Broaden your potential online

In a decade, e-commerce has changed the face of retail, helping companies expand into new markets, engage more efficiently with customers, reduce costs and drive revenue growth.

Are there any lessons here for IT resellers? Like retailers, many IT channel players sell online.

If managed correctly, e-commerce can open up new opportunities for growth. It is a question of taking a strategic view to ensure maximum value.

The internet enables businesses to increase revenue, expand customer reach, drive loyalty and improve margins. Web 2.0 can help mature and improve the opportunity further.

Barriers to entry are lowering as on-demand e-commerce makes participation easier and cheaper.

Merely being online and enabling broader exposure to customers removes geographical barriers and expands business opportunities, especially if you sell in multiple languages and currencies.

E-commerce can also make it easier for customers to do business with you at all hours.

The cost of investment in e-commerce is less than that involved in opening a real-world outlet, especially if an on-demand model is used. E-commerce on demand means businesses do not need to buy as much computer equipment or bandwidth and can use fewer staff.

The right set-up, with self-service features, means customers can search your inventory, place orders based on real time availability, and monitor existing orders.

However, telephone support helplines may still be needed.

E-commerce can provide support for personalised and targeted marketing campaigns, sophisticated merchandising techniques, and for data collection and analysis to fuel continuous improvement.

However, one oft-cited disadvantage for the reseller is that vendors that sold via the channel traditionally can now sell directly to customers.

If e-commerce is done well, the seller can change products, pricing and promotions online, and communicate this to customers quickly.

By automating the order process, businesses can streamline activities to reduce the number of staff needed. This can enable companies to redeploy staff to growth rather than routine operations.

You can also reach potential customers more quickly, as they can simply look online rather than having to visit an actual outlet.

To do this, you must invest in reaching your target audience. When searching for goods and services, many people start by using a search engine.

Placing intelligent advertisements based on defined keywords on search engines such as Google will attract customers actively searching for your products.

The days of simple online catalogues and shopping carts are long gone. Web 2.0 technologies include tools such as basic photo and video sharing as well as blogs, podcasts, wikis and other social media.

Such tools, that enable user-generated content, can help you scatter your marketing messages quickly and widely.

Even if you’re not doing any of these things, you can be sure your competitors are.

Craig Sullivan is vice-president of international products at NetSuite

New EMEA head takes the reins at NetSuite

Cloud computing vendor NetSuite has unveiled Steve Sydes as its new EMEA managing director.

The new executive appointment is aimed at strengthening the vendor’s expansion into key international markets.

Sydes joins NetSuite EMEA from Acal UK where he served for more than 10 years as managing director and a member of the board of directors. At Acal Sydes headed up the company’s electronics division, overseeing corporate operations in 13 countries including Baltic, Eastern European, and Israeli distribution operations.

Prior to Acal, he worked as an engineer, sales director, and managing director for firms such as Advanced Crystal Technology, Gothic Crellon, and GEC Computers.

In addition, NetSuite has also announced the appointment of Hajime Tamura as president of NetSuite K.K. in Japan.

Tamura moves to NetSuite K.K from SAP Japan where he was vice president of the customer innovation centre and vice president of marketing.

Zach Nelson, chief executive of NetSuite, said: “We are excited to have two outstanding executives join the NetSuite team to expand our investments in Japan and Europe and capitalise on our early success.

“Both gentlemen bring to their assignments solid track records of success and a wealth of operational experience that will help NetSuite address the huge international market opportunity for cloud computing solutions based on our leading integrated suite technology.”

To coincide with the appointment of Tamura, NetSuite has also partnered with Fujitsu Limited and Fujitsu Business Systems (FJB) to distribute, resell, and support the cloud vendor in Japan.

NetSuite, Fujitsu and FJB have designed a strategy to expand the reach of NetSuite’s new software-as-a-service business management suite Release J, to Japanese businesses. The vendors plan to reach 500 new customers within three years.

NetSuite Launches cloud platform

Business management software vendor NetSuite has unleashed its SuiteCloud Ecosystem for partners to tailor applications in the lucrative cloud computing market.

The ‘platform as a service’ will compete with similar offerings from rivals such as Google and Oracle.

SuiteCloud is a range of new products, development tools and services. This includes the new SuiteCloud Developer Network (SDN), a developer programme for ISVs.

Additionally, NetSuite unveiled SuiteApp.com, an online marketplace where ISVs, customers and solution providers can find developed applications.

