• October 29, 2008
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

All the News from NetSuite

Software-as-a-service (SaaS) CRM vendor NetSuite, in the midst of its 10th anniversary, has been turning up the frequency of its announcements in recent weeks. Among them are integrations of the NetSuite platform with OpenAir, the services automation SaaS vendor that NetSuite acquired in June 2008, and the launch of a new campaign aimed at stealing away current Salesforce.com users.

On October 14, the company released NetSuite Services Resource Planning (SRP), a business software suite targeted at professional services organizations. As an integrated suite, SRP addresses all facets of a service business' needs, according to the company. These needs include:

  • Marketing;
  • Project management;
  • Service delivery;
  • Billing;
  • Revenue management; and
  • Repeat business.

The debut of SRP marks deeper penetration of NetSuite into the professional services vertical, a penetration facilitated by OpenAir's history in that market. "Most of the stuff surrounding service companies ties back to OpenAir," says Rob Bois, research director at AMR Research. "NetSuite is just starting to see the fruits of that acquisition. [The company] demonstrated the seamless integration between the two, and let us see the life cycle of a consultant's interaction with NetSuite and OpenAir."

Other SaaS vendors have attempted to serve this market, but a consensus is forming that NetSuite's offering is the most capable to date. "NetSuite and OpenAir, when fully integrated, provide a complete enterprise solution for project-based businesses, and the first and only SaaS application on the market to address their end-to-end process needs," said Mike Fauscette, group vice president for software business solutions at research firm IDC, in a statement.

OpenAir simultaneously launched its new lineup of applications for professional services automation. OpenAir Team, Professional, and Enterprise editions provide a range of capabilities for small, midsize, and large service businesses, respectively. Each version is fully integrated with NetSuite solutions with no further customization needed, but OpenAir's line is still distinct. "They kept the user interface separate by design," Bois says. "The activities each [company] covers are fairly distinct."

As part of the launch, NetSuite announced plans to enable its channel partners to resell SRP as well as all OpenAir products.

This week, NetSuite fired a shot across the bow of rival Salesforce.com, announcing the NetSuite RenewForce Program. The promotion, launched as Salesforce.com prepares its upcoming Dreamforce user conference, is an attempt to entice Salesforce.com customers to drop their subscriptions by guaranteeing 50 percent savings for signing with NetSuite instead. The offer applies to current Salesforce.com customers in good standing, according to NetSuite, and applies to a comparable license of NetSuite CRM+.

It is unclear how effective RenewForce will be in practice, though it is certainly an attention-getter. Salesforce.com customers can sign up for the offer through the end of 2008, but NetSuite has not publicly said how long the 50 percent pricing will continue for customers who sign up under the program, nor what their renewal rate would be. "The timing, two weeks before Dreamforce, is good, but they didn't really address [renewal pricing]," Bois says. "And most of Salesforce.com's customers are on multiyear contracts, so the bulk of them couldn't even take advantage of this program."

RenewForce also opens up the possibility of something essentially new in the world of SaaS CRM: price competition. "I heard Salesforce.com's [chief financial officer] say they've been getting pressure on price, and may have to do some discounting," Bois says. "The company is a bit resistant to that, but most of the customers I know are fairly big -- very few of them are paying list price."

One reason price hasn't been a battleground to date is the relative newness of SaaS. While the concept has been around for some time, it's only recently that SaaS vendors have held a sizable chunk of the market. "During the last downturn, we didn't see much price erosion; this time that may not be the case," Bois says. "Microsoft undercut the other vendors right out of the gate [with the recent launch of Microsoft Dynamics CRM Live]. Then you have open-source solutions like SugarCRM, and somebody like Zoho that's got pretty good CRM for free. You can debate whether CRM is commoditized, but it's price-driven regardless."

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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