This article was published in the July issue of CRN, before Oracle announced it was acquiring NetSuite for US$9.3 billion.
It appears that NetSuite’s channel is struggling to keep up at a time when the cloud ERP vendor is really hitting its straps. For savvy resellers, this spells opportunity to pick up a lucrative vendor in a hot market.
Last month I flew to San Jose for NetSuite’s SuiteWorld conference and spent time with two customers (a manufacturer/retailer and a distributor) from Australia and New Zealand. When I returned to Australia I met a third customer (a manufacturer/retailer) who was a fortnight away from transitioning to NetSuite from MYOB.
NetSuite had guided two of these customers to partners from initial contact. However, they both had had bad experiences – with four resellers between them. The third customer was direct with NetSuite. All three ended up going direct and were happy with the outcome. (I don’t want to reveal the identities of the customers because they want to maintain business relationships.)
It would be unfair to tar all NetSuite partners with the same brush. I’m sure the company has excellent SME partners in Australia and New Zealand. Yet the complaints were consistent in one main area: lack of expertise. Two theories emerged from conversations with these three customers.
One is that the ANZ markets are just too small to sustain the depth of expertise required in verticals. The NetSuite channel comprises three multinational players, Accenture, Cap Gemini and Deloitte; a handful of mid-tier integrators; and fewer than 20 SME resellers.
NetSuite is selling to 12 industries including professional services, manufacturing, retail, wholesale distribution, advertising and real estate. It’s a diverse spread. Are NetSuite SME partners trying to sell to too many? Given the complexity of an ERP, it’s impossible to do well.
The second theory is that NetSuite is expanding its capabilities at a pace that SME partners find hard to match. A fourth prospective customer told me he dropped researching NetSuite because one small partner told him it couldn’t do in-store point-of-sale. (It does.)
A new NetSuite initiative, codenamed Atlas, could make a difference. Renamed Suite Success and launched at the conference, it consists of a best-practice program, in six verticals, that aims to get customers on NetSuite within 100 days. The company said the program had been tested in the US, with great results. It is only in the US right now and will most likely come to Australia in 2017.
Suite Success may not be the panacea. Some companies don’t want to roll out within 100 days. They want to de-risk by rolling out slowly, or one department at a time, says Don McLean, Australia managing director of Fronde, which was named NetSuite’s Asia-Pacific partner of the year.
But for the market that needs NetSuite the most – SMEs on smaller implementations – moving away from MYOB in as short a time as possible is undoubtedly a great thing. Meantime, NetSuite could surely benefit from industry specialists expanding into ERPs – even if it is just to help scope the project properly, where these customers struggled. NetSuite has developers in the Philippines who can customise and implement.
The opportunity is massive. NetSuite is well placed to take market share from Oracle and SAP, both of which struggle to field a cloud solution against it.
Increasingly smaller retailers in Australia and New Zealand are turning to NetSuite to go offshore. I spoke to a Kiwi retailer that has manufacturing in China, stores in Switzerland, France, the US and New Zealand and another nine distributors. The COO told me he was happy to pay $140,000 a year in NetSuite licences to manage all these entities.
NetSuite’s channel remuneration is very generous – 30 to 50 percent for the lifetime of the customer. Given the barrier to switching ERPs, you would imagine that the lifetime would be 10 years minimum. That would make a reseller $420,000 on the lowest commission plan – for one client.
And don’t forget ISVs. One “treasury management” app, Kyriba, charges $80,000 to $500,000 a year to manage bank accounts, hedging and currency for manufacturers.
It also has a commissions program.
NetSuite says it is looking at targeted recruitment. “If we look at geographies where we don’t have good coverage or sub-verticals where we don’t have a partner who could cover it, then we would target recruiting a partner,” Graeme Burt, NetSuite channel sales director for Asia Pacific and Japan, told me.
For example, the vendor recently recruited a partner in rural South Australia who covers the agricultural industry.
Looking to expand into business process workflow and make good money? This could be a good fit.
Sholto Macpherson is a journalist and commentator who covers emerging technology in cloud. Disclosure: NetSuite covered the writer’s travel and accommodation expenses to attend SuiteWorld.
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