Craig Sullivan, vice-president of international products at NetSuite, said the launch will help partners attack new verticals. “SuiteApps.com is a directory for partners and customers to find the right application for their business needs,” he said.

ISVs can build SuiteApps either on NetSuite’s SuiteCloud development platform, the NetSuite Business Operating System (NS-BOS), or integrate existing applications with it.

Steve Saunders, a developer at ISV BlueBridge One, said his firm had already developed SuiteApps for the e-commerce market.

“Our MaxMind fraud detection service enables businesses to check customers before accepting them,” he said. “The data is grabbed from the sale before being sent back to the business with a risk assessment.”

NS-BOS enables partners to create applications by building on the core of NetSuite’s ERP, CRM and e-commerce system.

Guy Mucklow, managing director of NetSuite partner Postcode Anywhere, said its web service builds upon the NS-BOS platform: “We tailored the application so businesses can search for an organisation and find useful information about it.

“We charge 40p per record for this service and are also working with NetSuite on route planning."

Workbooks Online hits UK

A newly launched competitor to NetSuite and Salesforce.com will begin courting the channel once it secures 100 customer references.

Software-as-a-service start-up Workbooks Online has kicked off its UK launch with an integrated suite of CRM and business applications for resellers Workbooks CRM and Workbooks Business.

John Cheney, chief executive of Workbooks Online and previously chief executive of email security business BlackSpider Technologies, said the company is aiming to breach the 100-customer barrier by the end of the year.

“We aim to be established in the UK, so we can start building a channel. The service is aimed at businesses with between five to 500 employees which want to streamline their disjointed accounts.”

Netsuite draws on Sage fears

Cloud-based business applications vendor Netsuite has launched a withering attack on larger rival Sage as it woos its resellers with a 50 per cent discount offer.

Netsuite has created a package of discounts and training incentives tailored to a Sage reseller community it claims is “wracked with fear, uncertainty and doubt” over the future of on-premise applications.

According to the US-based vendor, Sage lacks a viable software-as-a-service (SaaS) offering and is unable to lead its partners into the cloud computing world.

Netsuite is also seeking to exploit any disquiet around recent Sage redundancies and the collapse of some of its rival’s largest partners, including MIS in the US and BDE in the UK.

The programme is aimed at midmarket-focused Sage resellers that want to offer a “coherent and integrated” cloud solution encompassing ERP, CRM and e-commerce.

Martin Painter, EMEA channel director at NetSuite, said: “There is a groundswell of feeling among partners that Sage has spent too long milking the cash cow, and although it has acquired various solutions, none of them fit together.”

For the first 12 months converts will net a 50 per cent discount. That is equal to the discount top partners enjoy from Netsuite’s partner programme and 20 points higher than the entry-level discount, which is 30 per cent. They will also receive dedicated training that has been customised for Sage implementation experts.

NetSuite’s EMEA managing director Steve Sydes stressed that NetSuite grew 41 per cent last year and has been profitable for the past two quarters.

According to Gartner, the SaaS market is poised to rocket 19.4 per cent annually until 2013, while the on-premise software market will grow just 5.2 per cent.

“In a SaaS market that is growing very quickly we are well positioned to go forward,” said Sydes.

Netsuite has 25 UK partners, the largest of those being BT, although Painter admitted none of them are large Sage houses.

Steve Precious, managing director of Sage partner dcs, was unmoved by Netsuite’s charm offensive.

“I am not sitting here in a fearful state,” he said. “Cloud computing is being talked up, but like a lot of new technologies the reality is a long way behind the talk. The interest level among our customer base is very low.”

CBM News: NetSuite Disses Sage, Cable Guy Causes Recession, Comverse and Infor Partner

A fine good morning to you, dear friends and listeners, welcome back to Radio CBM 98.6, all Lynyrd Skynyrd all the time, the pride of the Hudson Valley:

NetSuite is offering current Sage partners in the U.S. and U.K. 50 percent revenue sharing for NetSuite products for the first twelve months, and training for NetSuite's accounting, Enterprise Resource Planning, Customer Relationship Management and e-commerce programs.

The NetSuitors say they expect this program will find "a warm reception in a Sage channel partner community wracked with fear, uncertainty and doubt" about the future of on-premise applications and "the ability of Sage to lead them to the new world" of cloud computing.

