SuiteWorld 2014: NetSuite talks channel investment

News Christine Horton
May 18, 2014

SuiteWorld 2014: NetSuite talks channel recruitment, unveils new partner programme and products

Cloud-based software vendor NetSuite (NYSE: N) has laid out its plans for growth in Europe, citing further investment in channel recruitment, as well as a new European datacentre scheduled for early next year.

“We have a commitment to bringing on new partners and growing their business,” says Martin Painter, who leads international business development at the firm, which provides financial, ERP and omnichannel commerce software via the cloud. “We are continuing to grow across the channel, and across the UK operation, which we wouldn’t be doing if we weren’t successful.”

“We’ve almost doubled the number of people in the UK since I joined seven or eight months ago,” adds John Campbell, EMEA channel director at NetSuite. “That includes a dedicated person for partner recruitment, as there have been so many enquiries.”

The execs were speaking to Channel Pro about NetSuite’s channel strategy at its annual SuiteWorld customer and partner event in San Jose last week. Partnering was a strong theme throughout the event, with COO Jim McGeever telling attendees: “NetSuite has by far the highest percent of their business delivered by partners than any other cloud company.”

Meanwhile, Campbell spoke about the potential new business that NetSuite’s planned new European datacentre will bring. He said the datacentre – which is scheduled to open late 2014 or early 2015 – will attract a raft of new customers in sectors which are bound by tight regulations over where their data is stored, such as government, legal and finance, as well countries like Germany, and some Middle Eastern countries that are sensitive to their data being stored in the US.

It’s a level of confidence; it’s a sign of commitment,” he maintains.

Landing punches

NetSuite has a reputation for not pulling any punches when it comes criticising its rivals’ offerings, and CEO Zach Nelson’s SuiteWorld keynote this year was no different, as he laid into Microsoft, SAP and Sage’s growth figures in front of the 6,500 attendees.

He announced that NetSuite was the fastest growing financial management system (FMS) vendor globally in 2013, based on data from the Gartner report, Market Share: All Software Markets, Worldwide, 2013. He said NetSuite grew in excess of 40 percent in 2013, breaking into the analyst firm’s list of top ten FMS providers worldwide.

Nelson went on to compare this to Microsoft’s growth rate of five percent in the arena, Sage’s less than one percent growth, and SAP minus 1.45 percent growth. “These guys give me so much material,” he joked.

The firm also lays claim to being the fastest growing – in addition to the only pure cloud FMS vendor – among the top 20 FMS vendors in EMEA.

In the UK Sage has the lion’s share of the FMS market, with NetSuite coming in ninth on the list, with 2.1 percent market share, according to Gartner. However, NetSuite has been quick to capitalise on Sage’s unhurried move into the cloud, approaching their resellers with a ‘pure cloud’ alternative for their portfolios.

“If a partner doesn’t have a cloud offering as part of their portfolio, they’re opening the door for the competition to come in,” says Campbell, who also dismisses the likes of Microsoft, SAP and Oracle, as only “paying lip service” to the cloud.

The exec goes on to say that NetSuite’s margins of 30-50 percent on the first deal, and 30 percent on subsequent renewals is a large carrot for potential partners.

Currently around 40 percent of NetSuite’s business goes through channel partners, from small, specialist partners to agreements with the likes of Cap Gemini and Accenture as they continue to build their cloud practices.

NetSuite wouldn’t break down channel figures for EMEA,  but 2013 signings to the NetSuite Solution Provider Programme in the UK and Ireland include Dublin-based Covali, which has launched an ERP practice on NetSuite; Ensphere Consulting, a Warrington, UK-based reseller of Sage ERP and CRM founded six years ago, and OSSM Cloud Solutions, another Dublin-based firm which launched a new NetSuite practice last year.

Says OSSM managing director, Raymond Ryan: “We’ve seen an evolution in understanding of the cloud in Ireland. Where once we were explaining it, now people are deploying it. NetSuite is cloud software as it should be, a solution that runs an entire business on one platform.”

