NetSuite CEO Attacks Three SaaS and Cloud Myths

zachnelson

First, some background: Nelson spoke pretty quickly so The VAR Guy is largely paraphrasing his comments. Here’s the list of top 3 SaaS myths:

Myth 1: Complex Processes Don’t Run in the Cloud

The opposite is true; the Internet is a great platform for complex processes, Nelson said. Traditional on-premises applications are hairballs, and every business subsidiary within a company has its own client-server hairball. SaaS, in stark contrast, delivers one system for running a business, Nelson asserted. Plus, he said it’s far cheaper to run SaaS vs. Client-Server. In one example, Nelson mentioned that a customer spent 3% of revenue running SAP but reduced that to 0.1% running NetSuite.

Myth 2: Customization is the Achilles Heel of Cloud Apps

In fact, SaaS is far more customizable than client-server ERP, Nelson claimed Killer feature of SaaS is mapping applications to your business processes in a day not a year. According to NetSuite’s 6,600 customers, the six most used features in NetSuite are (6) CRM and ERP (5) orders and invoicing (4) custom code (3) custom dashboards (2) journal entries (1) custom records — adding brand new tables to the database. Three of the top four features in NetSuite are customization, said Nelson.

Nelson also announced “true Cloud-to-Cloud integration” — tying NetSuite to Google Apps with Single Sign On, and a similar deal with Amazon Web Services. Stephen Cho, director of the Google Apps Channel and Alyssa Henry, GM of Amazon Web Services were on hand as part of the announcements.

Nelson also mentioned third-party applications on top of NetSuite can now have version control. Plus, Nelson said SuiteCloud 2.0 allows vertical application development.

Myth 3: Channel Partners Don’t Exist for Cloud Apps

How refreshing — a SaaS CEO who specifically mentions channel partners in his keynote. This is a partner conference, after all. But many SaaS partner conferences focus on ISVs and hosting partners. Nelson’s partner comments focused on traditional channel partners — resellers, integrators, solutions providers, consultants, etc.

“I think some of the most innovative things you’re going to see will be in the channels,” said Nelson. “Most SaaS companies started direct because it was a completely unproven model. We’ve always believed in channels. We think the opportunities are with the Fortune 5 million — not just the Fortune 500. So we started a channel program. We have about 200 channel partners today; they were the true visionaries in believing in SaaS.”

NetSuite’s channel sales have grown at a compound annual growth rate of 40% since 2005, Nelson said. “You’re going to see a major shift this year from stone age client-server to SaaS channel applications.”

Also, Nelson said the ISV and OEM channels will emerge in the SaaS. Nelson emphasized white label services increasingly offered by NetSuite’s partners.

Meanwhile, systems integrators have not raced to SaaS, Nelson conceded. But he’s begun to see SI’s offer NetSuite to customers. Nelson sees accounting integrators creating value on top of NetSuite. And also bigger SI partners like Fujitsu addressing opportunities in Japan. Next up, NetSuite and Wipro announced a partnership today to build a global practice around an ERP SaaS solution.

The VAR Guy will offer more analysis from the NetSuite SuiteCloud partner conference later this week.

Sign up for The VAR Guy’s Newsletter; Webcasts and Resource Center; and follow The VAR Guy via RSS; Facebook; Identi.ca; Twitter and VARtweet.