"Demand for on-premise software is diminishing across the board," NetSuite officials said, adding that "recent news of involuntary staff reductions at Sage and the abrupt bankruptcy of the company's leading reseller, MIS Group, are cause for additional concern among Sage channel partners."

Saying they're not trying to sow doubt about Sage or use scare tactics, a NetSuite spokesman said "all we're doing is trying to inform folks that by the time the bloody corpse of Sage washes up to rot on a deserted beach to be picked clean by buzzards, they might want to have other options in place."

Research has finally identified who's responsible for the economy cratering—the cable guy.

Harris Interactive and TOA Technologies conducted a national survey in June, finding that long wait-windows are costing consumers and service providers money: "Nearly one of every five consumers have taken unpaid time off to wait for the cable guy or some other service in their home in the past six months," TOA officials said, adding that "One third of consumers have taken a vacation day or sick time to wait for the cable guy or some other service in their home in the past six months."

In fact, the research found, "since January 32 percent of Americans have lost personal time off waiting for a home appointment, and 18 percent have had to take unpaid time off."

TOA CEO Yuval Brisker said the study found that 82 percent of all Americans say they wait on average at least one day per year in their homes for service or deliveries.

In politics, Senate Majority Leader Harry Reid (D-Nevada) said a vote on President Barack Obama's sweeping health care reform will be delayed until the fall, "after I've had my gall bladder operation."

Zoho officials have announced that they will comply with a federal court order and integrate the Zoho Mail Add-on for Zoho CRM. The National Guard was called out by California Gov. Arnold Schwarzenegger to ensure a smooth integration.

Raju Vegesna, Zoho evangelist, said the add-on gives users "contextual integration of information... letting information flow throughout multiple applications." For instance, Zoho CRM users searching for contact information within Zoho CRM will also see Zoho Mail e-mail exchanges with that contact.

The Zohovians say with the Zoho Mail Add-on, "Zoho bridges the divide historically separating e-mail and CRM systems. It's truly a great day for civil liberties in this country."

CRM systems which have suffered from segregation for years were overjoyed at the news. "I've been waiting my whole life to see this," one CRM system said with tears in her eyes. "I just wish Siebel could be around for this historic day of freedom and equality for all."

Gmail, Yahoo!, Hotmail and AOL e-mail users are included in the integration, making it "truly a landmark day for the dream of a fully integrated country," a Zoho spokesman said.

EGain Communications are chalking up another customer, as ASOS.com, an online fashion and beauty store, selected eGain Mail to replace Microsoft Outlook.

Matt Hiscock, Head of Operations at ASOS.com, said in the eight weeks since adopting eGain Mail, e-mail response times "have gone from 20 percent of e-mails correctly answered within one day to 95 percent correctly answered within one hour."

Independent observers marveled that any company answering 80 percent of e-mails incorrectly or late survived at all.

With over 5.2 million visitors coming to the site every month, ASOS.com officials say that since the company operates solely online, providing good online service "is something we should probably take a look at."

Comverse and Infor have announced a partnership to expand the Comverse ONE Billing and Active Customer Management to include capabilities from Infor CRM.

The new Comverse ONE embedded features include sales, marketing and services functionality to help operators with subscriber acquisition, retention and campaign management capabilities.

Launched last year, Comverse ONE lets operators manage "any subscriber, any service on any network, with any payment type," supporting "all customer touch points—call center, Web, handset, other mobile device, singles bar, whatever."

The partnership with Infor is intended to add CRM capabilities such as Sales Force Automation and Case Management and "improve the 360-degree view of customer-centric activities. Other activities can probably get by with a 180-degree view, or maybe just an obtuse angle."

That's the show for today, we're off to switch back to our old mattress.

NetSuite Inc wins four contracts in Asia Pacific for NetSuite OneWorld

NetSuite Inc (NYSE: N), a supplier of on-demand, integrated business management software suites, has announced four contract wins in the Asia Pacific region.A RCGC, StrapMedia, Profoto Digital Media Services and Co2 Neutral Conferencing have chosen NetSuite OneWorld for its integrated business management suite, which offers enterprise resource planning (ERP)/accounting, customer relationship management (CRM) and e-commerce capabilities within one on-demand application.A NetSuite OneWorld enables businesses to manage multiple subsidiaries and multi-currency operations in a single sales view. It also provides real-time reporting and dashboards for real-time visibility into business performance.A Financial details of the four contracts were not disclosed.