However an interesting development is the addition of e-commerce, alongside an ‘omnichannel’ strategy which sees NetSuite position itself apart from other core financial or ERP vendors. However, it’s still these core areas that are key to engaging new customers, according to Campbell.

“The core piece – the financials or CRM or ERP – they’re fundamental. We’re telling newer partners coming on board, focus on that as you can implement it very quickly; you get the confidence of the customer, the business is all running and then they have the opportunity to ask, ‘What is your strategy going forward for the next three, four, five years?’” he explains.

“It gives the customer flexibility, and allows the partner the skills set to expand the business into e-commerce, where before they couldn’t do that. We’re lowering the barrier for them to expand their business.”

New features and specialisation

Elsewhere the vendor took advantage of the event to announce a raft of new products and features.

One product launch welcomed by partners was NetSuite’s new services resource planning (SRP) solution, a cloud suite developed to meet the needs of product and services companies in one single system. It brings together ERP and professional services automation (PSA) to enable project- and product-based businesses to run their entire business life cycle—from project management, resource management, time-and-expense management, to project accounting—all in one unified software solution.

Andrew Peddie, founder of UK NetSuite partner, First Hosted, was particularly receptive to the offering: “We’re growing quickly, and struggling to manage our resources effectively, so when we saw the functionality being rolled out around SRP, it was the answer we were looking for. I strongly believe you should use what you’re asking other businesses to use.”

NetSuite also says it is making it easier for partners to develop applications, and urged them to focus on specialisation in a bid to stand out from the competition. “That’s the exciting opportunity for [partners], be it geographical or vertical,” says Painter. “That’s what attracts them to NetSuite; it’s a sound foundation that they can make attractive to very specific industries.”

“Our partners have built up incredible skills and expertise on the NetSuite product,” Nelson told attendees. “The evolution of our channel is incredible.”

Nelson revealed that the company purposely left its partners alone to develop their NetSuite businesses. “NetSuite’s strategy for how we work with channel partners is different to how we work with other implementation partners,” he explains. “We’ve always asked our partners to go out and engage with the customers on their own. We don’t pass them leads; they go and leverage their expertise to make great solutions for users.”

New BPO programme

NetSuite also launched a new partner programme, which allows BPO partners access to the NetSuite SuiteCloud. Inaugural partners include Capgemini, McGladrey and Accretive Solutions.

“With this new partner programme we’re providing the best of both worlds to BPO providers and their customers—an enterprise-class financial system that can be deployed anywhere in the world at a fraction of the cost and in a fraction of the time of traditional on-premise ERP,” says COO, McGeever.

“We’ve seen strong market demand for this type of programme and we're looking forward to working closely with our BPO partners to simplify the outsourcing model and aggressively lowering their operating costs moving forward.”

“The combination of BPO and the cloud is a natural evolution of the market,” comments Christine Dover, research director enterprise applications and digital commerce at IDC. “Businesses can outsource their processes to BPO providers and BPO providers can turn to SaaS vendors to manage the IT infrastructure and software maintenance. The result is a scalable, efficient market that presents savings and agility for all sides with great prospects for growth.”

“We think it’s going to be a great driver for growth,” says McGeever.

2014 and beyond

Gartner expects growth of seven percent overall just for the FMS market in 2014 globally, including on-premise and cloud-based solutions. For cloud-based FMS only, Gartner forecasts total software revenues to grow close to 30 percent in 2014.

The software market has been changing shape over the past five years, and cloud is driving the bulk of this change as software vendors acquire and provide applications and infrastructure technology to support the cloud and the Internet of Things (IoT) movement,” comments Joanne Correia, research vice president at Gartner in its report. She uses the example of a pure cloud vendor, Salesforce.com, making the top ten list of enterprise software companies for the first time.

These figures will bolster NetSuite’s belief that it’s from-the-ground-up cloud offering will continue to steal market share from the more established software players. Undoubtedly it will keep taking a swing at its rivals as it does so.

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