NetSuite upgrade aims for mid-market sector

Californian firm tries to grab share of business management software revenues before SAP and others get in on the act The nascent software-as-a-service (SaaS) market in Asia is about to heat up, with NetSuite attempting to trump SAP in selling on-demand business applications to mid-sized companies. SaaS pioneer NetSuite, a California-based firm controlled by Oracle chief executive Larry Ellison, has announced key improvements to its recently launched NetSuite 11.0 release, which brings mid-sized companies the benefits of a single business management suite without the cost, complexity and rigidity of traditional enterprise software applications. 'This is what we call 'SAP for the rest of us',' said Zach Nelson, chief executive of NetSuite. The new and improved NetSuite Version 11.0, which has been made available in phases since April this year, competes directly against mySAP All-in-One, the German software giant's SaaS solution. SaaS is a fast-growing software delivery model in which applications - including customer relationship management (CRM), enterprise resource planning (ERP), supply chain management and e-commerce - are offered remotely over the internet through a subscription-based fee. Users do not buy the licence of the software. With seven years of research and development invested in its SaaS model, NetSuite delivers an integrated on-demand business suite. Other suppliers in this emerging market typically offer stand-alone CRM or ERP applications. Mr Nelson said the new features in NetSuite Version 11.0 put even more distance between NetSuite and SAP's approach - with an emphasis on making back-office applications such as ERP as easy to use as front-office applications like CRM. NetSuite Version 11.0 adds deep ERP functionality, including demand-based inventory replenishment, landed cost and bin management for manufacturing companies; project accounting and milestone billing for those delivering services; and expense amortisation for companies with more complex financial systems. CRM has long been considered the domain for customer-facing activities, but Mr Nelson said back-office systems owned the most important information in the relationship with the customer - orders, credits, invoices, payments and product/service delivery. NetSuite says its Version 11.0 is the first application to make the back-office part the strategic core of total customer relationship management. Every interaction by back-office users - phone calls, e-mails, meetings, documents and user notes - is tracked in transaction records such as in orders, invoices and shipments, enabling the personalisation of workflow. The new NetSuite release also added customer dashboard, used to gather and review all that information, and KPI scorecards, a business intelligence tool. Mr Nelson said NetSuite was rolling out this version to 'thousands of firms', including new customers in Japan, which he said was 'the world's second-largest IT market'. More than 100 firms in Asia use NetSuite, which will beef up its presence in Hong Kong this year. Springboard Research last month noted that the top five SaaS vendors operating in Asia were all North American - Salesforce.com, WebEx, RightNow Technologies, Oracle and NetSuite - and accounted for more than half of the market. It estimated the regional market, excluding Japan, saw revenues increase more than 80 per cent to US$80 million last year. The market is expected to grow to US$501 million by 2008. Amid the challenge from smaller and aggressive rivals, SAP this month forged a new reseller, referral and solution relationship with IBM to serve the US$500 billion small and medium-sized enterprise market worldwide. That alliance will focus initially on the United States but will expand to about 12 countries in the coming months. More than 8,000 small and medium-sized firms run their businesses with mySAP All-in-One. 'The SaaS market is receiving considerable focus from software vendors operating in various industries,' said Dane Anderson, research vice-president at Springboard Research. 'Global software giants, local independent software vendors and emerging on-demand software vendors all have a healthy dose of respect for the power of SaaS to disrupt the competitive frameworks of the software industry in the future.'