I attended NetSuite‘s global conference this year (disclosure – NetSuite contributed to my T&E to attend) and it has been interesting to reflect on a company that is unabashedly growing up. Having been at all of the previous global NetSuite events, it was impressive to see attendance grow to some 5000 people, to hear the conversations ramp up a notch and to see the increasing professionalism with which the event was run. Having had a few days to digest the announcements, here follows an assessment of what we saw through this pundits lens.

What About the Social Angle?

In an analyst session with Zach Nelson, I raised my perennial question around the lack of a compelling vision from the company that provides some answers to the customer engagement question. I put it to him that Salesforce is really taking all of the mindshare when it comes to assessing the sentiment of the marketplace – harnessing conversations and bringing those into the core operations of the business. Salesforce has spent significant money on acquiring companies in this space and really articulates this value proposition strongly.

Nelson’s reaction was that as far as he was concerned, Salesforce isn’t really a customer relationship management solution but rather a prospect relationship management one. I suspect that what he justifiably meant by this was that solutions that only harness the front end of the relationship, but don’t have a deep visibility into the transactional activities of the customer are less than optimal In his view NetSuite, with it’s visibility into the total transactional relationship with the customer has this benefit. As I said that’s a justified position, but one which is, in my view, a little shortsighted. Any customer-facing organization that rests on its laurels by being happy to simply own the transaction relationship is missing out on the opportunity for new sales by harnessing the potential customers before they’ve even made a decision to purchase – this is where social media marketing and sentiment analysis tools come in.

I’m expecting to see NetSuite bridge this gap going forwards. With Their retail solution more baked now, I’d expect a very strong message about harnessing the customer BEFORE they’re event a customer to emerge between now and the next SuiteWorld in 2014.

A Vibrant Ecosystem

One thing that was very positive to see at SuiteWorld was the increasing maturity and breadth of the partner ecosystem. This ecosystem is vibrant not just at the ISV end, but also from the all important system integrator end. At SuiteWorld a partnership with CapGemini was announced – ticking off the last of the massive global consulting firms to have signed on as NetSuite partners.

In the ISV area however there was some real movement and some strong stories. On day two of the event a significant part of Evan Goldberg‘s keynote was given over to a demo by eWinery. I was very bullish about this vertically-specific solution for the wine industry when I first saw it a few months ago. I’ve long said that I believe the opportunity for NetSuite is to roll out more certical-specific solutions. I dug into this issue with Nelson and he explained his approach towards this. NetSuite is keen to provide broad solutions for general verticals (retail, manufacturing, professional services) but to leave what they call the “last mile” to partners. They’ll do broad categories, but not distinct industries seemed to be the approach. The eWinery partnership is a good example of this – NetSuite provided the broad retail and back office functionality, while eWinery came to the party with industry specific knowledge and process – it’s a logical approach and should allow NetSuite to hit a wider addressable market than otherwise.

Critiquing the Competitors

As is often the case, NetSuite put in a few jabs (actually more than a few) at its competitors. In previous years both SAP and Microsoft have come in for a lashing but this year criticism for Microsoft was lacking. This is interesting and is likely tied to the fact that Microsoft is rapidly becoming irrelevant in this space. There was one uncomfortable moment when Norm Fjeldheim, the CIO of Qualcomm, was on stage with Nelson during the keynote. Qualcomm are using NetSuite for some of their small business units and Fjeldheim made the comment that if he were Oracle or SAP he’d be worried. There was a moment of silence before Nelson agreed with him, at least when it comes to SAP. This off-the-cuff exchange shows the illogical nature of nelson’s harsh criticisms for SAP while leaving Oracle untouched. We all know that Larry Ellison is the biggest shareholder in NetSuite (in face I was part of a very small group of customers and influencers who enjoyed a cocktail event at Ellison’s amazing Woodside home), but clearly NetSuite is edging into the markets of both of these players are it’s frankly illogical to not admit that.

Nelson didn’t make a valid point about SAP’s much lauded in-memory technology HANA. He commented that while SAP talks all about technology, NetSuite is focused on delivering solutions to their customers. His point being that NetSuite uses in-memory techniques, but would rather talk about the solutions they’re delivering to the customers rather than the technologies themselves. It’s a valid criticism and one which SAP needs to ruminate upon.

