NetSuite has turned in a quarterly profit for the first time, despite the economic meltdown, an achievement that CEO Zach Nelson sees as at least in part as testament to the power of The Cloud.
“Our strategy of providing an integrated suite of applications, delivered on demand to small and medium sized businesses and increasingly to divisions of very large enterprises, is even more applicable in these times where cost reduction and productivity improvements are required for survival,” says Nelson. “The cost reduction that our products enable companies to achieve is partially due to the fact that we deliver our applications from The Cloud. Unlike applications like Microsoft Great Plains developed years before the internet became ubiquitous, NetSuite customers no longer have to pay for the resources required to manage, update and upgrade our applications.
“Firms like McKinsey have indicated that our software service delivery model such as the one NetSuite pioneered in 1998 can reduce the cost of ownership by as much as 40%. But NetSuite takes that cost savings a step further by integrating the functionality of multiple applications into a single application eliminating the cost of 'cowboying' together multiple incompatible applications with our suite approach, compounds the value of our offering.
“Synchronizing data between applications, even Cloud based applications, is always difficult and expensive and even the world's largest companies have a hard time of doing it right. Combine this integration challenge and related expense with the multiple training and subscription requirements required for users, the different technical resources required to manage the vagaries of each application and the lack of a single vendor who takes responsibility for the coupled together application environment, and one can easily see why Gartner Group concluded that most companies spend 75% of their IT budgets just to maintain legacy systems .
“We believe companies will continue to migrate to NetSuite because it is far more affordable, provides massive improvements in productivity and moves their businesses to a modern internet based platform that takes them into the future. In fact, an early driver of our growth occurred after the dot com bubble burst when companies moved to NetSuite to reduce the cost of their IT infrastructure and prepare their company for the turn around by building on a modern web based suite.”
Netsuite in action
A good example of a NetSuite customer is Iron Mountain Digital, a provider of enterprise Storage-as-a-Service solutions for backup and archiving which has consolidated multiple disparate billing software systems into one unified billing system within NetSuite's OneWorld suite. “The Iron Mountain Digital deployment is a great example of the power of NetSuite turning a patchwork of systems into a single unified global system of record in only seven months. says Nelson. ““The deployment of delivering a unified system not just in one country but in multiple countries supporting multiple currencies and local taxation around the globe, and the implementation is integrated with other important systems to provide a complete 360 degree view of the customer, and to support mandates handed down by corporate. “
The deployment also required the additional functionality within NetSuite to handle complex usage based billing requirements. This requirement was met by building an application using the NetSuite NS-BOS platform. This is music to Nelson's ears as the firm prepares to announce the names of 3rd party ISVs developing on NS-BOS over the next few months. “The strategy with NS-BOS is really twofold,” explains Nelson. “One is targeting corporate developers and effectively extend the functionality of NetSuite and very much the way Iron Mountain extended our core accounting and billing functionality to deal with complex billing requirements. It's a great example of internal ISV usage, or internal corporate developer usage.
“Then there's the external ISV developer and there we're really looking at multiple camps. One camp is those companies that integrate their existing applications with NetSuite to enhance their value proposition and our value proposition. There are lots of those types of companies. And then there are going to be strategic partners that we work with that are really around the notion of verticalising NetSuite for specific verticals. How we go to market with each of those partners may vary on the partner and the solution, but that's really sort of the landscape of partners building on and with the NS-BOS environment.”
SaaS ISVs and non-SaaS ISVs
That landscape may include ISVs who have been traditionally on premise who now want to move into the SaaS market. “That's a big commitment and we've had a number of discussions with a variety of large providers in that space,” says Nelson. “They have a non-SaaS application and they want to move to SaaS. That non-SaaS application, for example, needs functionality like accounting, like billing, like CRM so they have a choice. They can go build it all from scratch or they can effectively embed NetSuite in their application and use NS-BOS to extend their application to get to market quickly, to use our experience in managing data centres, all of those things.
“There are also other types that have a SaaS offering, but again, they need a rich back office functionality and they want to embed that in NetSuite, so they're also building on NetSuite using their SaaS offering to link to NetSuite in particular for back office accounting functionality. So you'll see both on premise and SaaS based applications building solutions on NetSuite.
“The key differentiation I think for NS-BOS from other platforms out there is that companies are using NS-BOS to extend our application, so they're effectively embedding our accounting, our CRM, our e-commerce in their application,” Nelson concludes. “In other platforms that you see out there, that's not what's happening. They're saying just come here and build your random application on our infrastructure, a very different approach and very different strategy. Ours is obviously appropriate for where we think NetSuite is pointed, and that is in helping companies run their business.”
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