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Mystic Zach’s TCO prediction comes true

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9th Dec 2010
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The war of words between NetSuite CEO Zach Nelson and his arch rivals at German software house SAP is one of the IT industry’s long-running executive soap operas. But it took a mystical turn at last week’s Cloud Business Summit when Nelson was asked for his predictions for the year ahead.

“One thing I predict that will happen this year is that SAP will take its Business ByDesign total cost of ownership (TCO) calculator,” he told BusinessCloud9.com editor Stuart Lauchlan on the afternoon of 30 November.

Two days later, SAP’s TCO calculator was gone, with the following message from the developer: “We are disappointed to see this tool, which was intended to provide customers transparency into all aspects of ownership costs for on demand solutions, be used in competitive posturing. We've decided to take down this TCO comparison to on-premise software until we can ensure that unfair and inaccurate conclusions cannot be drawn.”

In anticipation of its passing, NetSuite captured an image of the calculator before it disappeared and Paul Turner posted samples of its results in his company blog.

Using SAP’s tool NetSuite ran a series of comparisons that demonstrated its costs over a five year period were 40-70% lower than Business ByDesign’s.
 
SAP’s calculator showed a five-year TCO of $510,284 for just 10 users over in a distribution company,  while similar-sized manufacturing companies would end up with a TCO of $496,233.
 
Mini Peiris, NetSuite's VP of Product Marketing accused SAP of falling into the trap of every “stone age” software provider by providing an under-powered product with a high TCO and that NetSuite will gladly step in to eat up SAP’s installed base with a Cloud product that increases productivity while reducing total cost of ownership.

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