Overall Thoughts

NetSuite is a company that is rapidly maturing. Their product has a depth and a breadth that we haven’t seen before and the customer wins they showcased at SuiteWorld really indicate that is now able to deliver a far greater selection of what large customers need. This maturing greatly increases the likelihood of what I have been predicting for years, namely an acquisition by Oracle. Outside of this M&A crystal ball gazing however, NetSuite seems to be doing everything right. They’ve got a long way to go to catch up with the mindshare and aspirational appeal of Salesforce, but my sense is that internally there is a realization about this and that the next twelve months will see the company really step on the gas and increase the activity on a number of levels – I’d expect to see some smart acquisitions, a strong marketing message about the future of the different verticals they deliver to, and a narrative that helps their customers (who, frankly, are often the more conservative parts of a business) see how their future looks different, and the moves they need to make to secure that future.

Overall SuiteWorld was an impressive event, as NetSuite events always are – I’m already looking forward to the next event and seeing what the company can deliver in 2014.

I attended NetSuite’s global conference this year (disclosure – NetSuite contributed to my T&E to attend) and it has been interesting to reflect on a company that is unabashedly growing up. Having been at all of the previous global NetSuite events, it was impressive to see attendance grow to some 5000 people, to hear the conversations ramp up a notch and to see the increasing professionalism with which the event was run. Having had a few days to digest the announcements, here follows an assessment of what we saw through this pundits lens.

Launch of NetSuite for Manufacturing

Some three years ago NetSuite launched a manufacturing solution off the back of a partnership with Rootstock – for whatever reason, be it technical or business-related, that deal never really bore fruit. Instead NetSuite went back to the drawing board and decided to build its own solution. This is actually a better approach for a manufacturing solution since building off one common architecture and data type increases both the flexibility and the ease of use than by kludging together different solutions to create some kind of Frankensteinien combination. CEO Zach Nelson was very quick to point out that in the same time as SAP saw core licensing business reduce, the past four quarters saw NetSuite manufacturing sector bookings grow 60% – of course given the relative sizes of their business this is less impressive than it sounds, but for a company focusing heavily on growth, it’s something to crow about.

After announcing the solutions, Nelson told the audience about the partnership between NetSuite and Autodesk to integrate Autodesk’s 3d design and product lifecycle management (PLM) tools alongside the NetSuite ERP. The demo showcased a fictitious BBQ manufacturer and retailer, and showed how design, product feedback, customer input and financial aspects of a combined manufacturing/sales organization can be run on the products. While the demo was relatively slick, there didn’t seem to me to be a huge amount of true integration. NetSuite describes the partnership as:

a bi-directional integration of cloud-based ERP with cloud-based PLM, giving manufacturers a single, closed-loop solution to accelerate product design and development, reduce risk of errors and delays, streamline supply network collaboration, and gain critical real-time visibility into pricing, scheduling, capacity and profitability

There’s certainly some truth in that – but I suspect the number of customers who actually consider the design part of manufacturing as needing to be deeply integrated into their ERP solution is limited. There is also obviously some tension with regards existing product breadth from the two partners – as an example the functionality around requests for quotes, and important area for outsourced manufacturing businesses, exists in both Autodesk and NetSuite. Alongside the partnership with Autodesk, NetSuite rolled out some extended functionality that will appeal to manufacturing customers including availability to promise (ATP), standard cost, work-in-process (WIP), and routings.

Manufacturing is a massive area of opportunity and the complexities involved in a manufacturing business lend themselves well to the sort of broad, flexible and robust solution that NetSuite has created – the increasing velocity of the creation of new nimble manufacturing businesses (for example GoPro, the Pebble Watch and Jawbone) who aren’t constrained by existing thoughts around what a MRP system should look like plays very well into this new strategy for NetSuite

Omni-Channel Wins

One of the other areas Nelson focused on in his keynote was retail. Unsurprising since it was at this event last year that the company rolled out SuiteCommerce, a solution set designed to manage the complexities of omni-channel retail. NetSuite rolled out the CIO of Williams-Sonoma who has only just finished rolling out NetSuite to run four individual brands retail an e-commerce operations. The move to NetSuite was prompted by Williams-Sonoma’s first foray outside of the US, in this case building out an Australian business. The company wanted a solution that would scale geographically across markets and would let them roll out the stores as quickly as possible. The roll out took only three months, something Nelson is justifiably proud of given the massive timescale more generally seen with these sorts of projects.