NetSuite's SuiteCloud Enables Integration of InsideView's SalesView With NetSuite Connecting Sales Intelligence to NetSuite Cloud

InsideView today announced the integration of its leading Sales 2.0 application, SalesView, with NetSuite, the industry's leading on-demand business management suite. The integration gives businesses instant access to relevant intelligence harvested from editorial sources -- such as D&B, Hoovers and Reuters, and emerging social media such as Twitter, LinkedIn and Facebook -- directly within NetSuite, empowering them to significantly accelerate sales cycles and improve productivity across key operations of their business. The integration was built using the NetSuite Business Operating System (NS-BOS), the development platform that is part of NetSuite's SuiteCloud Ecosystem.

Related Results

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NetSuite announces partnership with Fujitsu

InsideView is a member of NetSuite's SuiteCloud Developer Network, a multi-tiered program that enables Independent Software Vendors (ISVs) to quickly go to market with on-demand business applications that leverage the power of NetSuite's (NYSE: N) core business suite. For more information about the integrated solution, please visit www.suiteapp.com .

SalesView is immediately available free of charge to all NetSuite customers as a native mash-up. The SalesView and NetSuite integration brings a host of benefits to businesses, including:

-- Enabling businesses to tap into accurate, relevant and timely business

insights directly within the NetSuite user interface

-- Helping sales professionals uncover customer engagement opportunities

faster

-- In addition to having integrated access to the "go-to" source for

detailed company information, sales reps can now call the right prospects

at the right time by alerting them to key business events and relationships

that represent real sales opportunities, thus accelerating the sales cycle

"Our partnership with InsideView proves that once again we are not only attracting industry leading partners for ERP, but across the entire suite, including CRM," said Guido Haarmans, vice president, SuiteCloud Developer Network of NetSuite. "The native mash-up with SalesView makes both traditional business and social Web information available directly within NetSuite, supporting increased sales productivity and accelerated sales cycles with timely, relevant insights from thousands of sources."

"As our recent Twitter integration reinforces, InsideView is continually expanding coverage of both traditional and Web 2.0 sources to distill timely, relevant business insights and deliver this intelligence at the point of need," said Rand Shulman, chief marketing officer of InsideView. "We are excited to be able to provide NetSuite customers with access to actionable sales intelligence directly within their CRM, increasing both the quality and quantity of their sales leads, as well as improving the productivity of their sales force."

About SuiteCloud

NetSuite's SuiteCloud is a comprehensive offering of on-demand products, development tools and services designed to help customers and commercial software developers take advantage of the significant economic benefits of Cloud computing. Based on NetSuite, the world's most widely used Software-as-a-Service business application suite, SuiteCloud enables customers to run their core business operations in the Cloud, and software developers to target new markets quickly with newly-created mission-critical applications built on top of mature and proven business processes. The complete SuiteCloud offering includes NetSuite's multi-tenant, always-on SaaS infrastructure; the NetSuite Business Suite of applications (Accounting/ERP, CRM, Ecommerce); the NS-BOS Development Platform; the SuiteCloud Developer Network (SDN), a comprehensive developer program for Independent Software Vendors (ISVs); and SuiteApp.com, a single-source online marketplace where customers can find applications to meet specific business process or industry-specific needs. For more information on SuiteCloud, please visit www.netsuite.com/portal/developers/main.shtml

About InsideView

InsideView is a Sales 2.0 leader, bringing insights gained from traditional editorial sources and social media to the enterprise to increase sales productivity and velocity. The San Francisco-headquartered company was founded in 2005 by pioneers of the SaaS, content and CRM industries to take advantage of the convergence of social media and enterprise applications. InsideView's unique socialprise technology intelligently aggregates relevant personal, professional and corporate data in real time from thousands of content sources to uncover new customer engagement opportunities. InsideView's Sales 2.0 applications deliver fresh and complete intelligence within CRMs and to mobile devices to maximize sales productivity and accelerate sales cycles. The company is privately held and venture-backed by Emergence Capital Partners, Greenhouse Capital Partners and Rembrandt Venture Partners. InsideView's sales force automation partners include Landslide Technologies, Microsoft, Oracle, Salesforce.com and SugarCRM. InsideView's customers include Ariba, Borland, IBM, Omniture and SuccessFactors. For more information, visit www.insideview.com .

