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Cloud Computing

SuiteWorld: The Happy Accident of NetSuite's Expansion

During his keynote at this year’s SuiteWorld, NetSuite founder and CTO Evan Goldberg did an elaborate skit involving Breaking Bad. But while any penchant for Meth amongst the workers wasn’t addressed, it’s fair to say the company is addicted to growth. From headcount to revenue, to the amount of data passing through CPUs, every graph we’re shown has an alarmingly upward trajectory.

Is it sustainable? Probably not at 30% year-on-year forever – but there’s still a whole world out there. Whether it’s Europe, the $100 billion companies, ‘the smart startups’ or the Internet of Things, NetSuite and its CEO, Zach Nelson, think they’ve got what it takes to become a powerful Cloud company, and make its customers powerful too.

While the Cloud means any company can go global straight away, it doesn’t always work like that. For now NetSuite is based mostly in English-speaking companies, but there is a big drive into Europe on the horizon. “When you start in a new country, it's like starting a new SaaS business,” Nelson explains “You have to put $5 million in at the start and because of the recurring revenue model it takes five years to actually pay that back.”

This meant the company historically took a more pan-Europe approach with a UK focus, always waiting to make a move into other countries, such as Germany. “Because now the company is bigger, those decisions are much smaller than they were when we were small,” says Nelson, “so Germany may actually be [the big focus] next year. We haven't just limped into these places, we know that when we go, it's a big investment.”

“When you start in a new country, it's like starting a new SaaS business; You have to put $5 million in at the start and wait five years.

The company is keen to stress throughout, it has plans for two new European data centres. This will help remove various issues surrounding which country any data is hosted in. “We still have lots of European companies storing data in the US,” says Nelson “but it will change the dynamic of the type of company we can sell to.”

Throughout the various keynotes, we’re told it’s not uncommon for NetSuite to be deployed separately onto different legacy systems – a two tier approach, often among the enormous $100-odd billion companies which make up its client base. But will two ever become one? “Probably. When will they replace it? When that nasty call comes and the SAPs and Oracles of the world say, ‘we're no longer supporting that version’.”

Since switching versions is often like a complete re-implementation anyway, Nelson believes the company is well placed to take over as it’s often when support ends for the various legacy parts that decide to fully embrace NS. While those are the kinds of companies at the top end of the enterprise space, ‘the smart startups’ already use NetSuite. “That was our heritage. If you look at a lot of the companies we put up on the board, a lot of them started as startups. GoPro started when they were two guys.”

So what makes the company so dominant and so confident that it has got what no one else can offer? Apparently it’s just luck and good timing. “It was a happy accident of our first customer bases that got us to this point. If you think of when we started the company in 1998, no one ever thought they'd put their mission critical applications in the Cloud, nobody wanted to, they were afraid of security,” says Nelson.

Two industries where the fear was outweighed by the need for accessible applications anytime, anywhere were distributors and service providers - people who sold time. “Those were the first two industries that came to us, and now those customers have huge input into what we build next, so suddenly you start to build up enormous functionality for both of these industry groups.”

“Companies that did choose to make software for these markets chose to make them separately. Fast forward 15 years to today, and now these guys are now starting to become very much crossed over - things become services and services become things. Nobody's ever built a system to manage things and time.”

No one will really ever solve this problem other than NetSuite, because nobody has the visibility.

“We happened to do it frankly as an accident of our first customers, and now as time has moved on, these companies have had enormous overlap, and so there's no one who will really ever solve this problem other than NetSuite, because nobody has the visibility.”

“It's the hardware guys that really drove this complexity,” he continues, “where a hardware company used to just sell and distribute hardware, and it was a pretty straightforward business model, now these guys are selling hardware and software bundles.”

That covers the past and present, so what about the future? Nelson mentions how the traditional view of ERP is changing, and to be successful everyone needs everything in once place. “The powerful companies on the Cloud are companies aggregating lots of data; Facebook, LinkedIn, Twitter. They're mining that data in a single place. Businesses are probably the least powerful places on the planet because all of their data is spread all over the place.”

“[So] it's less about NetSuite becoming powerful,” concludes Nelson “and it's really more about customers becoming powerful and aggregating data about their customers in one single place.”

 

 

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Dan Swinhoe

Dan is a journalist at CSO Online. Previously he was Senior Staff Writer at IDG Connect.

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