IBM and NetSuite connect with Cast Iron

NetSuite and IBM have announced a partnership that sees NetSuite now having the ability to connect to on-premise solutions via IBM's recent Cast Iron acquisition. The obvious target is SAP.
Written by Dennis Howlett, Contributor

NetSuite and IBM have announced a partnership that sees NetSuite now having the ability to connect to on-premise solutions via IBM's recent Cast Iron acquisition. The obvious target is SAP. This will now allow NetSuite to compete more directly with Business ByDesign, Microsoft Dynamics, Sun Systems and others that have traditionally offered a credible 'surround' solution for SAP customer subsidiaries that do not need the 'weight' of an SAP ECC6 offering.

James Governor, analyst with Redmonk said: "Hub and spoke integrations have been around for a while but this stuff is really sweet. It is drag and drop, dead easy. It removes that old problem of needing three integrators on a project for months at a time. It certainly makes it easier for IBM to get into the kinds of company that would not otherwise think of them. More important though is this allows IBM to start proliferating all sorts of integrations. It's not quite an Apple App Store thing but it's that kind of idea." On his blog, James said:

Cast Iron may be way more interesting that that. Its an API management platform – IBM will do the work to track all these APIs and help organisations build apps that target them. Unlike many web companies enterprises don’t really have time to concentrate on tracking API changes. Holy crap. I just realised its also an amazing data play. Cast Iron effectively instruments the world of APIs. IBM is going to know exactly what’s going on in cloud development- what’s hot and what’s not.

In a related post, he said:

Turns out IBM just acquired Cast Iron Systems. What’s the big idea?

Take companies onto the cloud. That’s right folks- its a cloud onboarding play. The firm has 75 employees, was founded 2001, and has a stellar list of partners… and adapters to integrate with them. Pretty much every SaaS company of note is on the roster. We’re not just talking Netsuite salesforce.com and RightNow technologies though- ADP is another example.

It will be interesting to see how the relationships among these different partners plays out. IBM now becomes the deal broker of choice in situations where there are many subsidiaries requiring cloud connections. It is bound to cause tensions with SAP, one of IBM's most important partners, coming as it does on the eve of the general availability of Business ByDesign.

From NetSuite's perspective, IBM now becomes a secondary channel through which it can reach a much larger market. It will be particularly important to NetSuite's OneWorld which claims:

...the first and only on-demand system to deliver real-time global business management and financial consolidation to mid-sized companies with multinational and multi-subsidiary operations.

With NetSuite OneWorld, you can manage companies with multiple subsidiaries, business units and legal entities all from a single NetSuite account. NetSuite OneWorld seamlessly handles different currencies, taxation rules, and reporting requirements—at a fraction of the cost of traditional on-premise ERP solutions.

How that works out in the real world may be another matter. SAP is better known among manufacturing companies rather than the service businesses with which NetSuite is more closely aligned. On the other hand, Business ByDesign is not slated for global availability anytime soon, giving advantage to NetSuite in the short to medium term. But then according to NetSuite, IBM picked them rather than the other way around. Glenn Griffin, Vice President of Business Development at NetSuite said: "IBM has a huge interest in NetSuite OneWorld as IBM's base is enterprise not just manufacturing. That is the market our partnership will attack. Our intent is to co-market the solutions across all IBM distribution chain: channels, direct sales, consultants." It is clear NetSuite sees this as a critical part of its go to market but it will be very much the junior partner, dependent upon the extent to which IBM's sales people are interested in selling Cat Iron appliances.

Depending on how hard IBM pushes this, the impact on the broad applications market could be profound and in particular in the mid-market. Where traditional deployments have taken years, cloud offerings typically take 3-6 months. The cost profile for implementation alone is bound to raise questions. It will force SAP and Oracle in particular to rethink how they package up their offerings so that fast track means what it says and not a shaving of a few months here and there.

During the recent NetSuite earnings call, CEO Zack Nelson played whack-a-mole with SAP:

Of SAP he referred to Bill McDermott’s (co-CEO SAP) appearance on Reuters where he said that SAP was about to deliver a 99 mile an hour curve ball aimed at NetSuite. That’s a reference to Business ByDesign. Continuing the baseball metaphor in regard to customer numbers, Nelson said: “The current score is NetSuite 6,600, SAP 100″ and in regard to SAP validating the market, he added: “I’d like to thank SAP for being our IBM.”

Whichever way you look at this, cloud based ERP just got a whole lot more interesting.

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