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NetSuite Launches ''SAP for the Rest of Us''
The company adds new ERP functionality to its popular on-demand suite, making it difficult for SAP to catch up in the race for the midmarket.
Posted May 24, 2006
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NetSuite CEO Zach Nelson outlined new improvements to NetSuite Version 11.0 yesterday, all the while explaining why SAP's on-demand strategy for the midmarket is doomed to failure. The enhanced suite contains new ERP functionality with CRM-like usability, continuing the company's bid to capture both SMB and midmarket customers. Speaking during a Webcast Tuesday, Nelson said the new ERP capabilities found in Version 11.0 will bring midsize companies the benefits of a single business management suite without the cost, complexity, and rigidity of traditional software applications like SAP. Three key features will now make the back-office portion as easy to use as the front office. NetSuite Version 11.0 adds ERP modules, including project accounting, expense amortization, and bin and inventory management. A new customer dashboard provides a graphical view of each individual customer's purchase history, collections status, yearly pipeline, and custom metrics. Last, new KPI scorecards give Version 11.0 corporate performance management functionality by allowing a company to measure itself against customized goals and time periods. The new capabilities merge ERP with CRM, according to Nelson. Every interaction of back-office users-phone calls, emails, meetings, documents, and user notes-are tracked in transaction orders like orders, invoices, and shipments, enabling the automation of workflows like collection emails and phone calls. "We've built a single integrated application designed to have everyone around your company transact in this common environment," Nelson says. Analysts have also had a positive response to NetSuite's latest offering. " [NetSuite's] focus on a suite is a big contribution to improving productivity. NetSuite is providing customers with a set of applications that look, feel, and act alike," says Sanjeev Aggarwal, senior analyst for SMB strategies at Yankee Group. In reference to SAP catching up to NetSuite in the midmarket, Aggarwal says "it would likely take a multiyear plan to turn over a complete business suite that would compete with NetSuite. You've got to make a big architectural shift to truly make it on-demand."
Never one to shy away from criticizing his competition, Nelson explained that while SAP's hosted suite does have considerable integrated functionality, it misses on the three other key requirements of developing a business application for the midmarket-ease of use and implementation, ease of customization, and low cost delivered via a true on-demand model. Nelson says SAP's hosted offerings will be difficult to customize because "you have to learn SAP's language to customize things. I'm not privy to their strategy of how they're going to host this. Most companies have basically attached Citrix to the front end of an on-premise application to make it on-demand," he says, referring to Microsoft's on-demand CRM offering. With no clear leader in the fragmented midmarket applications market, and with NetSuite focused on delivering an integrated application designed and built for the on-demand business model, Nelson sees NetSuite becoming the "SAP for the rest of us." Related articles: NetSuite Episode 11: Revenge of the Suite SAP Takes a Dual Approach SAP Targets Enterprise SOA
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