Product Profile: NetSuite
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San Mateo, California-based NetSuite is one of a relatively new breed of online business-application services vendors. Beginning as an accounting-application service for small business under the name "NetLedger," the privately held company was founded by Evan Goldberg and Oracle CEO Larry Ellison in October 1998.

Toward the end of 1999, CRM-application functionality was introduced -- and not long after that, its target market expanded to include both small and mid-size businesses. Since changing its name to "NetSuite" in 2003, the firm has grown rapidly. It has greatly expanded its applications, and its customer base now exceeds 7,000 companies and 50,000 end users.

NetSuite: The Product

NetSuite has built an architecturally unified set of online applications, which include CRM (sales, customer service, marketing and PRM), ERP (financial, inventory, order and payroll), Web site and Web store.

These applications are available as four bundled offerings: Oracle Small Business Suite, NetCRM, NetERP and NetSuite. All can be accessed on the World Wide Web from Microsoft Windows, Apple Macintosh, Linux-based or Unix-based computers, which can support Microsoft Explorer (5.0 or greater) or Netscape (6.2 or greater) browsers.

The Oracle Small Business Suite (OSBS) has a robust set of the business applications a small firm would need, including SFA, contact management, financial management, inventory management, purchasing, order management, payroll, Web site, and Web store. Pricing for is US$1,400 per year for the first user, and $50 per month for additional users.

NetCRM is configured to include all of the primary CRM application functions a small or mid-size business would need, including sales, marketing, customer service, PRM, self-service, and employee management with commissions. NetCRM is priced at $75 per user per month.

NetSuite includes all of the vendor's functionality: the NetCRM bundle plus ERP, including management applications for financial, inventory, purchasing, vendor, order, fulfillment, timing and billing and employee payroll. NetSuite is priced at $4,800 per year for the first two users and $75 per month for each additional user.

With the rollout of the current version, 9.5, NetSuite offers CRM functionality that is appropriate for almost any small business and many mid-size businesses. All of the basic (or what increasingly is being viewed as the commodity) level of CRM functionality is present. This includes lead and opportunity management for sales, problem management for customer service, and campaign management for marketing.

In addition to the basics, NetSuite version 9.5 supports the advanced functions of sales forecasting, multilevel analytics (real-time analytic dashboards, ad hoc analytics/advanced search, and direct database access by external analytics tools), partner relationship management and custom reporting.

NetSuite: The Company

NetSuite's 2003 revenues, according to media estimates, are in the $20-30 million range. Customer and revenue growth rates for 2004 likely will continue to be well in excess of 100 percent. Even as competitive and vendor-consolidation pressures grow in the maturing CRM marketplace, NetSuite appears to be financially stable, viable and well-managed.

NetSuite sells both directly and through a growing network of solutions providers, now numbering over 200. NetSuite's technology partners include Oracle and HP. NetSuite's applications are built on Oracle databases and Oracle application servers.

NetSuite's primary CRM competition is Siebel CRM OnDemand, Microsoft CRM, and Best Software's SalesLogix. Its broader competition for full business-application suites comes from Best Software (SalesLogix and MAS90) and Microsoft Business Solutions (Microsoft CRM and Great Plains).

NetSuite also has competition on the non-CRM application level, such as from Best Software's MAS90 and Microsoft Business Solutions' Great Plains for mid-size business ERP and QuickBooks, PeachTree, and Microsoft Small Business Manager for small-business accounting.

NetSuite's Strengths

NetSuite's primary strength and the source of its competitive advantage is the breadth of its integrated business applications (CRM, ERP, and Web).

NetSuite's third-generation dashboard functionality is very intuitive, operates on real-time data, supports analytic functionality, snapshot-in-time comparisons, saved and shared queries, graphing and drill-down analysis.

In addition to its unique strengths, NetSuite has the inherent strengths of many of the on-demand CRM or CRM-as-a-service applications. These strengths include applications that are easy to learn and use, services designed and operated for small and mid-size businesses, seamless and painless application upgrades, ready scalability, rapid deployment with few up front costs, relatively low ongoing costs, low capital requirements, and modest support resource requirements.

NetSuite's Challenges

NetSuite offers basic call-center integration but will need to offer more sophisticated and robust integration as it increasingly targets larger and more complex businesses.

Although highly configurable, NetSuite's core functionality ultimately is not customizable. To be fair, this level of application-tailoring is not needed or desired by many, particularly smaller, businesses.

However, to compete effectively with software-based solutions and to move up-market, NetSuite must continue to push out the boundaries of configuration to offer the business-process and industry-specific tailoring required for competitive advantage by many firms.

Along this track of greater configurability, NetSuite and its partners need to build and offer more industry-specific applications based on the core functions to meet increasingly vertical demand and competition.

NetSuite lacks robust support for offline or disconnected use. For mobile users, such as traveling salespeople and managers, this is must-have functionality. High-speed broadband and Wi-Fi connections still are a long way from ubiquitous, but their availability is increasing.

NetSuite, like the other on-demand services, is challenged by the preference the majority of businesses have for purchased, packaged software-based applications. But this bias -- partly based on the real limitations of the current on-demand services and partly based on outdated negative perceptions - gradually is fading.

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