NetSuite Announces Second Quarter 2009 Results

- Posts Third Consecutive Quarter of Non-GAAP Operating Income and Non-GAAP Net Income - Generated Operating Cash Flow of $1.4 million, an Improvement of $3.6 Million Versus the Prior Quarter - Average Sales Price during the quarter increased 33% over the Prior Quarter

SAN MATEO, Calif., July 30 /PRNewswire-FirstCall/ -- NetSuite Inc. , a leading vendor of cloud computing business management software suites, today announced operating results for its second quarter ended June 30, 2009.

Total revenue for the second quarter of 2009 was $40.3 million, a 10% increase over the second quarter of 2008. Revenue from the Americas for the second quarter of 2009 was $32.5 million, while revenue from international regions was $7.8 million.

On a GAAP basis, net loss for the second quarter of 2009 was $5.0 million, or $(0.08) per share, as compared to $3.1 million, or $(0.05) per share, in the second quarter of 2008.

Non-GAAP net income for the second quarter of 2009 was $687,000, or $0.01 per share, as compared to a non-GAAP net loss of $900,000, or $(0.01) per share, for the second quarter of 2008.

Items presented on a non-GAAP basis exclude expenses related to stock-based compensation, the amortization of intangible assets, and transaction costs for business combinations. A reconciliation of GAAP net income/(loss) to non-GAAP net income/(loss) is provided below in a table immediately following the Condensed Consolidated Statements of Operations, along with an explanation of why these non-GAAP financial measures are useful to investors and how they are used by management.

"We were very pleased with our financial performance and strategic execution during the quarter. Once again, we delivered top-line and bottom-line results that exceeded expectations. We also generated operating cash in the quarter, well ahead of our plan. We remain on target to achieve our objective of posting break-even operating cash flow for 2009," commented Zach Nelson, CEO of NetSuite. "We're particularly pleased that we not only acquired more new customers during the quarter, but we did so at a higher average sales price. A recent industry report indicates that NetSuite was rated as the fastest growing vendor in the top ten vendors of financial managements systems in North America. As customers accelerate their movement to cloud computing we believe NetSuite will continue to take share from our competitors."

  NetSuite's Second Quarter 2009 Highlights Include:   --  Appointed Edward Zander, former Motorola CEO and Sun Microsystems       President, to its Board of Directors.   --  Announced that NetSuite and NetSuite OneWorld have become the first       generally available Software as a Service (SaaS) business management       suites to be certified in Germany.   --  Announced that NetSuite OneWorld was accredited by the Institute of       Chartered Accountants in England & Wales.   --  Added Google Checkout functionality to its platform providing instant       payment options for buyers in 140 countries.   --  Announced a new Financial Planning module to enable business       performance management for strategy, planning and execution.   --  Received several awards including: a Top 15 CRM Small and Medium       Business Software Award for 2009 by strategic advisory service ISM       Inc.; a 2009 CRM Excellence Award from Customer Interaction Solutions       magazine for NetSuite CRM; winner of Best of SaaS Showplace Award for       OpenAir by THINKstrategies, Inc.;  and Network World, a prestigious IT       publication, listed NetSuite as one of the top 10 cloud computing       companies to watch alongside technology leaders Amazon and Google.   --  Unveiled a new Financial Edition to help companies speed deployment of       business processes to the cloud.    --  Announced the availability of OpenAir Mobile for Apple's iPhone.     Conference Call  

In conjunction with this announcement, NetSuite will host a conference call at 2:00 p.m. PDT (5:00 p.m. EDT) today to discuss the company's second quarter financial results and outlook for the third quarter. A live audio webcast and replay of the call, together with detailed financial information, will be available in the Investor Relations section of NetSuite's Web site at http://www.netsuite.com/investors. The live call can be accessed by dialing 877-548-7907 (U.S.) or 719-325-4905 (outside the U.S.) and referencing passcode: 354-9759. A replay of the call can also be accessed by dialing 888-203-1112 (U.S.) or 719-457-0820 (outside the U.S.), and referencing passcode: 354-9759.

NetSuite to supply OneWorld to Jollibee

NetSuite Inc (NYSE:N) has won a contract to supply its NetSuite OneWorld solution to Filipino fast-food chain operator Jollibee, the supplier of cloud computing business software suites said on Thursday.

No financial details were disclosed.

