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NetSuite vs SAP … Round #n. A Game Changer?

elephant-flea In my recent Suites post I said there were exactly 1.5 (one and a half) integrated full business solutions (SaaS Suite, SaaS All-In-One, SaaS ERP, SaaS SMB ERP – take your pick or  create a new one) offered as a service.   The one in that equation was NetSuite, and the half is SAP’s Business ByDesign.

The half is getting close to becoming full, bringing the total number of solutions to two.   SAP’s ByD, originally launched in 2007 was a functionally rich solution already at launch – in fact I called it the most complete SaaS Suite not available customers. And therein lies the rub.  Functionally rich, but a phantom product that only a few selected early customers could get their hands on.  And it wasn’t simply a marketing / segmentation blunder as some analyst thought, it was all about architecture: SAP missed out on the economics of multi-tenancy, and realized they could not profitably operate and scale what they referred to as “mega-tenancy” – so they went back re-architecting ByDesign.

The lost 2 1/2 years were a gift to competitor NetSuite, and they milked it every possible way.  SAP announced entry to the SaaS SMB space validated their market, and their own delay was an open invitation to NetSuite. As CEO Zach Nelson said at their recent earnings conference:

I’d like to thank SAP for being our IBM.

NetSuite never shied away from aggressive marketing (I guess that’s the Oracle blood in their veins), starting from pranks like the SAP for the Rest of Us Party during SAPPHIRE 2006 to staging a shootout at the anti-SAP Conference or releasing edgy videos a’la Mac vs Windows.  But the biggest coup, one with definite gains was the Business ByNetsuite program which we covered here:

The aptly named Business ByNetsuite program guarantees at least 50% savings to current SAP R/3 customers relative to  – watch this! – the annual maintenance fees they are now paying to SAP.  Yes, it’s not a price-to-price comparison.  With the perpetual licence model customers pay upfront, but are still forced to pay annual maintenance fees – with SaaS there is only a subscription fee, and now NetSuite proves it can be half of only the maintenance component of traditional software’s TCO.

Yes, NetSuite took deals from SAP and of course amidst all the chest-thumping they did not particularly emphasize the fact that that these were often divisional deals:  smaller divisions of large companies, often replacing legacy systems as a result of an acquisition with the parent company running SAP.  NetSuite even developed  NetSuite-to-SAP connectors for enterprise reporting, fully recognizing they won’t be replacing SAP on the corporate level.

Now of course these were relatively easy wins when NetSuite was the only game in town – and that’s about to change, as SAP is getting ready for General Availability of a new Business ByDesign in July.  And SAP CEO Bill McDermott fired a few salvos over to NetSuite in his announcement, as quoted by Reuters:

McDermott said he believes Business by Design’s sales will be able to quickly surpass those of NetSuite, which last year posted $167 million in revenue.

“When Business by Design is coming at them like a 99-mile-an-hour fastball, let’s see how tough they are,” McDermott said of NetSuite.

Winning against SAP when they had no relevant SaaS offering was one thing, going up against a functionally strong product will be another.  NetSuite is changing tone, comparing the two offerings, as show by this slide I received from NetSuite:

NetSuite SAP

This must be the first time SAP finds themselves on the wrong side of the David vs. Goliath equation (or is it the elephant vs flea?  – but who is the elephant and who is the flea in the long run?).   I have an issue specifically re. the functional shootout, which was rigged at best.

As for the rest of the comparisons, a fair summary is that neither side is a newcomer.   SAP is the granddaddy of business processes with 30 years of experience, but they are new to operating / scaling a cloud environment – something NetSuite has a head start on them.

I have reasons to believe (more on that in another post) ByD will not be a failure this time around, and NetSuite will have to adopt to competing with a real product vs. a phantom.  It will be a healthy change, with customers now having a choice of (at least) two well integrated SaaS offerings.  In the end, customers win.

(Keep an eye open for the next post on ByD and beyond…)

(Cross-posted @ CloudAve)

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The Sleek and the Geek @ SAP

Need more proof that being co-CEOS is an awkward situation?  Watch this SiliconAngle video between 0:20 and 0:35 🙂

Of course you can watch the whole thing… and read these reports of the press event:

Meanwhile I’m just waiting for the promised mid-summer new release of Business ByDesign .. and what the company does about marketing / sales / partner ecosystem.

(Cross-posted @ CloudAve )

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SaaS Accounting Gains: Now What Say You, McKinsey?

According to Goldman Sachs Accounting is now at the #3 spot in SaaS implementations, reports Dennis Howlett.

Not a real surprise, certainly not to Dennis’s readers, or those who follow Ben’s Accounting 2.0 series over @ CloudAve.

Still, seeing the numbers makes me feel good, given that I debated a short-sighted report by McKinsey a few years ago, when they predicted that Financial Applications would be amongst the last to move to the Cloud.

Eat crow, McKinsey 🙂

(Cross-posted @ CloudAve )

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SaaS CEO on Improving Website Visitor to Trial User to Paying Customer Conversion

I don’t claim to be an expert in the area, so this is more a quick pointer then a real post. Well, too short for a post, too long for a tweet:-)

Duane Jackson, CEO of SaaS accounting provider Kashflow writes up his experience of using Google Analytics and Website Optimizer to fine-tune his site to increase conversion:

It turned out that of everyone that visited our registration page, only 45% of them actually went on to complete it. So over half of everyone that looked at our registration page sailed off into the sunset never to be seen again.
We’ve managed to gradually improve that to almost 70% by trying a few different things…

His conclusion:

I’m really pleased we’ve found the time and tools to do this. What really irks me is that we didn’t do this ages ago. I could sit down and calculate what our revenues and customer numbers would look like if we improved conversions like this years ago – but I’m scared to.

