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NetSuite CEO lashes out at "fake Cloud vendors"

16th Apr 2010
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Zach Nelson had a lot to get off his chest at NetSuite's Suite Cloud customer and developer gathering in San Francisco.

Everyone has a view on Cloud Computing. It's no longer a problem getting any technology vendor to offer up their tuppence-worth on the validity or otherwise of the model. The trick is picking through the various claims and counterclaims to find the vendors with a decent track record of being right in their predictions.  

"We've been far more accurate about predicting the future than our competitors," said Zach Nelson, CEO of NetSuite as he opened the firm's Suite Cloud customer and developer gathering in San Francisco. "Everyone today says that they are Cloud Computing vendors. You've probably heard Larry Ellison's rant about Cloud Computing – well I'm in Larry's camp: everyone says that they are Cloud and they're just not. 
"You can't take what you did pre-internet, host it in a data centre and say it's Cloud. If you take a Great Plains application and you host it in a data centre, it's still going to be single tenant. For Cloud Computing, you need applications that are designed for the Internet and designed to take advantage of that environment. You have to take what is being called Cloud with a pinch of sat and make sure you look under the covers, which customers are actually doing."
Nelson argued that NetSuite's 9% growth rate last year – the slowest in its history to date – is in stark contrast to the 28% decline reported by SAP or the 16% decline reported by Sage. "In our slowest growth year, we accelerated the rate at which we took market share from our public competitors," he said. "Customers are voting for real Cloud over fake Cloud.”
But he warned that despite the spread of Cloud Computing into the mainstream, the naysayers and luddites of the hi tech world would continue to throw fear, uncertainty and doubt in its direction. But he insisted: "Every time you hear a myth pop up about Cloud Computing and what it supposedly can't do, it has been knocked down and in face shown to be the opposite of the truth.
"Back in 2002, it was said that people wouldn't want their applications to look like web browsers, they needed them to look like Windows 3.0 – can you imagine anyone wanting that today," he added. "Back in 2002, people said their data was more secure in the closet next to the coffee pot, now they realise that its much more secure in our multi million dollar data centre."
Myths and legends
There are, he added, still some remaining myths that need to be shot down. It's still argued that complex processes don't run in the Cloud. "The opposite is true – more complex processes run better in the Cloud," said Nelson. "The internet is a very good platform for doing complex thing, much better than client server ever was. It's a complete red herring."
Then of course there's the old chestnut about the supposed inablity to customise Cloud applications. "The achilles heel of Cloud applications apparently – I really go crazy over this because it's so far from the truth," said Nelson. "Traditional vendors put up on their web sites that SaaS is not customisable, but it's so much more customisable than traditional applications ever were. The killer feature of SaaS is that you make those apps map onto your business processes in a day!
"You know, SAP has a new product coming out called Business ByDesign which is supposed to be on-demand. On the website its says that SaaS is right for you if you don't require deep customisation. Another fake Cloud vendor is Lawson where their Cloud offering is the same old stuff hosted."
The nail in the coffin
Nelson claimed that NetSuite's latest offering – SuiteCloud 2.0 – would be the "final nail in the coffin" for such myths. "We introduced SuiteCloud a year ago and since then we've seen unbelievable momentum, driven by what's going on the market and by Cloud Computing," he said. "It's been driven by the cloud computing market, where the cloud intersects telephony and computing with mobility, business computing and social networking. They're all making their way into business and all these pieces are coming together."
New features in release 2.0 include what NetSuite claims is "the first solution for true application management in the Cloud, seamless Cloud-to-Cloud integration with single sign-on authentication and new graphical workflow management software that for the first time gives users the ability to quickly point and click to create and alter custom workflows to support the way businesses need to work in real-time." 
The firm was also keen to pitch the idea that while Platform as a Service is clearly the way ahead, not all Cloud platforms are equal. Nelson argued that from lacks SuiteCloud's automatic migration capabilities, which he said forces ISVs and developers to maintain multiple versions of their extensions for different customers due to reinstallation concerns. He suggested that in some cases, applications become version-locked due to further customer modifications. 
NetSuite's solution to this is the SuiteCloud SuiteBundler which enables ISVs to  push new versions of their applications to all customers with a single click so that all customers receive true "upgrade while you sleep" protection. This is a major differentiator for SuiteCloud, according to NetSuite's view of the world, citing research firm International Data Corporation (IDC) to support its claims. 
"The advances in SuiteCloud 2.0 create substantial competitive advantages for ISVs and developers looking to embrace Cloud Computing and expand their practices into new verticals," said IDC's Mike Fauscette. "No other Cloud Computing platform offers the breadth of enterprise functionality that NetSuite delivers, making it an ideal choice for complex business processes."
NetSuite is now into its second decade as a company, but for Nelson, it's just the beginning. The emergence into the mainstream of Cloud Computing has occurred. Now the traditional ERP vendors such SAP and Microsoft are coming into the market with their own SaaS offerings after dismissing the model for so long. For NetSuite such new competition brings validation of its business and operating model, but it also brings powerful new competitors. In such an increasingly febrile marketplace, there will be a lot riding on SuiteCloud 2.0.

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