17th May 2013
This week, the NetSuite SuiteWorld conference in San Jose took place at exactly the same time as arch-enemy SAP's SapphireNow conference in Orlando - "a tale of two conferences," quipped NetSuite CEO Zach Nelson.
And while Nelson was busy unveiling an update to the NetSuite for Manufacturing Edition and announcing that a European data centre is on the vendor's to-do list, he still had time to tell the 5,000 conference attendees why SAP has its priorities wrong.
"SAP talks a lot about Cloud but they're having their user group conference at same time we are and while we'll spend a lot of time introducing a new product, NetSuite for manufacturing, SAP is talking about databases in the Cloud," he said.
"Talking with customers not a single one asked us for databases in the Cloud - they want new features and new app capabilities, but not databases.
"SAP is fighting a battle that was won by Oracle 20 years ago. I think it's a telling week to see what we're delivering this week and what SAP are doing."
With the two vendor events running simultaneously, the sparring between the two firms led to call outs and counter call outs from both sides via social media channels.
For its part, SAP executives got the media attending NetSuite's gig to tease Nelson by offering to move NetSuite's underlying architecture over to HANA, the 'database in the Cloud' that the Netsuite CEO had dissed from the stage to his own audience.
NetSuite of course runs on Oracle database back end technology - as well it might when the majority shareholder is one Larry Ellison!
"We've just renewed with Oracle," chuckled Nelson with mock regret when told of the SAP offer.
Whether the offer is renewed when NetSuite makes a more aggressive push into Germany remains to be seen. But Nelson is well up for parking his tanks on the German giant's lawn with a drive to beef up business in the country.
"It's a manufacturing country so it should work well, but it's also a technology country and we work well with tech companies," he concludes, adding with considerable understatement: "It'll be interesting."
The update to the NetSuite for Manufacturing Edition includes a number of key features designed primarily for manufacturers as opposed to firms working with manufacturers.
"We've had this product in development in stealth mode for about two years and there's a sea change coming in manufacturing. Not everything will be outsourced anymore. You'll see people coming back onshore driven by new capabilities like 3D printing," said Nelson.
"We know that manufacturing devices is different from manufacturing something like pharmaceuticals," he added. "Our general strategy is to build an industry-based solution that serves as a platform, and then let third parties address the last mile to meet the needs of the manufacturing verticals."
The focus on manufacturing comes a year after NetSuite set out to revitalise the ecommerce market with an eye to the retail sector. Retail remains a priority as well. Earlier this week NetSuite fleshed out its Commerce as a Service offering with the acquisition of OrderMotion, a Cloud order management firm.
NetSuite will be using OrderMotion’s technology for continuity and replenishment, as well as supporting direct response marketing efforts.
As an example of its retail customers, Nelson introduced US cookware retailer Williams Sonoma which is using NetSuite’s SuiteCommerce offering to enable an expansion into Australia.
Alongside bricks and mortar stores in Australia, Williams Sonoma launched four e-retail sites for four of the home goods retailers’ brands—Pottery Barn, Pottery Barn Kids, West Elm and Williams-Sonoma.
Williams-Sonoma uses SuiteCommerce to incorporate store sales data while integration within call centres creates what Williams-Sonoma chief operating officer John Strain calls a “fully omnichannel operation”.
Using Cloud applications enabled Williams Sonoma to get its sites up and running in three months. Strain estimated it would have taken three years to do the same thing on the in-house platform the firm uses in the US.
Data centre trends
Earlier this month Salesforce.com revealing that it would opening up a long promised, much delayed UK data centre in Slough in 2014. Not to be outdone, Oracle President Mark Hurd announced a week later that his firm would be setting up a second data centre in the UK, dedicated to the public sector market.
So maybe it was only to be expected that NetSuite would follow suit with CEO Zach Nelson - fresh from a comedic cameo as a UPS delivery guy during a NetSuite conference keynote address - confirming this week that a European data centre is on the 'to do' list at some point in the next 12 months or so.
The location of the centre remains unknown at this stage - even to NetSuite. The firm is headquartered in the UK, but it has considerable ambitions for the wider EMEA market so a location such as Holland has to be a possibility.