According to the company, NetSuite OneWorld provides Jollibee a cost-effective way to automate reporting, perform real-time analytics, conduct audit trail analysis, operate an international supply chain, consolidate international financials and enforce corporate governance standards in its subsidiaries and divisions.

Strengthened by the success of its Vietnamese pilot programme, Jollibee currently plans to roll out NetSuite OneWorld across its Chinese operation before the end of 2009, followed by Taiwan, the US and other Asian markets, the company said.

NetSuite announces partnership with Fujitsu

NetSuite Inc (NYSE:N) has partnered with business solutions provider Fujitsu Limited (TSE:6702) and Fujitsu Business Systems Ltd (FJB) to distribute, resell and support NetSuite in Japan, the supplier of cloud computing business software suites said on Tuesday.

The financial terms of the partnership were not disclosed.

According to the company, NetSuite Release J is Japan's first fully-localised, Software as a Service (SaaS) business management suite available to Japanese businesses to date. It provides support for Japanese accounting requirements, including Tegata (promissory note) payments, J-GAAP compliant financial statements and Consumption Tax configuration capabilities.

The companies have designed a comprehensive strategy to expand the reach of NetSuite Release J. The plan calls for 500 new customers within three years.

The partnership provides Fujitsu a cloud-based Enterprise Resource Planning (ERP) offering for small to mid-sized enterprises. Fujitsu's internal experts will specialise in promoting NetSuite to mid-market manufacturing companies, while FJB and its external partners focus on targeting SMEs in the industry-specific verticals.

What is NetSuite worth?

NetSuite filed its S-1 this week, with an eye toward an IPO in September if the market conditions permit. The SaaS darling is looking to raise up to $75mm; Credit Suisse is the book runner and WR Hambrecht + Co is co-managing the deal. This is interesting for two reasons:

1) To those who think sell-side analysts don't play a role in the investment banking process, it's interesting that Jason Maynard's firm got the lead. Maynard has been way out in front of the SaaS world, including publishing a meaty research primer on the sector which has long been a prerequisite for firms that want to prove their mettle and expertise in a given space.

2) The selection of WR Hambrecht is a coup and undoubtedly relates to their expertise handling the Google auction. You see, NetSuite is taking a page out of Google and will hold an auction instead of the traditional IPO listing most are familiar with.

As you can imagine, this long-awaited offering garnered a ton of press in the last few days. Many of the mainstream stories are fixated on Larry Ellison's majority stake, yet few that I've seen have bothered to articulate why that's of any consequence.

Dissecting Ellison's Majority Stake

I was well aware of the fact Ellison and his family owned a majority position in the company, but even I was surprised at the magnitude of his position. As of March 31st, Larry Ellison and related parties owned 74.1% of the company:

• Larry Ellison -- 649mm shares (61.1%)
• Trustee for David Eillson (Larry's son) -- 69mm shares (6.5%)
• Trustee for Margaret Ellison (Larry's daughter) -- 69mm shares (6.5%)

Why does this matter?

1. Post IPO, Ellison will retain majority control. As a result, public shareholders will not have a material say in the governance of the company. Larry will still be able to make quasi-unilateral decisions and is under no obligation to create a truly independent board of directors. From the S-1:
   
   • As a result, Mr. Ellison and entities with which he is affiliated will be able to exercise control over most matters requiring approval by our stockholders, including:
     • the election of directors;
     • amending our Certificate of Incorporation;
     • approval of significant corporate transactions, including a change of control;
     • executive and director compensation plans, including equity compensation plans;
     • issuing additional shares of capital stock; or
     • commencing a liquidation.
2. While not a certainty, historically companies have been afforded a lower valuation than their comparable peers when they are captive
3. The ties to Oracle, itself with grand designs on the On Demand software market, will be hard to ignore as a real risk factor as long as Larry has controlling interest (imagine if you will Larry deciding to sell a major piece of the company in a privately negotiated transaction to Oracle, for example)

