NetSuite pushes up market with SRP
Earlier in the week I attended a NetSuite event where the company showcased European customers who have bought into NetSuite's 'service resource planning' (SRP) offering. For those that don't know, NetSuite's SRP is the outgrowth of its 2008 OpenAir acquisition.
Next week I will publish video extracts from customers that included Siemens Global Services and Software AG, both of which are SAP customers.
An ebullient Zach Nelson, CEO NetSuite hinted the company is tracking annual revenues in the region of $200 million. If correct, and we won't know that until we hear the upcoming earnings call, this represents a significant increase in business for the company that last fiscal year recorded revenue of $166.3 million. I pulled Zach on what he said. Jokingly, he referred to slide one of his presentation, the Safe Harbor Statement: "It's a sort of a prediction and it may or may not work out." One executive I spoke with said he would be 'disappointed' if NetSuite doesn't reach something around $350 million in the next couple of years. These are ambitious thoughts, even for a company that is in a high growth market. But then with companies like Lloyds Register onboarding more than 7,000 of its 9,200 employees onto NetSuites's professional services solution, the company is acquiring a reputation for being able to reach further up the food chain.
I was particularly interested in talking to the Siemens and SoftwareAG representatives because these have traditionally been solid SAP shops. In both cases, the companies are SAP suppliers and customers. The burning question on my mind was whether and when they'll likely kick out SAP in favor of NetSuite's accounting. Accompanied by nervous laughter, the answer was the same: not any time soon. The strong hint left in the air was that it would happen. Eventually. I then asked how many more years were they likely to continue paying maintenance for established back office functionality?
The answers that came back reflect something I've seen repeated over and over in SaaS deals where there is an incumbent accounting application. It is darned hard to get CFOs to move to cloud computing. They don't generally want their environment displaced - however bad it may be - and are overly concerned about security expressed in an often irrational and illogical manner. If misconceptions remain unchallenged then cloud deployments will not deliver the full range of potential benefits. This is where I believe the cloud ERP players need to up their sales game and challenge the CFOs mindset.
Another problem I see is that so far there is very little publicly available research to explain the range of benefits that can be extracted from cloud based systems. I'm aware of a few projects of that kind (I'm involved with one as is an outsourcing colleague on another.) Early results suggest there are many more benefits than I first thought. Rather than let the cat out the bag too early, I will simply say that there are some genuine surprises.
What I can say is that for those businesses that are using cloud for transformational purposes, the benefits can be staggering. In one case, a company grew revenue 200% while increasing its service staff by less than 15%. That would not have been possible without a planning solution that sits in the Internet cloud.
When set against that kind of background, it is easy to see why NetSuite execs are so bullish.