| NetSuite: SaaS is the Way of the Future |
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| Channels Web Stories - In: Asian Channels February 2008 | |
| Written by Shanti Anne Morais | |
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Founded in 1998, NetSuite, Inc. is a leading provider of on-demand enterprise resource planning (ERP) and customer relationship management (CRM) application software for growing and medium-sized businesses. The company set up its Asia Pacific region operations four years ago, with the intention of expanding its presence here and making its brand name even more well-known.
Dean Stockwell, regional director, Asia, NetSuite Asia Pacific says that NetSuite's mission is to enable companies to make better, faster decisions in a fiercely competitive market. "We have a killer application that combines complete CRM, ERP and Web capabilities in a single powerful application. Using NetSuite, companies can unite departments and automate processes, beginning with sales leads and ending with customer invoices. Delivered via the Internet, NetSuite can be implemented all at once or modularly, depending on a company's needs," he elaborates. Asian Channels caught up with Stockwell and Mark Prew, Channel Manager, Asia, NetSuite to get their views on SaaS in the region. What is NetSuite's definition of SaaS? Is it different in any way from the industry-standard definition? Dean Stockwell: NetSuite subscribes to the purest view of SaaS. That is the process of delivering software as a true service. Customers should not be concerned with hardware limitations, or database schemas, instead they should have a set of functional requirements and be able to subscribe to those requirements over a given timeframe. Similar to subscribing to a mobile phone service with MMS, Blackberry etc., those customers of NetSuite are generally not concerned with the technical details - they just want their application delivered over the web, when they need it, wherever they happen to be in the world. Customers often confuse SaaS with ASP. SaaS is very different from the old ASP model. ASP typically involved hosting a machine and application for a specific customer/purpose. True SaaS vendors adopt a multi-tenant architecture which means that one machine is capable of serving many different customers with many different configuration requirements within the application. What kind of impact do you think SaaS has made in the Asia Pacific and why? How has this translated for NetSuite? Dean Stockwell: SaaS is definitely gaining ground in Asia although there is still some work to be done educating the market. Even though NetSuite have been delivering SaaS for more than 10 years, local customers are still coming to terms with what it means to them. Momentum is building and adoption will grow exponentially as more vendors inevitably deliver their applications using SaaS architecture. Right now, there are only a handful of vendors delivering SaaS, however larger vendors are now entering the market by re-engineering their products to be SaaS compliant. NetSuite feels good about the current state of the Asia market and we have attracted a large number of customers in just a few years since we opened up here. How SaaS-enabled do you think Asia Pacific businesses are? What do you think can spur this on further? Dean Stockwell: Those businesses we deal with in more mature countries, such as Singapore, are very open to the idea once they overcome the shift in mindset. Internet connectivity remains the key issue in some developing countries; however there are still many NetSuite customers in just about every country in Asia enjoying the benefits that SaaS offers. NetSuite is looking closely at increasing the number and location of data centers that will host the service - this will have a positive impact on the way SaaS is viewed in those developing Asian countries and also the more mature ones. It is also worth considering that SaaS will provide additional benefits once customers have always-on internet access. SaaS will be the only method by which employees can securely access applications regardless of physical location - in a hotel room, on the bus, on the MRT, etc. SaaS is actually helping to drive more collaboration within organizations that have embraced internet architecture. What do you think are the main pros and cons of SaaS? Dean Stockwell: Of course I don't think there are too many cons; it is more a case of educating the market. Considering that our primary market is small to medium sized businesses, it is hard to find a downside of SaaS even without considering the significant cost savings. Most companies in this space don't even perform regular backups, or upgrades. Whereas we are in the business of effectively taking all the IT-related maintenance headaches away whilst allowing them to focus on running their business. NetSuite offers an uptime guarantee of 99.5% - in the past 3 years we have never failed to deliver at least that service level each month. How many small businesses could argue that they have that level of access to their on-premise applications? What types of companies benefit the most from SaaS? Dean Stockwell: Without doubt, there is huge value to those companies that are small-to-medium in size, say 1 to 250 employees. Companies of this size are fortunate if they have a full-time IT manager, and even if they do, that person generally doesn't have the time to deliver good service to the organization. We take all that responsibility where it matters most - in the day-to-day maintenance of the key business applications. SaaS involves the effective outsourcing of these maintenance tasks such as backup, upgrades, hardware, security etc. Do you think SaaS can be as successful in the medium/large organization sectors as it has been in the SMB sector? What is NetSuite's strategy here? Dean Stockwell: SaaS most definitely can add value in this space also. Many larger companies are already paying for a team of IT managers and hardware/database licenses so the value proposition is often diluted. However, as SaaS gains momentum, more and more CIO's will be exploring what SaaS has to offer and will quickly see the credibility and financial benefits associated with this model. One common concern for these companies is the concept of storing their data outside of their organization, but this is simply an education process. Most credible SaaS vendors have multi-million dollar bank-level security in place with regular independent audits and governance. I am willing to bet that 10 years ago none of those Asian SaaS customers thought they might be accessing their personal bank accounts and transferring