I spent time this week in San Francisco with the Netsuite team and a good cross section of customers and partners at its first annual global user conference. The conference was well managed and very well attended with over 2000 attendees. From my perspective it was also packed with content and provided an interesting view into the emerging strategy that is supposed to continue Netsuite on it current path of fast growth and global expansion. I should also point out that I had quite a bit of fun at a special reception that Netsuite hosted for some key partners, press, media, industry analysts and other special friends at Oracle founder and CEO Larry Ellison’s San Francisco house atop Pacific Heights. As views go that one would be hard to top and the food, created by celebrity chief and restaurateur Michael Mina was fantastic.
To me there were two key themes to the announcements that have the potential to provide substantial benefit to customers and prospects while fueling additional growth for Netsuite. One of these themes is the introduction of a new tier of product offering / packaging for the Netsuite OneWorld product line called Netsuite Unlimited and targeted at the enterprise. The second theme was a host of new partnerships, not least of which are aimed at bringing significant social functionality to OneWorld.
Netsuite’s announcement of moving it’s offerings up market is intriguing and perhaps very timely. Partly packaging and strategy shift, the announcement was also tied to some of the partner announcements. The new Unlimited version of OneWorld includes the complete product offering of course and has pricing tiers that scale up by seat bundles. the attack on the enterprise will, for the most part be a direct sales effort although several key partners were announced that should help get Netsuite into the competition. System Integrators (SI) will prove extremely important in the enterprise move and Netsuite added two major partners this week, accenture and McGladrey. The move up market series of announcements also included an appearance by Oracle President Mark Hurd to reinforce Netsuite’s use of the Oracle Database and Fusion Middleware and also to announce Netsuite’s move to offer Oracle Exadata for extreme scalability of Netsuite apps. Moving up market puts them in direct competition to the only other enterprise cloud based ERP offering from Workday and its CRM partner Salesforce.com. In theory Netsuite should already be competing with SAP;s mid-market cloud ERP offering BusinessByDesign, although Netsuite claims to never actually run across them in deals today. The move up market does not mean that they are forsaking their mid-market roots, clearly continuing aggressive sales efforts there.
I say this move up market is timely for a few reasons. First the enterprise is clearly moving more and more of it’s applications to the cloud, especially after the shift in IT and corporate spending strategy caused by the tough economic conditions of the last few years. SaaS based apps also are providing much faster time to value than the on premise alternatives which also equates to faster ROI. As an example of the rapid deployment / fast return model Groupon, a new Netsuite enterprise customer, told the story on stage of deploying Netsuite OneWorld to its rapidly growing operations, 5 international markets live in 6 weeks and in the process of bringing 26 live in only 3 months. The second reason this is timely is the lack of enterprise cloud app offerings and the opportunity to gain share against on premise competitors. As I pointed out above the only other complete cloud ERP suite comes from the partnership of Workday and Salesforce.com. SAP is completely absent from the enterprise cloud ERP discussion and Oracle is only now expanding from its CRM On Demand offering to both CRM and HCM from the new Fusion Applications Suite. I should point out though, that the complete Fusion Applications suite is architected to be offer in a multi-tenant SaaS model, but Oracle has not decided to do that at present. This isn’t at all negative for Oracle though, as Netsuite’s “arms dealer” of choice they continue to make more money as Netsuite grows (and of course Oracle’s founder Larry Ellison is the majority investor in Netsuite).
The only real product weakness for the enterprise in OneWorld seems to be on the supply chain side of the suite. This weakness was readily admitted by Netsuite, by the way, with a promise of new and richer functionality to come shortly to address many of them. Partnering to gain key functionality is a clear part of Netsuite’s strategy, for example announcing this week a new Warehouse Management System built on the SuiteCloud platform by eBizNet, an offering that was key for moving into the distribution vertical. In the mean time Netsuite continues to focus on verticals that don’t require heavy duty supply chain functionality.
The more exciting area for me this week is the move by Netsuite to incorporate social functionality into its portfolio. Netsuite could have started to address the absence of social features in its products by quickly trying to build out a new solution but instead (and perhaps wisely) decided to take the partner route by integrating to well established, more mature and feature rich social products from companies like Yammer and Qontext. Yammer, a new Netsuite partner announced this week, becomes the social glue for the entire OneWorld product by providing the social layer to the ERP system that connecting people, content, data and applications. I’m very happy to see the open approach to solving this problem, with Netsuite opening up access to the ERP suite through an open application called SuiteSocial that connects to social software like Yammer. In Netsuite CEO Zach Nelson’s words it’s the partnering of the system of record (Netsuite) with the system of engagement (Yammer). Partnering with Yammer also offers another important advantage, the ability to work across the enterprise and out into the ecosystem of partners, suppliers, customers, etc., as social is really about tying more than just the companies employees together. Yammer provides a business with its own internal social network but also adds the capability to create a broader business network. Overall this approach allows companies to socialize all of its enterprise processes with connectivity throughout the full ERP system back into the social activity stream from Yammer. This is an important advantage to just deploying a disconnected social layer that is not tied deeply into a companies core business software. Operationalizing social drives social adoption and the greater the adoption the greater the network effect created in the business. Or said another way, the key to success with this type of social product is in getting as many people as possible to actively use the product, the more people that use it, the more value…and the more people will want to use it. This is a great first effort in adding social into the ERP system, but I’d say now Netsuite should look to adding a community management platform partner, connecting to new social support channels in the CRM module, a feature rich socialytics platform and perhaps offering an embedded social platform for activities like blogging and wiki’s.
Congratulations to Netsuite on a very engaging and well run event and on some very interesting content. Time will tell of course but I think the company is on track in many areas and seems to be particularly strong in leveraging both it’s platform / ISV partners and in pulling in significant strategic partnerships to add value to its product portfolio quickly.