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SAP v NetSuite: Round two

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24th Jun 2008
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After NetSuite beefed up its manufacturing credentials to take its fight to SAP's backyard, the German giant has this week bolstered its own manufacturing portfolio with the acquisition of Visiprise.

The integration of Visiprise into the SAP portfolio will be as close to turnkey as it can get. Not only has Visiprise collaborated with SAP on product roadmaps and functionality additions the past few years, SAP has pitched its offerings as part of its wider ERP offering.

"Who would have guessed that prosaic manufacturing would suddenly be a hot sector in ERP?" said Warren Wilson of research firm Ovum. "This week, SAP in effect served notice that it is still the category kingpin when it announced it would acquire Visiprise, whose software provides greater visibility into and control over manufacturing operations. (SAP had made a minority investment about 18 months ago in Visiprise, which is one of a relative handful of partners to earn the 'SAP Endorsed Business Solution' label.) In other words, while NetSuite is just roughing out a position in this market, SAP is polishing its solution for a sector it pioneered years ago.

"NetSuite, rather than target the sector as a whole, is leveraging its existing wholesale/distribution edition and adding new functionality in assembly, work order, inventory and bill of materials management in order to target 'light' manufacturers in a variety of verticals, from apparel to electronics. As with its other offerings, NetSuite positions its integrated software as a service offering as a replacement for multiple on-premise applications for accounting, warehouse management, inventory, and so on. The new offering is priced at $999 per month and $99 per user per month.

"In fact, NetSuite competes for small to medium-sized businesses (SMBs) more directly with Microsoft and several smaller ERP vendors than with SAP itself. In fact, NetSuite can be an effective complement to SAP - for example, large companies can deploy NetSuite in regional or divisional offices and tie it to their existing SAP backbone.

"Even so, NetSuite has targeted SAP directly in an effort to capitalise on the recent, much-publicised announcement that SAP was slowing its rollout of Business ByDesign, an all-new, integrated on-demand offering that was launched in September 2007 but today is used by only about 150 customers.

"Delay doesn't equal failure. SAP has a lot riding on Business ByDesign, but its existing offerings for small and mid-size enterprises - Business One and Business All in One - are growing nicely, so it is under no real financial pressure to rush Business ByDesign to market. Still, NetSuite, Salesforce.com or anyone else has not yet mounted a serious threat to SAP's reputation as the pre-eminent ERP vendor, the one with the greatest depth of expertise in a range of vertical industries, including manufacturing. The Visiprise acquisition serves only to cement that reputation."

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