money over the internet. What do you think are the major trends in Asia Pacific's SaaS market? Are these trends different from other regions? What kind of impact do these trends have on NetSuite and its partners? Dean Stockwell: The key trend is growth and adoption. SaaS will continue to grow exponentially for many years to come and the SMB market is the last bastion for software companies to conquer. NetSuite is without doubt positioned in the right place at the right time and poised to capitalize on what lies ahead. The third dimension is the likelihood that Asia will outgrow other global economies and will drive the demand for this type of application even higher. We will be happy to work with those partners that recognize this trend and share in the success. Can you please elaborate on NetSuite in the Asia Pacific region and its strategy here? Has this strategy changed in any way over the years? How? What's the focus for 2008? Dean Stockwell: The strategy has remained constant. We want to educate the market on the benefits of SaaS and continue to offer world class service to our customers. The go to market strategy is a combination of channel and direct, but we are working hard at increasing our market exposure through effective channel partners and are always on the lookout for those partners that can compliment NetSuite's offerings. When it comes to the channel, SaaS has come under fire (for e.g. making SIs redundant). How true do you think this is and what is NetSuite doing to ensure its commitment to its channel network and partners? What is NetSuite's channel strategy in the Asia Pacific? Mark Prew and Dean Stockwell: Unlike many other SaaS solutions, NetSuite has developed a system that can "fit" just about all industry verticals. This is possible due to its flexibility as well as its scalable platform. This requires equal commitment from both partners and NetSuite to ensure the product is integrated and implemented professionally and accurately. Many SaaS models will claim the product is "out of the box" configured, and whilst this is somewhat true with NetSuite, customers will always wish to tailor the product to their exact needs and specific workflow requirements. Partners may also play an active role in the ongoing management of the application. Whilst NetSuite takes care of routine tasks, the partner has the opportunity to provide regular administration of the system, such as report writing, moves, adds and changes, etc. NetSuite's ultimate goal is to have a broad-reaching channel equipped with the necessary skills to fulfill both the implementation and administration duties. From our experience this is a far more appealing proposition to the average reseller who may be currently selling hardware and software licenses. In short, we are allowing the partner to present themselves higher in the value chain. What does it take to become a channel partner of NetSuite? Mark Prew: Becoming a partner for NetSuite involves a certification program, followed by "shadowing" NetSuite with the first implementation to ensure the customer always receives the professional service we pride ourselves on. We expect partners to stay up-to-date with the product and industry trends. Is NetSuite looking for more partners in the region? If yes, where, what types of partners and why? Mark Prew: The channel in Asia is most definitely a growing concern. The demand for NetSuite is increasing at an exponential rate, and the challenge is keeping up. Asia is not unique in preferring face to face meetings, despite the fact that NetSuite can be demonstrated, sold and delivered via the internet (where it lives!). Successful partners tend to be forward-thinking; embracing the wave of change with SaaS, and with little capital investment and a renewing revenue model, the aim of our channel is to maximize the opportunity along with customer satisfaction. Customer renewal and referral are very important metrics to NetSuite and a major contributor to our growth. More players are coming into the SaaS industry. What kind of impact do you think this will have on a SaaS stalwart like NetSuite as well as on the industry in general? Dean Stockwell: NetSuite are excited that this market is gaining strong momentum. When IBM stepped into the database market 20 years ago it had a profound effect on the way that companies viewed the importance of databases and exposed Oracle as the clear leader in the client-server space. The same thing is already happening in the SaaS market as household-named companies are creating exposure and helping to educate the market. Right now, there are only a few vendors like NetSuite creating the awareness and providing the customer with much-needed education. We say bring it on - the market is significant, we have the advantage, so the more the merrier! Do you think Microsoft's entrance into the SaaS arena with its Software-plus-Service model will have a major influence on the SaaS industry? Dean Stockwell: Yes. There are those that lead and those that follow. Most of the followers will wait for Microsoft to give SaaS a perceived stamp of approval. Microsoft's investment can only be a good thing - there is a history of this going back 20 years or more. What do you think NetSuite's main strengths are in the SaaS arena and what do you think makes your company stand out from other SaaS players?Why do you think NetSuite will continue to dominate the SaaS market? Dean Stockwell: There are many reasons why NetSuite will continue to dominate this market and why customers should look very closely at what NetSuite has to offer. There are four key reasons that make the NetSuite story so compelling:
How do you think SaaS has evolved over the years? Do you think it will evolve any further? How? Dean Stockwell: This is just the beginning. As popularity and internet pervasiveness grows, so too will the opportunity for the integration of different SaaS applications and functions. Right now for example, a customer can place an order within NetSuite and automatically create, via the internet, a shipping notification to their shipping provider (Fedex, UPS, etc.). In the future, this type of integration can be taken to a new level so that different companies who trade together can connect their systems together in a completely automated manner. Additionally, you will see particular industries adopt industry-specific versions of SaaS applications, such as a car manufacturer who has SaaS connectivity with the entire supply chain. There is little doubt that SaaS is the way of the future, the wave is building and it is just a matter of time until it is considered the norm. ◊
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