NetSuite, the provider of perhaps the best hosted integrated software solution for the SMB market tried to rain on SAP’s parade during SAPPHIRE 06 in Orlando. They planned to host a cocktail party in a hotel suite right across the Convention Center. The party’s theme was “SAP for the rest of us” and the email invitation posed a question/answer: “Who will become the SAP for the midmarket? (It Ain’t SAP),” Cute.

Of course SAP got p***ed and enforced it’s contractual right to cancel competitive events in any of the SAPPHIRE venues. SAP’s Spokesman Bill Wohl called NetSuite’s move “guerilla marketing“.

Now, what’s wrong with Guerilla Marketing? It’s fun … if you have humor to appreciate it. Last week SAP didn’t. The result? NetSuite CEO Zach Nelson laughed off the “loss” and will hold a web-conference instead. This being a juicy story of course it got picked up in the media and quite a few blogs – the media blitz lasted a few days, then will start again around the web-conference … so basically SAP’s decision to kill the party provided NetSuite with a fair amount of publicity – exactly what it needs as it ramps up for its IPO planned later this year. Zach should send a thank-you note to SAP.

Here’s what I think SAP should have done: let it happen, and set up their own counter-party. Had it been allowed to proceed it would have been a noon-event. Not that NetSuite is a negligible company, in fact they have an excellent product. Some say Salesforce.com is just a glorified contact manager relative to NetSuite, and I tend to agree. (I put my money where my mouth is: in my last corporate job I became a NetSuite customer, after careful comparison to Salesforce). That said, NetSuite is targeting strictly the SMB market, in fact more the “S” than the “M”, while SAP despite all their SMB initiatives is still largely the Enterprise Company – SMB is just not their sweet spot. SAP had their own SMB people in Orlando (I interviewed Gadi Shamia, SVP for SMB Solutions, and intend to write about it soon) – they should have set up their own party right next to NetSuite, and present SAP’s vision for that market segment. In fact they could have embraced the NetSuite event (steal their show) and make up SAP logo’d signs pointing to both events.

The impact of the NetSuite party, especially in an environment where most participants are already biased towards SAP would have been minimal. In fact NetSuite had more to gain from the cancellation and the resulting media blitz then actually proceeding with the party … so much so, that I wonder if NetSuite intentionally leaked the news to SAP – a brilliant PR coup, if you ask me.

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