The breadth of use of NetSuite by Williams-Sonoma was somewhat glossed over at the event – currently it’s in place for the Australian operations only. Having said that, in follow up sessions with the NetSuite executives in charge of retail, I did get the distinct impression that this is a relationship that is likely to grow stronger – Williams-Sonoma was very impressed by the speed at which the implementation of NetSuite occurred, perhaps especially so given their experience with existing large ERP solutions.

In a deep-dive analyst session around retail I stated my impression that, while the retail solution looks really powerful, it doesn’t really leverage the cutting edge approaches that we’re seeing in the marketplace – I mentioned such things as location based shopping and special offers as two areas where there is a massive amount of innovation. NetSuite doesn’t seem to be weaving this narrative into its approach towards retails. My impression is that there is a couple of reasons for this. Firstly the company has only just started down the retail route and is running fast to try and innovate quickly. Secondly however and more importantly, NetSuite is delivering a solution that its customers, generally larger retail operations, are asking for. These companies seem not to be aware of the impending tide of disruption that the social/local/mobile trend will have upon their business. NetSuite needs to start telling this more aspirational story or else it risks losing relevance in the future.

Look for part two of this review next week.

SuiteWorld

I’m now a veteran SuiteWorld attendee having previously enjoyed a number of times the amazing job that NetSuite SVP Mei Li does of looking after the analysts that attend the event. NetSuite is an amazing company that has done a fantastic job of morphing from its roots as a SMB vendor and rapidly moving up the food chain to be a credible ERP offering. It has to be said however that NetSuite is a little constrained on a couple of fronts:

• Firstly by its own habit of pouring scorn on its larger competitors (SAP and Microsoft Dynamics) while completely ignoring the elephant in the room in the way of Oracle. Of course the NetSuite share register shows why this is the case, Oracle boss Larry Ellison is also the largest NetSuite shareholder but, still, NetSuite’s criticisms of its competitors would ring truer if this situation was resolved
• When compared to its cloud competitors, most notable Salesforce but others as well, NetSuite is a little slow to jump on the social bandwagon. Of course some of this is because NetSuite sells to the CFO, someone generally less inclined to “get” the social message. It’s easy for Salesforce selling primarily as they do to the sales and marketing parts of the business but still, a more compelling proposition about how NetSuite enables its customers to compete in the new more connected and collaborative world would be welcome

That said, even without lots of cool social enterprise cred, NetSuite is executing well. They’ve built strong vertical solutions in both retail and professional services – some smart acquisitions have helped with this an in my conversations with NetSuite customers – this value proposition of tying together the back office and the front office is one which resonates and really drives efficiencies for customers.

Last year at SuiteWorld CEO Zach Nelson announced SuiteCommerce, an elegant and compelling offering that strongly tied the back office EP functionality to an end-to-end retail offering that covered e-commerce including the customer facing aspects. The company has been a little quiet about the rollout and success of that initiative so I’d be hoping to hear much more on that front.

NetSuite also recently announced a vertical offering for the wine industry – I’ve long said that strong verticals are where NetSuite’s future lies and I’m looking for some more progress with this – NetSuite has some strong vertical success but I’d like to see it productize those vertical offerings a little more to give some clarity around where it is aiming.

Finally the perennial question remains as to when Larry Ellison will swoop in and buy the part of NetSuite he doesn’t already own. Much of the timing of this rests on NetSuite’s strategy to push two tier ERP as a strong solution for larger enterprises – the idea that individual business units will use NetSuite but roll up the various units into a bigger system for consolidation is one which makes sense – last year we saw a few of these stories being told and it seems to me that once the company starts seeing some real momentum around this strategy – that will be the moment that Ellison swoops in.

SuiteWorld is always a fun few days – this year will see it out grow the usual San Francisco hotel venues and head down to the Valley – I’m looking forward to speaking to customers and having a conversation with the always thoughtful and well informed Zach Nelson.

GoogleIO

Ah Google. I’ve attended IO once before but unfortunately missed it last year and had to watch the spectacle on the livestream. And what a spectacle it was seeing skydivers jump out of a blimp above the Moscone center and record their journey through Google Glass. Actually I was a little disappointed that Google had succumbed to the temptation to create a high impact, but generally meaningless stunt. Google is better than that and I’d have much rather seen a more measured, thoughtful and forward looking first outing for Glass.

Of course given the marketing wet dream that Google had when Robert Scoble recently declared glass to be the biggest thing since the transistor, it would seem that Glass is front and center in terms of what part of the Google empire will get the most airplay at IO. This is a little disappointing and, frankly, a little bit shortsighted for the company.

