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NetSuite Business Software Evaluation

NetSuite kicked off operations in 1998 and was one of the first providers of both on-demand Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) business software systems. NetSuite has subsequently become a market share leader for hosted business software systems.

NetSuite's primary owner and majority share holder is Oracle big wig Larry Ellison and there has been a steady migration of staff leaving Oracle for employment at NetSuite, which has given NetSuite the nick name "Little Oracle". The staff, culture and business drive between the two companies is not surprisingly quite comparable.

NetSuite became a publicly traded company in December 2007. The impressive public offering was described as a Smokin Hot IPO, raised about $161 million and earned the company a billion dollar market cap. However, since that time the stock has seen a significant fall and some analysts have turned sour on the stock appreciation. According to NetSuite CEO Zach Nelson, “The IPO was something of a branding exercise for NetSuite. We want to be the SAP of the mid-market, but reaching all those firms is hard."

The company's ten year high growth achievement has not been without significant growing pains. Product stability is questioned by many, the company has seemingly incurred the highest customer turnover in the on-demand CRM industry and the hosted software delivery has incurred system downtime - which is especially troublesome as the company has no backup for its services.

NetSuite's most recent product release is the release of NS-BOS, the NetSuite Business Operating System, a development platform and environment targeted at ISV (independent software vendors) with industry specific domain knowledge and market expertise looking to leverage NetSuite's SaaS infrastructure. Whether this new release is a reaction to Salesforce.com's Force or is a similar Platform as a Service (PAAS) strategy or even whether the ISV development community is willing to part with industry standard technologies such as Java/J2EE or .NET for a proprietary environment is a significant question that will be answered over time.

NetSuite's competitive strengths include its broad back office and front office integration, a flexible e-commerce storefront add-on and a recognized corporate brand. NetSuite, originally named NetLedger, began with only hosted accounting software and more recently added hosted CRM software. It's therefore not surprising we find NetSuite's back office ERP software more competitive than its front office CRM software. Competitive weaknesses include a hard to understand user interface, unintuitive navigation and a portfolio of up-charges that can make your head spin. As the company's average customer is less than 10 users and the company hasn't earned any of the largest SaaS deals touted by Salesforce.com and Aplicor, the product's scalability and acceptable performance with higher volumes has yet to be confirmed.

NetSuite faces various competitors. The company shows reservation when deciding whether to compete in CRM-only sale opportunities. For those sale opportunities where they do elect to compete and which do not include back office ERP or accounting software, they generally run up against Salesforce.com more than any other single vendor.

For sale opportunities looking for both on-demand CRM and on-demand ERP, the company may run into either Intacct or Aplicor. Intacct has no CRM system, however, partners with Salesforce.com. Aplicor is the only other middle market provider of both hosted CRM and ERP software systems.

Competing for on-demand enterprise level business systems is a battle waiting to happen. While NetSuite and Aplicor currently pursue these business opportunities, SAP has announced Business ByDesign as the company's entree into the hosted CRM and ERP market. SAP intentions for the SaaS industry are suspect by many. While the company 'announced' its Business ByDesign ERP software suite last year, the on-demand software still has not made it to market. Once the hosted solution does eventually arrive, many question whether a sidebar business division of the software titan will be able to compete with the more focused and mature SaaS only solutions. Even SAP co-founder and Chairman Hasso Plattner, described SAP's prior CRM product release with disappointment. According to Plattner at an April 10, 2008 event, "We had a shitty CRM system." Others question whether SAP's hosting strategy is more of a defensive approach designed to slow down its client erosion going the way of SaaS or is a loss leader approach designed to acquire SaaS clients and then steer them toward the company's on-premise flagship product.