Nuggets from the S-1

• One Data Center -- I was surprised to learn that NetSuite currently operates its entire business out of one 3rd part data center in California. We host our services and serve all of our customers from a single third-party data center facility located in California. We do not control the operation of this facility. [cont]...[cont] We do not currently operate or maintain a backup data center for any of our services or for any of our customers’ data, which increases our vulnerability to interruptions or delays in our service. They have no redundancy which astounds me when you consider the company has 5,300 customers and $67mm in 2006 revenues and runs a utility computing model
• Staged Releases -- Unlike other SaaS companies that deploy major new releases to all customers at once, we roll out all major releases and many upgrades of our application suite to a portion of our customer base at any one time. This “phased release process” is designed to allow us to mitigate the impact of major changes and new releases, ensuring that any potential issues affect only a portion of our customers before they are addressed. Quite the contrast from SfDC, which prides itself on simultaneous release cycles.
• Principal Competitors List -- It's always fun to see who a company lists as its principal competitors. Lest you think this is a random sampling, I can assure you that every admission and omission is carefully calculated. So who does NetSuite list as its competition? Our principal competitors include Epicor Software Corporation, Intuit Inc., Microsoft Corporation, SAP, The Sage Group plc and salesforce.com, inc. The omission of Oracle is amusing and inaccurate (if SAP is a competitor, so too is Oracle). I give the company credit for listing Intuit, which I maintain is their most direct competition. Of course, NetSuite and the investment community are more likely going to compare the company to Salesforce, for obvious reasons.

The Inevitable Comparisons to Salesforce.com

Back in March of last year, I profiled NetSuite and handicapped its potential IPO, comparing it to salesforce.com. I'm pleased to see that many of my suppositions have proven accurate. Regardless of whether NetSuite and salesforce are really competing for deals (they don't very often), it's inevitable that from here on out, the two companies will be compared and contrasted against one another by the investment community. Many investors have been waiting for another pure-play SaaS vendor to hit the market, and now we're finally going to get what we asked for.

• Revenues at time of filing -- NetSuite reported 2006 revenues of $67.2mm, representing 85% year-over-year growth. March '07 results were $23.2mm, representing 72% growth. Compare that to Salesforce's numbers in 2004 when it files its S-1. It was coming off a $96mm year representing 88% growth. Don't underestimate the importance of NetSuite's June quarter results (which we will see in a subsequent S-1 amendment I'm sure). Although the company is growing incredibly fast, Q1 hinted at deceleration and investors will want to see that June results don't show further deceleration.
  
• Net profitability at the time of filing -- NetSuite is decidedly unprofitable. The company posted a 16% operating loss margin in March, and a 34% loss margin in 2006; compared to Salesforce.com's 3.9% operating profit margin.
• Current metrics -- It's hard to ignore the disparity in size between the two companies.
  • 2006 Revenues: SfDC -- $497mm (60% YOY) vs. NetSuite -- $67mm (85% YOY)
  • 4Q Annual Run Rate (As of most recent Q): SfDC -- $648mm vs. NetSuite -- $93mm
  • Customers: SfDC -- 32,300 vs. NetSuite -- 5,300

The size disparity is particularly interesting when you consider that NetSuite was founded in 1998 versus salesforce.com, which was founded in 1999.The fact that Marc Benioff's firm has been able to grow to be 7x larger over a similar time span raises broad questions:

1. Does being a publicly traded company make that much of a difference? NetSuite will argue as much, and certainly the ability to compensate talent with stock options and restricted stock grants is a factor in driving a growth company, but by itself this wouldn't seem to argue for the size disparity
2. Is this evidence of the more entrenched nature of on premise back office ERP functionality? Does the fact that NetSuite is 7x smaller than SfDC indicate demand for back-office SaaS pales in comparison to front-office SaaS? In aggregate, back-office ERP is several orders of magnitude larger than front-office SFA, yet uptake of SaaS appears far less pervasive.
3. Is the size disparity an indication of customer size? According to NetSuite's filing, they target the SMB channel, defined as companies with up to 1,000 employees. While that's an important part of SfDC's market, as well, they have been successful winning deals in larger enterprises, too. Does NetSuite need to prove an ability to scale in order to close the revenue gap?

Important metrics we've yet to be provided with:
There are variables to the NetSuite equation that we've not yet been provided with. I'm sure they will fill in the blanks in subsequent S-1 amendments, and will do the obligatory IPO deal roadshow when the time is right. In the meantime, here are a list of metrics that I would like to see from the company:

• Net new customer additions
• Net subscribers (we know they have 5,300 customers, but how many users?)
• Average revenue per customer (either annualized or quarterly)
• Pricing (e.g., per module? incremental pricing for platform? higher pricing for better SLAs?)
• Average contract length (the company has said it's been focusing more on 1-year deals of late)

What's NetSuite Worth?