As Google begins to push it’s Amazon Web Services competitor, Google Compute Engine, as a credible public cloud alternative, it starts to beg a number of questions about just how ready for, and committed to the enterprise Google actually is. The recent decision to scuttle Google reader, an admittedly less than overwhelming success of a product, along with the seeming lack of focus on Google Apps that the company has does little to reduce the concerns about their eventual intentions.

It seems to me that Google is a company torn between exciting, attention grabbing and generally consumer faced business units and the less exciting, but very important enterprise products. What I’d like to see at IO is significant attention given to Google Apps, Google App Engine and the Google Compute Engine. What I expect to see is lots of hand waving about Android, Glass and self-driving cars.

IBD: During the company’s Q4 earnings call you took some shots at SAP and Microsoft about their progress in building a cloud-based business. Why spare Oracle (ORCL), which is also building a cloud-based business?

Nelson: Oracle has made much more progress in the cloud. They have a strategy. We compete with Oracle in various industries.

But Microsoft literally has no strategy and no intention to get one in the ERP space, as far as I can tell. They are never going to bring their ERP products to the cloud.

SAP has done some cloud acquisitions, but these acquisitions are not in areas that SAP is known or valued for.

So I guess in some ways I’m picking on the weaker guys, namely Microsoft and SAP, because they really haven’t executed on a cloud strategy.

IBD: But Oracle CEO Larry Ellison and his family own about 55% of NetSuite’s stock. Is that why you spare Oracle?

Nelson: If and when we compete with Oracle, we play to win. So if customers are looking at us and looking at Oracle and our functionality is better, we are going to win. Oracle’s strategy is targeting very large companies. The sweet spot for NetSuite is the midmarket. I don’t see them coming down or attempting to come down to the midmarket. SAP has attempted and failed. Microsoft hasn’t really made any progress in cloud-based ERP.

Another person who watches this space, Frank Scavo, wasn’t shy in also questioning the motivaation for Nelson playing soft on oracle:

@zachnelson Of course, Mr. Ellison being a NetSuite major shareholder doesn’t have anything to do with your going soft on Oracle right?

— Frank Scavo (@fscavo) March 16, 2013

MyPOV

Larry Ellison is the smartest of business people. His historical smack talking about cloud, while all the while investing heavily in the pace, is the thing of legends. While he backed Salesforce early on but exited from the company when competitive tensions became too great, that is not the case with NetSuite – Ellison provided the initial capital for the company and to this day remains the majority shareholder.

While Nelson is keen to push the story that NetSuite competes as strongly with Oracle as it does with other vendors, the fact is that most people accept an Oracle outright acquisition is simply a matter of time.

I’ve opined upon the fact previously that as soon as NetSuite truly provides Oracle with a compelling story (and with the continuing strength of their “two-tier ERP” story, that day is getting closer all the time) for its customers, the deal will finally be consummated. While we may not like it, NetSuite is, other than the paperwork, an Oracle company-in-waiting. Give it 18 months or so and we’ll see closure on that prediction.

NetSuite’s acquisition of Point of Sale (POS) vendor Retail Anywhere creates a powerful offering that allows retail businesses to compete in the face of a challenging environment.

Long version

NetSuite recently acquired Retail Anywhere, a provider of multi-channel retail management solutions designed to improve the retail customer experience. Given the amount I talk about how traditional businesses are soon to be disrupted, you’d be excused for thinking that I’d be dubious about this deal. Not so.

Retail is an interesting beast – traditional retail is immensely challenged by the rise of online behemoths such as Amazon, along with the increasing preference from consumers (bizarre as it may seem) to buy from known brands at big-box outlets. In the midst of this dual challenge, how can traditional retails hope to compete? Quite simply, they do so by delivering highly integrated solutions to their customers – both back-end and front-end. Vertically integrating manufacturing, the physical retail presence itself and deep relationships with end users online allows retails to really deliver upon the promise of “relationship-based retail”.

This is reinforced by the Deloitte 2012 Annual Holiday Survey, which found that consumers who engage with retailers through multiple customer touch points are likely to spend 71 percent more than those who only engage through the traditional brick-and-mortar channel. Retail Anywhere has a long pedigree of delivering solutions of both a software and hardware nature. The software was buitl upon the NetSuite platform, making this a natural fit. As for the hardware part of the business – that is going to be dropped – indicative of NetSuite’s belief about where the future lies for retail.

