NetSuite is climbing the ladder

Posted: October 31, 2007 in CRM

My natural inclination right now is to say something like, "I want to buy a vowel," but really, I want more.

I want a few words, and like my buddy the eminent guru, Paul Greenberg, I would like a few that have not been combined together quite as frequently as "as a service." It is remarkable how our species takes something unique and absolutely grinds it until all that’s left is an insipid powder. For instance, decades later all things Washington still need to have a "–gate" suffix before they reach the stature of seriousness, but I digress.

What am I talking about? Last week, NetSuite went to the mountain top — actually, the foot of Russian Hill — with its partners to give them a panoramic view of the future and it included a new component called "SuiteBundler," which is designed to make products out of specialized applications that its partners churn out every year to meet customer needs.

Here’s how it works. A developer builds a vertical application made up of some new screens, tabs and other "stuff" (one of my favorite recondite technical terms) and then packages up just the enhancements and "injects" it (NetSuite’s recondite technical term) into another company’s instance of the NetSuite service and voila! The second company now has the vertical application too.

This is cool stuff, and though similar capabilities are available elsewhere, that’s not the point. The point is that this is a good and smart capability that further opens up NetSuite’s ability to support vertical applications. This last point is not trivial but it really comes into focus when you get to see some use examples.

To its everlasting credit, NetSuite never used the word "mash-up" — though one application its demonstrated did rely on a map from elsewhere in the cloud. All that NetSuite did in its demos was to introduce real hard-working applications that achieved important things. For example, one application that was demonstrated involves tracking ships, their origins, their contents, the special handling requirements of the cargo and more. Some might call this a "micro-vertical," but it’s hard to see what the plain old vertical would be, what utility it would have or who would buy it.

The shipping system is an example of an application that has to be the way it is to be of any use at all, and there really is no conceivable way that a lesser application would be almost good enough. My point here is that it’s an example of a complex application that incorporates a lot of front and back-office data as well as data delivered by SOA (service-oriented architecture).

More important, they tell me that there are about 60,000 ports out in the world that could use this kind of functionality to replace aging green screens and multiple unintegrated applications that may be used to track the same kind of data today.

So why do I want to buy a vowel or a bunch of words? Because the words we have to describe our new generation of software are totally lacking in the ability to deliver any real information to an uninitiated buyer. Software as a Service (SaaS), on-demand and things like it only tell us about a delivery method that once scared many people and today elicits more yawns than watching playoff baseball at 11:30 p.m. (that’s just a description, not a complaint).

NetSuite has another problem and it’s the old front-office/back-office divide. To call NetSuite "ERP" (enterprise resource planning) or "e-commerce" or "CRM" alone is not helpful, because it misses two-thirds of that it does.

It’s really business software made to run all aspects of a medium-sized business. As CEO Zach Nelson tells it, he’s trying to sell to the "Fortune Five Million," and he has plenty of company in that space from the likes of Sage — which has been plowing those fields for a long time along with Microsoft (Nasdaq: MSFT) and Great Plains — and newcomers like SAP (NYSE: SAP).

Tight integration of the main components, an on-demand delivery system, and development and customization capabilities will do a lot to help NetSuite continue its march in this market.

While all vendors will make similar claims, each goes about it differently, and at the end of the day, the determining factor might very well be ease of use that is fostered by NetSuite offering a single vendor interface (along with a vertical partner in many cases), a technology stack whose complexities are hidden from the user, and a modern development environment that leverages standards and steers clear of proprietary things to the extent possible.

What’s great about all this is that we are seeing a real market coming to life. In addition to NetSuite’s announcements last week, a wee small company from Redmond, had a few things to say about on-demand, partners and vertical applications. Microsoft’s announcements point to a serviceable offering and a strategy that will appeal to many, especially its large partner channel.

There is no doubt that for the immediate future there will be multiple successful development platforms, and the marketplace will sort it out and possibly anoint a new king — though that may be less important than it was in, say, the relational database wars. Before that happens, though, we really should figure out what to call it. Much as I like SaaS and on-demand as strategies, the terms are no longer big enough to cover this growing and robust field.

So, what did you think?

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