAP said at SAPPHIRE ie for SAP implementations. I have no evidence it is mandated.
  • The old game

    I have checked the offer ... it is definitly the old game ... just at a little lower rate organized a different way. The inital fee is definitly exatly the offer for a setup with little consultancy that one already pays if the system is inhouse.
    • RE: NetSuite slams SAP Business ByDesign

      @michaelthuma2 are you talking B1? I'm not understanding this response. What consulting are you going to need as part of the implementation? SAP is providing bags of help in the presales situation.
  • Is Zach worried that is time is running out?

    nothing new under the sun here - SAP had to deal with statement like the one offered by Zach from Best Breed Vendors for over 15 years - Baan had these comments in the mid 90's then it was Peoplesoft in the late 90's then Siebel in the early 2000's - Where are these guys again today? - The key for SAP is to keep focusing on the customer and engineering great software. The rest is just noise that you have to expect from an organization that now has every reason to get worried as they are no longer the only game in town. SAP By Design was a bamboo that took time to come out of the soil but now it?s out and the SAP sales machine can get active with it. As for Zach let him enjoy the stage time but the clock is now ticking. As always, the market will determine who deserves to win
  • RE: NetSuite slams SAP Business ByDesign

    Fixed priced implementations are definitely customer friendly of course. I believe partners have the option of using this model or not. Not getting how this is "channel-unfriendly".<br><br>Customizations. Based on our experience the SMB wants a highly configurable SaaS product without having to hire resouces to deploy and maintain custom code around bad business practices. I dont think best practices are based around what SAP thinks - more around what the customers have shown.
  • RE: NetSuite slams SAP Business ByDesign

    We became an early channel partner in 2009 for SAP Business ByDesign, and before then and still today have been an active player in the SAP ecosystem with our R3 practice. I have to disagree that SAP?s offering is ?channel-unfriendly?. We?ve developed SAP enterprise products and have specialized enterprise services offered at a fixed bid. That has been our model for years, so when we took on SAP Business ByDesign in 2009 we knew from our personal experience that this is a proven model.
  • user type

    I have a question- Does the Team User CRM ($89 per month) has the ability to process sales order and enter customer or product data into the system?
    Would anybody be so kind to help me with this question.