That’s why this deal makes so much sense – the acquisition builds on last year’s announcement of NetSuite’s SuiteCommerce platform, and creates a deeply integrated cloud business suite for retailers. It’s the next deliverable in the “Commerce as a Service” model that CEO Zach Nelson promised us at SuiteWorld last year. NetSuite contends, and I agree, that it fulfills a strong demand among retailers for a single commerce solution that supports the multiple customer touch points a retail business needs to succeed – from physical points of sale (POS) at brick-and-mortar stores or other locations to call centers, social media and B2B, B2C, and eCommerce. It also works nicely with NetSuite’s manufacturing offerings, giving those physical product retailers who have completely vertically integrated their businesses the ability to base all of their solutions within one suite of products.

So what does this deal mean from a functional perspective? Customers of the combined NetSuite/Retail Anywhere products can deliver:

• An enhanced in-store experience. By unifying the online and in-store customer experience, customers can leverage data from across a business to provide the insight necessary for delivering personalized service, building customer loyalty and increasing revenue
• Supporting, enabling the latest POS technology
• Extending sales and service with mobile POS
• Obtain a single view of customer orders, preferences, issues, and contact and payment information
• Gain real-time visibility and analytics
• Use real-time inventory management
• Deliver a dynamic web storefront
• Run real-time order management
• Deliver dynamic customer support

That’s a long list of functionality, but the proof of the pudding is in the eating – a new breed of vertically integrated businesses are looking for these kind of combined solutions – I’ve spent time with some NetSuite customers taking advantage of this sort of solution – in many different industries – TCHO in the FMCG area, Ibex in the apparel/fashion sector, Kitchen Direct in the e-commerce arena – all these customer point to the value that an integrated solution brings to their business as a key enabler of agility and hence competitiveness.

(Disclosure – NetSuite is a sometimes client and they have previously comped my T&E to attend their global customer events).

A thorny, complex and time consuming process which is tied to all parts of the financial workflow. So with an acceptance that billing and subscription is an important problem-space, the interesting thing in Nelson’s announcement was that NetSuite were actively signaling an intent to move away from their previous strategy which saw them partner with best of breed billing and subscription services like Zuora and Aria and go it alone with their own product. It was only a year or so ago that NetSuite was happy to leave complex billing calculations to third party solutions like those from Zuora, and integrate the result that fell out of that calculation back into the core NetSuite product.

So what’s changed? NetSuite is pushing a story of high complexity of requirements, alongside insufficiently deep integration from third party solutions as the rationale for this move. COO Jim McGeever lays it on the line when he says that:

You cannot manage the full range of required functionality and integrate it it fully into the workflow without using a platform approach. We think this is a significant differentiator where customers want to automate the process but still demand as much flexibility as possible

In a briefing with McGeever he was quick to tell me that NetSuite, as an organization that makes its revenue from complex recurring transactions, lives the pain of this world every day. The experience with their own business helped them to design the product they’re going to sell to customers – they have to work with usage-based components, automatic choices and upselling day to day. What got interesting was McGeever’s contention that billing is in the middle of a bunch of different complex processes – with CRM, leads, quotes, sales order and fulfillment all touching the billing process. Given this, Netsuite’s stance that only a core product will really meet the needs of the market resonates. But in doing so NetSuite has a difficult diplomatic act. They’ve chosen to remain loyal to Aria, talking about it being an appropriate product for basic billings services, but have decided to burn their bridges with Zuora, indeed their pitch deck is length and includes a long list of reasons why Zuora isn’t up to the job – lack of flexibility, customizations, interoperability and analytics among them.

The messaging goes that a standalone product only really handles pure new business and billing models and doesn’t work with more traditional models of billing – in their mind standalone products are not giving these hybrid customer accurate revenue recognition. According to McGeever:

With Aria the problems relate to the nature of the beast, it couldn’t handle complexity but for simple use cases the integration with NetSuite would work. With Zuora however the marketing is way ahead of the product – the company has been over promising and in going public with their billing product NetSuite wished to combat falsehoods from other vendors. Basically the current partner offerings have been having difficult meeting requirements for financial process automation. Customer outliers take 80% of the time and Netsuite implementations with third part billing and subscription vendors were failing

McGeever also suggested that with Zuora in particular, their choice of building on the force.com platform limits the degree of customization available in the product. that’s an assertion that Zuora (and salesforce for that matter) would vehemently refute. Proof of the pudding and all that.

