Netsuite software targets SAP, Oracle: source
Monday, Apr 13, 2009 7:54PM UTC
By Jim Finkle
BOSTON (Reuters) - NetSuite Inc, a maker of Web-based business management software for small- to mid-sized companies, has developed programs catering to large corporations, said a person familiar with the strategy.
The person, who was not authorized to publicly discuss the plan, said NetSuite wants to sell its software to divisions of large corporations that use traditional software from SAP AG and Oracle Corp.
NetSuite, which is barely profitable, needs to expand into the corporate market to fuel growth. Spending by large corporations accounts for the bulk of business applications software sales, which researcher Gartner estimates total about $89 billion a year.
The new programs -- dubbed "SuiteCloud Connect" -- allow corporate divisions to run their businesses on NetSuite's Web-based software, then easily roll up financial data into their parent companies' SAP and Oracle systems, the person said.
A spokeswoman for NetSuite, which is majority-owned by Oracle Corp Chief Executive Larry Ellison, declined to comment.
SAP and Oracle sell traditional software, which companies buy and run in their own data centers. The bulk of the world's biggest corporations either use SAP or Oracle.
That approach can be more expensive than buying a subscription to NetSuite's hosted, Web-based software, said Rebecca Wettemann, an analyst with Nucleus Research who has not been briefed by the company on the new product line.
"From a total-cost-of-ownership perspective, it never makes sense to run SAP instead of an on-demand solution, such as NetSuite," Wettemann said. "SAP is simply too costly on an ongoing basis."
Wettemann said she expects the new product to be well received by divisional technology managers interested in switching to NetSuite's software-as-a-service offering.
"NetSuite can go to everyone that has dragged their heels in going to SAP and Oracle and say 'Now we have an option for you that is much more in line with the scale of your business that solves the roll-up and reconciliation question," she said.
Analysts expect 11-year-old NetSuite to post its first profitable year in 2009 as the San Mateo, California-based company's revenue grows 15 percent to $176 million, according to Reuters Estimates.
The source who described the new NetSuite offering said the company will soon announce the connection software for SAP, but hold off on unveiling the product that works with Oracle.
NetSuite developed SuiteCloud Connect using tools known as application program interfaces, or APIs, that are already built into SAP and Oracle programs, as well as software from most vendors.
Those APIs are open to all programmers and have previously allowed NetSuite customers to develop their own integration software for rolling up financial data into the parent company's computer systems.
But SuiteCloud Connect offers a standardized set of tools designed to save businesses the time and expense of doing that customization on their own.
The programing was partially based on customization work done to help integrate Asahi Kasei Corp's SAP programs with subsidiary Spandex America's NetSuite software.
The Oracle connectors were partly based on know-how developed from Iron Mountain Inc's implementation of NetSuite at its Iron Mountain Digital division, according to the source.
(Reporting by Jim Finkle; editing by Richard Chang)