NetSuite Saps a Competitor and Shows Growth

For the second time in two weeks, software-as-a-service (SaaS) vendor NetSuite has launched a campaign to lure customers away from a specific competitor. This time, the target is SAP, whose delayed Business ByDesign SaaS offering for the small-to-medium business (SMB) market has already been the subject of NetSuite strategizing. The campaign, Business ByNetSuite, offers cost savings of 50 percent or more to current customers of SAP R/3 who switch to a NetSuite deployment with a comparable number of user seats, including NetSuite Gold Level support.

Business ByNetSuite is similar in structure to RenewForce, the campaign launched against Salesforce.com last week to coax the rival SaaS vendor's customers to change teams. Both are limited-time offers, open to customers in good standing with their respective providers.

NetSuite has developed an SAP migration program, which includes a set of services and third-party tools designed to help ease the switching process. It includes 100 hours of free professional services time that can be applied to business process mapping, configuration, data migration, end-user training, and deployment assistance, according to the company.

In addition to complete migration away from SAP, NetSuite is giving prospects the opportunity to integrate NetSuite into an existing SAP R/3 deployment. Three partners  -- Boomi, Cast Iron Systems, and Pervasive Software - are on call to aid any data migration or integration needs that may arise.

"This is more of an attention-grabber than a major move to acquire new business," says Jeff Kaplan, managing director of SaaS consultancy ThinkStrategies. "To their credit, it shows a level of confidence in being able to offer these prices." Kaplan further notes that the real competition is not between CRM vendors like Salesforce.com and NetSuite, but between SaaS vendors and traditional software vendors.

NetSuite's confidence was further bolstered on Monday when the company announced its earnings for Q3 2008. Total revenue for the third quarter was $40.4 million, a 44 percent increase over the third quarter of 2007, and an 11 percent increase over the second quarter of 2008. Net loss for the third quarter of 2008 On a GAAP basis was $(6.2 million), or $(0.10) per share, compared to $(1.8 million), or $(0.21) per share in the third quarter of 2007.

"We are pleased with our record third quarter results, and we believe our top-line growth makes us the fastest-growing ERP-based suite in the market," said Zach Nelson, CEO of NetSuite, in a statement. "While market conditions remain unpredictable, we believe that the cost-reduction and productivity enhancements provided by NetSuite's on-demand integrated suite will be highly sought after by customers as they navigate through these turbulent times."

While the financial data didn't cause much of a stir, it is a sign, along with NetSuite's 36 consecutive quarters of revenue growth, that the market for CRM and related applications technologies remains vital. "Wall Street wasn't particularly excited, mainly because it had higher expectations," Kaplan says. "I was very pleased; NetSuite's continued strong growth is good for SaaS."

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