Every day that you’re not actively working on improving your conversion ratios is a day of lost opportunities.

You can do it, too at zero cost:-) Or if you want to turn pro level, you may want to check out HubSpot, the inbound marketing gurus.

(Cross-posted @ CloudAve )

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Dubious SaaS Awards

SaaS Directory has announced September’s most popular SaaS companies.  The top 5 are:

September’s top 5 US winners are:
#1 – Gogrid
#2 – WebECS
#3 – CariNet
#4 – Rackspace
#5 – American Data Technology

That’s a strange list..or perhaps SaaS Directory has a strange definition of “SaaS companies” since the top 5 are all in the web hosting business. (ASP, anyone?).  Well, it triggered my curiosity enough to dig deeper and look at the full list.  I’m not picking on any business here, simply stating my own ignorance, but I have to admit I haven’t heard of Robson Communications, Younicycle, Apptix or Yuba, just to name a few.   But perhaps it’s just me, so I asked around on Twitter:

How many “SaaS” companies do you recognize in this so-called “most popular” list?

Here are a few responses:

list1

Hm.. you tell me:-)

list2

6 from former Industry Analyst and current SaaS Exec Chris Selland – should say something about the list

list3

Ben makes a living writing about this stuff, and he only recognizes a third of these companies…

There’s one on the list I know by pure co-incidence: Vembu Technologies, whose CEO I happened to meet at his brother Zoho CEO Sridhar Vembu’s office (disclosure: Zoho is Cloudave’s exclusive Sponsor).  I guess it proves it’s an entrepreneurial family: but wouldn’t Zoho be a more recognizable SaaS brand than Vembu?

The more I look at the SaaS Directory, the more confused I am.  Or perhaps they are the ones quite confused?  Here’s their definition of SaaS Project Management:

SaaS is an effective project management tool which enables teams to work together towards achieving common objectives dramatically improving the overall user experience while offering increased flexibility

“SaaS is an effective tool”… LOL.  (By the way, for SaaS PM discussions you may want to read this thread, or Andrew Filev’s PM 2.0 Blog)

Clicking further I’ve discovered the SaaS Directory Forums – they all seem to be overrun by commercial  spam:

saasforum

I rest my case.  Awards are a great way to recognize effort, success – but some awards can only harm a company’s reputation. As for the SaaS Directory – well, it’s a directory sans the SaaS part.

(Cross-posted @ CloudAve )

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Multi-tenancy, the Holy Grail of SaaS. Do Customers Care?

Two recent posts by Enterprise Social Software  vendors Jive and Atlassian set up a huge debate amongst my fellow Enterprise Irregulars.  Here’s the money-quote from Jive:

It’s not so long ago that it felt embarrassing to say the words "SaaS" and " single-tenant" in the same sentence. For years, it’s been an industry mantra that it’s  simply impossible to have a scalable SaaS business without multi-tenancy.

Both Jive and Atlassian went single-tenant. That’s a red flag with many SaaS purists.  But there’s more then just tenancy. What if customer data stays behind the firewall, while the application is still provided over the web?  Is that still considered SaaS?    Do customers really care about such issues, or do they look for innovation in features and services?

And a bonus: the #1 SaaS icon supposedly delivers on-premise, if the deal is big enough…

Read more here

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Intuit Did Not Kill MS Money. Microsoft Did. Slowly, Over Long Years. Here’s the Full Story.

An era comes to an end on June 30th, when Microsoft discontinues their PFM (Personal Financial Management) product, Money

The story started outside Microsoft, with a startup named Intuit releasing their first DOS-based PFM software, Quicken.   The concept was simple and powerful: balance your checkbook, keep track of your financial transactions electronically. It worked; in fact surveys showed that Quicken became the driver for many consumers to buy their first personal computers in the late 80’s.   But it really became popular when Windows, especially the first “good”  version, 3.0 arrived. 

Intuit remained a one-product company until after their IPO in 1993, when they acquired Chipsoft and entered the tax-software market. 

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SAP Discusses SaaS Strategy

John Wookey has a tough job. The former Oracle Exec, currently EVP @ SAP, the Enterprise Software leader is supposed to charter SAP’s foray into On-Demand – in a company whose bread-and-butter is clearly in installed applications and which still largely considers a threat to its traditional lucrative business.

He spent the first 6 months crafting the new strategy, which he first announced at the SIIA OnDemand Europe conference in Amsterdam.

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“SaaS as Recession-proofing Software” Theme Picking Up

It looks like I may have started ( actually, just re-started) a trend discussing How Software Can Be Resilient to Recession.

Sramana Mitra @ Forbes talks about ‘SaaS-ing’ Back At The Economy:

Some of the robustness of SaaS companies comes from the fact that the sector caters heavily to small businesses….

Fellow Enterprise Irregular Ismael Ghalimi makes the case that:

Some will gain, but most will lose, and some to be really affected by the downturn are enterprise software vendors selling expensive perpetual licenses for their products…

He than takes the oppurtunity to turn the analysis into a cocky offer to his competitors.smile_wink

Read more here

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Amazon’s New Wine Business Already Obsolete

Amazon will soon start selling wine, reports the Financial Times.   Too bad it’s based on an obsolete model: physically shipping bulky goods.  It’s like shipping boxed software, when it’s available on the Net.  Or bulky books when it’s available on Amazon’s very own Kindle.

It’s time Amazon entered the 21st Century, the age of Waas: Wine as a Service.

(Watch the video here in case the embedded player does not work in your feed.)

 

Related posts: TechCrunch