In one final slap of the competition, McGeever criticizes the trend towards percentage based pricing plans saying that NetSuite’s pricing (still to be announced) will not include any percentage based charges.

As with all of these vendor announcements, the inter-vendor politics are half justified and half theatre, but beyond the rhetoric, we are looking at a core bifurcation between best of breed and suite vendors. The suites would say that only a core offering will work deeply with the breadth of functionality that customers require, the best of breed vendors suggest that a suite provider can’t possibly deliver a world class product because of their lack of focus. The reality for customers will vary, but one thing is for sure, this space just got a whole lot more entertaining.

• SuiteCommerce Experience – The SuiteCommerce Experience is the page serving and development framework that enables companies to deliver rich user experiences, regardless of touchpoint
• SuiteCommerce Services –The SuiteCommerce Platform includes a new group of services called SuiteCommerce Services that expose NetSuite’s back-end commerce functionality and data as services to the SuiteCommerce Experience and any other commerce front-end application
• NetSuite Commerce Platform –The NetSuite Commerce Platform provides the core native business processing capabilities to run commerce operations

So in effect it is an aggregation of front end delivery, back end enablement and a flexible platform fabric running between the two. The bringing together of customer facing and backend functionalities is important as it opens up for a number of functional possibilities – want to tie customer history to purchasing options? This is the way to do it. Want to allow a host of end point devices to talk to the core business software? You need integration to power it. As Denis Pombriant pointed out in his post;

The Internet of things will be much bigger than the Internet of people and the Internet of things will be a major acquisition portal for business and consumers as well as a major user of automated commerce technologies.  Commerce solutions that make it easier for people to buy and receive products through efficient channels is a great first step.

MyPOV

I’ve long talked of the value that organizations can leverage by using one system that ties together disparate parts of the business. SuiteCommerce is a good example of this and importantly ties ERP, often thought of as the central system for a business, to what is actually the systems of note – customer interactions and the buying experience. In his keynote, NetSuite Zach Nelson told the audience that NetSuite is the fifth largest E-Commerce system on the web – that is, only four other organizations (among them e-commerce monsters Amazon and Ebay) have interactions with higher numbers of e-commerce transactions. That being the case, by closing the loop between customer and core systems – NetSuite is uniquely placed to provide a higher value offering to e-tailers. The other e-commerce sites can’t do it because, outside of integrations, they don’t have visibility over the financial aspects of the system. The other financial providers meanwhile haven’t provided compelling e-commerce solutions and hence also have to rely on integrations with the e-commerce providers. NetSuite is betting that large e-tail operations will prefer a suite solution rather than bolting together separate best of breed solutions.

Of course it’s not quite as simple as that. In order for SuiteCommerce to succeed, the e-commerce solutions needs to be as flexible as the best e-commerce solutions in the marketplace. That’s a difficult ask for a company that is primarily focused on back-end systems. While there is no denying that NetSuite is a robust ERP solution – one only needs to look at their user experience to see that they’re not an organization that is laser focused on UI or UX – both aspects that are critical once the customer has to interact with the system.

It is also going to be interesting to see how NetSuite handles the challenges of scaling hi throughput e-commerce needs. SuiteCommerce is currently being trialed by around ten NetSuite customers and Nelson told us that they’re limiting its rollout to only 100 customers this year. That’s something of a worry as it suggests that either NetSuite is worried about scale impacts of adding more users, or else that the solution isn’t actually yet ready for prime time.

At the event I spoke with Peter Maccauley from Kitchenware Direct, a kitchenware e-tailer from Australia. They told me that SuiteCommerce absolutely solves a pain point that they have and that they’re keen to sign up to it as soon as possible – the risk for NetSuite is that retailers like Maccauley get sick of waiting for a less rapid roll out and go looking elsewhere for solutions. At the moment they’re unlikely to find anything as compelling as SuiteCommerce – the challenge for NetSuite now is to ensure that customers have access to it as soon as possible.