I won't presume to tell you what NetSuite will, or should be worth at IPO. We have no idea what overall market conditions will be like at listing, what the institutional demand will be, how the auction process will alter the IPO pricing, or what NetSuite's forward-looking guidance will be. For the sake of comparison, here are a sampling of enterprise value/revenue estimates for publicly-traded SaaS companies, provided by Brent Thill's team at Citigroup:

• Concur (CNQR): $860mm market cap, 6.8x '07E revenues, 5.3x '08E revenues
• Salesforce.com (CRM): $5.0b market cap, 6.3x '07E revenues, 4.6x '08E revenues
• Omniture (OMTR): $1.1b market cap, 7.6x '07E revenues, 5.1x '08E revenues
• RightNow (RNOW): $540mm market cap, 3.9x '07E revenues, 2.9x '08E revenues
• Ultimate (ULTI): $725mm market cap, 4.5x '07E revenues, 3.8x '08E revenues
• Average '07E revenue multiple: 5.8x
• Average '08E revenue multiple: 4.3x

Remember, NetSuite is an entirely different company with a different growth rate (both historically and going forward), a different addressable market, and we have yet to see how NetSuite will approach margins and cash flow generation. Investors may opt to value NetSuite on entirely different metrics, and may also choose to assign a different multiple that lies outside the bounds of this theoretical analysis.

What is NetSuite used for?

NetSuite is the industry's first and only online business application that supports your entire company—from customer relationship management (CRM) to enterprise resource planning (ERP) to Web capabilities. NetSuite is the first and only web-based application to offer everything in a single, integrated and powerful solution. Additionally, NetSuite enables you to make better, faster decisions through real-time business intelligence. What this means is sales representatives can view the complete customer record, including support cases, billing issues and more. Warehouse managers can instantly view approved sales orders on their Dashboards, and accounting personnel are able to view support issues when calling customers to collect payments.

What is netsuite?

NetSuite Inc. (NYSE: N) is a vendor of on-demand, integrated business management software suites for mid-market enterprises and divisions of large companies. NetSuite was originally named NetLedger by its founders Larry Ellison and his protege Evan Goldberg.

History

NetSuite’s hosted online business software is one integrated suite that includes accounting, customer relationship management (CRM), enterprise resource planning (ERP) software, e-commerce and Web site development.

Evan Goldberg, chairman and chief technology officer, founded the company with the financial backing of Lawrence J. Ellison, founder and chief executive officer of Oracle Corp. Other initial investors were StarVest Partners and UBS PaineWebber.

The initial iteration was marketed as NetLedger, then Oracle Small Business Suite.

NetSuite has grown to about 1,000 employees and has offices in San Mateo, California as well as in Denver, Colorado; Boston, Massachusetts (its OpenAir subsidiary, acquired in 2008); Toronto, Canada; the United Kingdom; the Philippines; Japan; Singapore; Hong Kong; and Australia.

In December 2007 NetSuite became a publicly traded company after its IPO on the NYSE.

Products

NetSuite has released NetSuite 2009.0 as its base service with NetSuite and NetSuite CRM+ as the two primary product options, with NetSuite Global CRM, Dedicated Server Options, OpenAir, and Payroll as some of the other product options or integratable services. In April 2008 NetSuite introduced OneWorld, an on-demand system to deliver global business management and financial consolidation capabilities to mid-market companies. With NetSuite OneWorld, multi-national organizations can manage companies with multiple subsidiaries, business units and legal entities from a single NetSuite account, seamlessly handling different currencies, taxation rules, and reporting requirements. Individual users at the local level get an application in their language and can transact in the local currency with local taxes and financial compliance fully enforced.

Features

NetSuite is an application covering business functions such as accounting, ERP, CRM, customer support, sales force automation, marketing automation, partner relationship management, ecommerce, and inventory management. Each of these also includes groups calendaring and tasking functions.

Supported Countries

Most countries in the world seem supported by NetSuite. 12 languages are available.

Country specific features:

UK: VAT 100 report, UK settlement discount, full support of VAT.

Australia: Business Activity Statement, Australia tax code list, full support of GST.

Canada: GST34 report, full support of GST/PST.

Japan: application in Japanese

NetSuite Partners

NetSuite has a lot of VAR (Value added-resellers) all around the world to enable people to have access to NetSuite specialists wherever they are. It allows NetSuite clients to have specialists close to their operations.