The firm also has a development centre in Eastern Europe, while news of the NetSuite expansion will have pricked up the ears of the Irish government which is hellbent on luring as many US Cloud providers to Dublin as possible.
Nelson says the decision to have a European data centre has been made just because it is the right time in the company's evolution rather than any concerns that the firm is missing out on business in the region because of data location and transfer concerns among users.
"We are headquartered in the UK but we've been working across Europe. When you establish a new office it's like starting a new business. You can take 3-5 years to get the money back. But we are at the point now where we have the momentum," he argues. "In the old days, to build a data centre was a huge expense. Now it's a lot more cost effective.
"In some cases the lack of a native data centre makes the sales cycle longer because you have to go through hoops to prove you're in line with safe harbor rules," he adds. "In general we get through these concerns, but it does extend the sales cycle. So we will have a data centre in Europe in the next 12 months or so.
There will be performance benefits for European customers to be gained from this. "We haven't had any customers complaining about latency issues, but it will result in better performance. We'll know that load times are half a second rather than a second," says Nelson. "It's great to have the systems closer to end user customers. The biggest value will be that the systems are closer to them so the applications and their website will perform faster."
Having a European data centre might also see NetSuite make moves on the public sector market. Both Oracle and Salesforce.com have made no secret that one of the main drivers for setting up their own UK data centres is to pursue the opportunities of the UK public sector's drive towards the Cloud.
"We are getting deeper in public sector in the US," says Nelson. "We've been involved with FEDRAMP (The Federal Risk and Authorization Management Program) and I'd imagine we will start to look at what we could do for the UK government."
International revenues have accounted for a smaller percentage of the NetSuite total revenues to date than say, for example, they do at Salesforce.com. This has been down to a conscious decision to invest in the domestic US market, says NetSuite Chief Operating Officer Jim McGreever who promises: "What you will see now is a significant investment in international operations."
Nelson is confident that Europe's interest in NetSuite is picking up. "Last year, Europe just didn't grow at the same rate as the rest of the business," he admits. "But there has been a change and we've seen an awesome first quarter. The product's already internationalised of course, every tax regime in Europe has been done. No-one else can offer that."
Part of this increased European push will be assisted by a new relationship between NetSuite and French-based systems integration giant Capgemini.
The companies will integrate NetSuite with Capgemini's IBX procurement platform and supplier network, including Source-to-Contract and Procure-to-Pay to provide enterprise customers with clear visibility across suppliers, through procurement and contract processes, to customer order management.
Capgemini BPO has also chosen NetSuite to power its BPO Virtual Company solution, offered within their Global Enterprise Model (GEM) framework.
Capgemini has long had a SaaS division but this partnership reflects a significant escalation of the firm's interest in the Cloud. "Capgemini is really getting SaaS religion," enthuses Nelson. "They have a huge footprint in retail so SuiteCommerce is great for them."
Nelson of course once famously stated that there would be an "Accenture of the Cloud but whether it's Accenture remains to be seen". He's now got his answer. "It is Accenture," he says. "Accenture is beyond SaaS religion. They are all in on the Cloud. We have customers into the double digits live with Accenture now.
"All of the systems integrators get it now that the 'months not years' model of deployment is coming and they need to deal with it." he adds, noting that the change management capabilities of such firms are a valuable asset for Cloud adoption now that the message of 'SaaS - it's easy' that was a starting point for so many providers is being tested in the real world.
"We don't say that it is easy," adds Nelson. "We say we are a heart transplant, not a knee transplant. Some people take that on board, some don't."
Perhaps it depends on who you're talking to? NetSuite's traditionally pitched to the CIO and the CFO, but the likes of Gartner now insists that it should be the CMO who's the first port of call and who will come rapidly to dominate the ICT selection process.
Nelson isn't so sure it's that simple."In the larger enterprise, the CIO is pivotal. You see more of the CMO in retail. Ecommerce is not a human process, it's about machines and the CMO can have an incredible role in automating the machine process," he argues.
"But the CMO is being transformed. CMOs have to be more IT savvy. But as to the CMO inheriting the earth…maybe it's more like they are becoming more CIO-like? Remember, the best CIOs are already involved in the actual business so I'm not sure there's a clear cut distinction to be made. Everyone in the organisation has to get more IT savvy."