I promised a look back to last year’s event so here goes. Broadly speaking the highlights for me were;

• The announcement of a partnership with Yammer to embed social into NetSuite
• The demoing of an impressive manufacturing offering built on top of NetSuite
• A maturing ecosystem growing up around the company
• Lots of customer success stories, the ultimate proof points

So, on to SuiteWorld 2012. Here’s what I want to see;

More Social Success Stories

White SuiteSocial was announced last year, I’m yet to hear the really compelling customer success stories about how it’s enabling better business. AT Salesforce’s DreamForce conference last year we all heard the CEO of Burberry was poetic about what Social Enterprise generally, and Chatter in particular, are doing for her business. Attendees at SuiteWorld need to hear a similarly compelling customer story for NetSuite’s social initiative if they’re not to lose mindshare to other vendors. Not only salesforce with Chatter but also Workday and Infor going social and more recently SAP, after acquiring the HCM provider, offering its Jam social collaboration platform to SuccessFactors customers.

More Platform

PaaS is the future of the cloud and in my view it comes in two flavors. Developer PaaS, typified by Heroku, that is aimed at enabling developers to deploy apps more easily and Business PaaS, typified by force.com which is more about giving business users the ability to highly customize point applications. Again it’s probably fair to say that salesforce has stolen a march on NetSuite, force.com is the most mature business-centric platform and again I’d be looking to see some announcements from NetSuite that show it’s strongly pushing its own platform as the place for business users to build their applications and tie them in to their NetSuite financial and customer data.

More Financial Roll Ups Stories

NetSuite has long been talking a two tier ERP notion with NetSuite taking the role of ERP for divisions or business units and more traditional players doing the corporate roll-ups. While that makes sense as a market entry message, in the past twelve months we started to hear more about NetSuite being used across the entire organization. I’m expecting to hear more about this and perhaps even some product launches that meet the needs of the largest corporate finance divisions, thus enabling NetSuite to hammer another nail into SAP.

A Compelling Mid-Sized Business Story

Last year I made specific mention of NetSuite moving up the food chain saying that;

While some might bemoan the shift in focus (NetSuite calls it a broadening of focus but I’m not convinced) away from SMBs and up the food chain, we can see that into the void comes innovative companies building offerings on top of the core NetSuite engine. Witness JCurve in Australia building a product that very much targets micro and small businesses – if NetSuite can replicate this sort of partnership elsewhere in the world, they look set to truly deliver on the promise of a consistent solution from the smallest, right up to some of the largest businesses.

I wouldn’t be at all surprised to see NetSuite broaden the JCurve initiative elsewhere, they could acquire JCurve and roll it out globally as an independent business unit or simply strong-arm and support JCurve to branch out themselves. Either way it makes perfect sense for NetSuite to own not only it’s current but also its future customers, a product aimed at mid-sized customers will do that.

A Complete Outlier

I’ve been saying for years that Larry Ellison should simply formalize the fact and acquire NetSuite outright – eh already has a significant shareholding and now that he’s no longer pouring scorn on all things cloud it makes even more sense. While it’d be a surprise to see it announced at SuiteWorld, I still think that at some point in the next couple of years we’ll see Oracle acquire the company outright.

Bring It On

SuiteWorld is always a fun event, characterized by some great conversations, some awesome wine and food and me wearing a suit for an unheard of three days running. It will be interesting to see how this year’s event differs from previous incarnations.

Disclosure – NetSuite comped my travel and expenses to attend SuiteWorld

• Record Q1 Revenue of $69.3 Million, a 30% Year-over-Year Increase
• Recurring Revenue Grows 27% Year-over-Year to $58.0 Million
• Non-GAAP Net Income Grows 116% Year-over-Year
• Operating Cash Flow Grows 58% Year-over-Year to $10.6 Million

Interestingly NetSuite made a Q1 loss of $7.7M, the exact same loss as in Q1 last year. Interesting that with an increase in revenue, the loss remains the same.

Total revenue for the first quarter of 2012 was $69.3 million, representing a 30% increase over the prior year. Subscription and support revenue for the first quarter of 2012 was $58.0 million, representing a 27% increase over the same period in the prior year.

Calculated billings, defined as revenue plus the change in deferred revenue, were $77.9 million for the first quarter of 2012, a 26% increase over the first quarter of 2011.

Cash flow from operations was $10.6 million in the first quarter of 2012, an increase of $3.9 million, or 58%, over the same period last year.

In the commentary, NetSuite CEO Zach Nelson took the expected swipes at SAP. That works for awhile but the market will want to see some movement on ongoing losses and some guidance around a move towards profitability.

I’m looking forward to hearing more about this next month at NetSuite’s SuiteWorld event in San Francisco.

