NetSuite slams SAP Business ByDesign

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.
Written by Dennis Howlett, Contributor on

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.

Editorial standards