Opinion: As cloud concerns abate Netsuite could surge

Scale at speed — that’s the genius of Internet giants like Google and Facebook. And it is the challenge that will determine whether NetSuite is a good company or a great one.

Which-50 spent last week in San Jose attending NetSuite’s SuiteWorld. The company is the pioneer of cloud-based ERP and still largely has the field to itself, despite hanging its shingle out over 15 years ago. But the NetSuite story in many ways is also the digital story.

The company has disrupted a well-established market with entrenched incumbents, and is now selling the virtue of disruptive transformation as part of its philosophy. Its biggest shareholder is Oracle founder and chairman Larry Ellison, who has spent much of his career looking for — and causing — all manner of grief to those who crossed his orbit.

The Oracle relationship is a subtext to much of the NetSuite story, and questions remain about how the relationship will play out over the long term. NetSuite is an aggressive and competitive marketer against companies like SAP and Microsoft, but conveniently ignores Oracle’s presence in much of its positioning in ERP and CRM markets. Ellison may not care — as either way he wins — but customers and investors may be less sanguine.

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For instance, NetSuite specifically lists its relationship with Oracle as a risk in its SEC filings, due to its reliance on Oracle’s database. “We rely on software licensed from third parties to offer our service, including database software from Oracle. This software may not continue to be available to us on commercially reasonable terms, or at all. Any loss of the right to use any of this software could result in delays in the provisioning of our service until equivalent technology is either developed by us, or, if available, is identified, obtained and integrated, which could harm our business.

And its recent purchase of marketing automation company Bronto will bring it into direct conflict with Oracle in the marketing tech world, where the latter is placing some very big bets.

Hooked on a feeling

All that said, NetSuite also has the feel of a company about to accelerate dramatically. Chatting to its customers over the course of the event it’s clear that concerns about cloud computing often still surface during the sales process as a roadblock — especially as the company moves up the food chain. Indeed, Billabong global CTO Kadima Lonji explicitly raised it with Which-50 as an internal objection that needed satisfaction before his company would commit.

That story next week.

Inevitably, though, those concerns will melt away — probably more rapidly than many people realise. When they do, expect the company’s already strong growth trajectory to turn sharply north.

There is one final interesting sidebar, from CEO Zach Nelson’s keynote. The company has cut a deal with American Express Travel that delivers a single corporate rate for all of NetSuite’s approximately 25,000 clients. A cloud vendor corralling the huge buying power of its crowd is a novel — and potentially very disruptive — idea. Watch this space.

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