NetSuite rides 'two tier' ERP wave

NetSuite CEO Zach Nelson drew some encouraging portents from the company's latest results, reports Stuart Lauchlan on BusinessCloud9.com.

The NetSuite CEO is a master at turning his quarterly results press call into a ritual humiliation of his rivals. While NetSuite is still running at a loss ($7.7m for the last quarter) the underlying figures encouraged investors who took heart from Nelson's claim that ERP in the Cloud is nearing its "tipping point".

Here are some of the key comments from the BusinessCloud9.com report on what the trends mean for the UK ERP market:

• “The UK market for financial management systems actually contracted in 2010. NetSuite gobbled up market share. Our 60% growth rate in the UK was more than four times faster than SAP and sharply contrasted with the ‘in the red’ market share measurement for Sage, Unit4 and Microsoft.”
• “We have reached this tipping point in ERP. What I see with the larger companies is that they are looking at their mid-tier ERP systems mess – and it is a mess. They’ll have some PeopleSoft and some SAP, hundreds of systems around the globe and they are trying to consolidate those. When they’re talking about consolidating at the top tier, they are talking about going from AIX to Unix. Why do it? It’s the same horror show. As they become aware they could have NetSuite instead we will see that accelerate as well.”
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• “[Gartner's] Top Ten [ERP] list – excluding NetSuite – reads like a ‘Who’s Who’ of dead software architectures – Sage, Deltek, Microsoft, Lawson. Just when the likes of Lawson and Epicor are desperate for innovation, they are going to be viewed as ATMs for private equity firms. The trend of private equity firms buying dying software firms will only serve as another ERP tipping point such as those we have benefited from over the last few quarters.”
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• “At Microsoft’s recent Convergence conference, CEO Steve Ballmer jumped in the ‘Way Back Machine’, set the dial for 1999 and announced a Cloud ERP strategy that would make any other software executive blush. His strategy is based on hosting his ancient client server applications. This approach failed a decade ago and Microsoft is hoping its customers and resellers won’t remember that. But customers have grown too educated and smart to fall for the same failed approach twice. While Microsoft has ERP as part of its ‘all in for the Cloud’ strategy, it could be more accurately labelled ‘not at all in’.”
• “[SAP] Business ByDesign is the David Hasselhoff of software – big in Germany but we just don’t see it that much in the US. In the deals where we do see them, the functionality is still very nascent, very weak. It’s still a 1.0 product. Even SAP has announced they have all these features that they still have to bring out. As far as I can see we’re going to be competing with replacing existing SAP and I don’t think we’re going to see a ton of Business ByDesign.

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