First some context. I live in New Zealand but most of my work is in the US. This means that time zones and travel are a somewhat complex hurdle to overcome – I don’t make life as easy as I could, I acknowledge that.

Salesforce

I’ve had interaction with salesforce at the highest levels now for a number of years. I’ve spoken with the co-founders, Marc Benioff and Parker Harris and have been lucky enough to have been invited to their DreamForce conference on a number of occasions. Salesforce has obviously drilled its PR agency on the value that influencers like myself can bring and I have been staggered at just how engaged salesforce has become with myself and others like me. But it’s more than just the PR team, they seem to have a holistic approach to the way they engage with me – allowing that engagement to truly be two way. From PR to AR, from exec outreach to market strategy – it’s a holistic approach towards engagement. From ensuring that our visits to user conferences run smoothly, to proactively providing us the information e need – timely product and business announcements, access to executives for further insight and comment and a simple engagement in the conversations we have.

While I have some criticisms of salesforce’s approach to enterprise software – things like vendor lock-in and a tendency towards vapor-ware – I cannot fault them for the way they engage with bloggers and analysts like me.

NetSuite

NetSuite is a company that follows a similar approach to salesforce – I have had awesome conversations with everyone from CEO Zach Nelson down and these conversations have enabled me to gain a strong perspective on where they are as a business. As with salesforce, I have some criticisms of NetSuite (they’re a little slow moving on the social side of things for example).

NetSuite SVP of PR/AR Mei Li does a great job of ensuring that I get what I need – when I need it

Oracle

A couple of years ago it became apparent that my deeper involvement in this space necessitated a deeper engagement with Oracle. Some helpful PR/AR folks at the companies above put me in touch with some of their senior Analyst Relations execs. I reached out to this exec and received a reply saying that my details had been passed onto someone else with the Oracle PR machine. This person…. failed to respond.

Fast forward six months ago and Oracle’s local PR agency contacted me to advise that Oracle exec was going to be in new Zealand and inviting me to his presentation. I attended, had a really interesting session with him, recorded a video (that due to a dodgy camera was lost – my bad) and returned home, more aware of Oracle’s strategies in the space.

Which brings us to this week’s Oracle Open World event, the annual mega-conference that Oracle runs (although, in fairness I must add that OpenWorld is a similar size to salesforce’s DreamForce event and hence shouldn’t be anymore challenging with regards to analyst engagement). Having had no contact I contacted Oracle PR looking for some targeted and contextual information around announcements at the event. The reply was telling;

Hi Ben – all of our OpenWorld media information is available on http://www.oracle.com/us/corporate/press/mediakits/openworld-2011-media-center-508004.html

 

Thanks,

[redacted]

I responded saying that I didn’t really consider a web URL to constitute analyst outreach but… whatever.

Which brings us to a call that I finally received from some APAC Oracle PR folks. It was great to have the contact but pretty much it consisted of telling me that OpenWorld was a big event, that hey were really busy having worked for the week preceding the event, and that the best thing I could do was look at the public list of press releases to find out information. In fairness the person I spoke to did ask me if I had any specific questions, of course it’s hard to have questions when you don’t actually know what’s going on…

What’s Going On Here

Oracle obviously don’t want to be proactive in engaging with me – they might deny that, but I can’t help but feel like that’s the case. That’s fine, perhaps they think I’m a little to positive about their competitors. Of course my response to that is that it’s very easy to be so when I only ever hear one side of the story.

But deeper than that this is an example of how Cloud, social, connected and agile is changing business. Organizations like salesforce and NetSuite are using  host of tools in order to assess sentiment, engage with influencers, and generally understand what’s happening in the world. Oracle on the other hand… offers me the URL for a list of press releases.

Sigh

The bottom line here is that we (the industry observers) can no longer be put into defined buckets – there’s not a bucket for analysts and one for bloggers, one for press and one for customers. We’re different and hence need to be treated individually, it’s possible to conclude that how a vendor treats those who think, write and opine about it can be paralleled to how they feel about heir customers, their industry and their world. Maybe that’s overstating it a little, but having that’s what it feels like me at the receiving end of all of this.

Disclosures

So being 120% up front here… both salesforce and NetSuite have covered my T&E to attend events – it’s pretty obvious they do so in order to ensure that I’m well briefed on stuff….

Update 1

After writing this post I received a pretty good email from Oracle APAC PR giving me an update of news announced thus far and with a promise that I I’d receive timely notice of cloud-related announcements. We can but hope.