OAKLAND, Calif. — With the release of Version of 11 of its flagship product, NetSuite Inc. of San Meteo, Calif., is trying to move further past traditional customer relationship management.
The company’s approach is to tie together many browser-based applications for accounting, sales force automation, support, service, marketing, warehousing or inventory and others into a suite targeted at the mid-market space.
Zach Nelson, president and CEO of NetSuite, believes there is going to be a battle for the mid-market with Microsoft and its Business Dynamics offering, SAP with its Business One product and other vendors such as Sage Software and Salesforce.com.
“The mid-market looks like the enterprise market of 10 years ago — but on steroids. It is also fragmented and customers in this space do not have $5 million for PricewaterhouseCoopers to fix it,” Nelson said.
The key for NetSuite, Nelson believes, is that his company’s software suite is hosted. His competitors, he claims, may have a suite, but does not compare with NetSuite’s OnDemand, or they believe in the OnDemand model without a suite of products. He admitted that Microsoft is not one of those competitors. Nelson said the software giant from Redmond, Wash., is working on an hosted suite, but he ventures it will take seven years for Microsoft to complete it.
Tony Bone, managing partner of Zeroedin Inc. of Toronto. thinks NetSuite will have a huge impact in the mid-market as well as small business. NetSuite is targeted at the mid-market, but Bone said the software can go down to one user.
NetSuite comes in a five user version, a 20 user version and an unlimited version.
Zeroedin just finished up its first NetSuite implementation. The company specializes in integrating point of sale systems with NetSuite. “It’s an untapped market and NetSuite is four to five years ahead in the market,” Bone said.
He added the company was the first company that recognized OnDemand in the market and put together a suite for the mid-market.
“It is everything a mid-market customer would want. It’s a single database with many features engineered to work together,” Bone said.
Clean-Mark Service Group of Toronto recently switched over to NetSuite from Salesforce.com. The company sources out independent cleaning providers across Canada for its clients. One of Clean-Mark’s more high-profile clients is Staples. Clean-Mark personnel goes in after hours and sweeps the floors, takes out the trash and tidies up around the aisles and counter tops at Staples, said John Vavitsas, president of Clean-Mark.
The company wanted to increase its revenue beyond its cleaning service. With a large database of customers Vavitsas believed it would be a natural extension for the company to begin to supply these customers with paper towels, toilet paper and other cleaning supplies via its Web site. NetSuite helped Clean-Mark get this venture off the ground, Vavitsas said.
Richard Morochove, IT consultant for Morochove and Associates of Toronto, believes it was a good move for NetSuite to put the AJAX technology into many more aspects of the software. “AJAX makes the software that was formerly bound by the limits of the browser more flexible and it looks like regular software than just a browser,” he said.
However, Morochove said that conservative customers in the accounting market especially may balk at having next to no control of its data. NetSuite stores the data off site for customers.
“NetSuite’s biggest obstacle is customer’s saying ‘where is my data’,” he said. “Will customers be comfortable moving their data off-site and out of their control?’
Another new feature is SuiteScript, which enables the software as a service application to provide customized platforms for customers.
SuiteScript, according to Morochove, will be a key element of Version 11. He said SuiteScript allows for customization, using standard Java. “Customization is a good idea because every business is different.”
Also NetSuite has made updates a thing of the past because it is browser-based, Bone said. “You can go to bed on a Friday and have a brand new version on Monday,” he added.
Automatic updating eliminates infrastructure costs for a customer, Bone added.
However, this benefit may also be a detractor for NetSuite, Bone said. Because the software is browser-based it is prone to delays when the Internet is down. But, Bone also said that with the Web being so ubiquitous today this problem becomes less of a concern.
Channel margins for NetSuite are similar to Microsoft Dynamics products. The key for Zeroedin is that with NetSuite customers sign up with them in a one, two and three-year contract periods. This allows a channel partner to gain re-occurring revenue streams. “You start every year with bookable business and it also allows you to better plan your business,” Bone said.
Nelson said this three-year revenue model will be a low cost option for customers. For example, a 100 user site pays US$178,040 in the first year for NetSuite, Version 11. They pay US$150,200 in year two and US$150,200 in year three. Total savings for a customer over the three-year period is US$478,440 over a comparable Microsoft Dynamics client/server solution.
Morochove said the channel will like NetSuite because the very nature of the OnDemand program it allows them to interact with customers on an on-going basis instead of the one-time sales approach.
NetSuite also released wholesaler/distributor and services company mid-market suites.
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