Enterprise Resource Planning (ERP)

NetSuite CEO Plans UK Switch for Sage Siege

Zach Nelson is in characteristically pugnacious, good-humoured form when we meet bright and early in the dining room of his smart Mayfair hotel room in London.

The CEO of Californian e-commerce and back-office firm NetSuite laughs off some recent digs made by executives at Infor after the rival ERP firm called for Nelson’s staff to join their firm.

“Talk about a dead company!” he laughs. “They’re attacking the king. That shows the changing of the guard. Infor is chasing NetSuite.”

He’s probably right. NetSuite is now ensconced as the midmarket leader in its sector and with Workday it is one third of the powerful cloud triumvirate led by the all-conquering Salesforce.com. These companies have put the cat among the pigeons of the old order of enterprise software; as evidence of this, later on in the day we talk SAP, which agrees to buy cloud-based expense and travel management Concur Technologies as it rushes to catch up with the new preferred IT deployment model.

With 3,600 staff and a $6bn-plus market cap at time of writing, NetSuite is part of the modern Silicon Valley furniture but it has plenty more to mine as the ERP and financial management systems planted by SAP, Sage, Infor and others come under review. Indeed, such is the vaulting ambition for growth that Nelson, an American Britophile, is plotting to move to the UK for a period early next year to help bed in recent acquisition Venda and to unsettle Sage, the biggest native tech firm.

“Sage has lived way too long,” he says before attacking his bête noir of “graveyard software”, a term he repeatedly uses for what he sees as the client/server-generation living dead.

There’s a detour to mock the Ballmer-generation Microsoft.

“Ballmer’s whole mantra was devices-plus-services. Nadella realised we should probably put software in there. Instead of buying into cloud Ballmer “bought a phone” with its Nokia purchase.

But SAP doesn’t escape the lash either.

“They’re an enigma. I love all their cloud advertising because they don’t have any cloud. It’s all acquisitions. The more they advertise the cloud, they’re basically advertising NetSuite.”

Speaking of advertising, Nelson shows me his company’s new campaign, taking shots at SAP with the banner headline: ‘Maybe somebody should get fired for buying SAP’.

“Fifteen straight days [it will run]. SAP will not be very happy but they’re a proxy for all the dead technologies companies run on.”

Nelson believes NetSuite has the capacity to grow at 20-30% “for decades”. Most of that growth will be organic and there are no plans to make blockbuster deals because rich pickings are everywhere.

“We were listed number ten in financial management. From one through nine it’s the graveyard of software and from 11 through 50 it’s the graveyard of software.”

I say that I can imagine Larry Ellison telling him to make a blitzkrieg attack via a big deal such as stepping in to buy Concur. Nelson says that’s not the case and says Ellison does not these days get too involved in the business he bankrolled.

He likes Concur though.

“The interesting thing is actually the travel: it’s actually a very different thing to do. They’re like Expedia for businesses.”

Later that day not only does Concur announce its deal with SAP but Ellison announces his plan to step down as Oracle CEO. (In an email he writes: “Very surprised by the Larry change but I suspect Oracle been operating in this structure for quite some time. Concur is consistent with SAP's strategy: if you aren't capable of building successful cloud applications, your only option is to spend outrageous sums to buy them.”)

Leaving aside M&A, one big opportunity Nelson sees is in the broadening of omnichannel selling.

“Retail has actually been massively disrupted and companies need to retool their infrastructure to compete. It’s probably coming soon to every business. Retail is the canary in the coalmine as products are becoming services and [like Uber and Airbnb] services are becoming products.”

Despite this change, Nelson isn’t tempted to double-down on services.

“It’s 25% of our revenue but we see it as a necessary evil,” he says.

Some cloud firms are forging pre-integration links to appeal to buyers but Nelson is again unconvinced this is a game changer.

“At the end of the day it’s hard to integrate applications. Integration is the big software lie. There’s no such thing as easy integration.”

Outside of NetSuite, Nelson recently joined the board of Benaissance, a financial benefits company that operates in the healthcare sector. The company is part of the flowering of the Omaha area for tech firms and as a proud Nebraskan (he has a stake in American football team Omaha Nighthawks) Nelson has high hopes for the local startups.

He points to local companies like railway pioneer Union Pacific, Berkshire Hathaway and ConAgra Foods and says Omaha has the colleges, business links and infrastructure to be a significant hub so long as it focuses on core opportunities rather than trying to be too broad.

“Most people when they create a tech hub say let’s build Silicon Valley. That’s probably not going to happen in Omaha.”

But NetSuite has plenty to keep him busy when he comes to his sojourn on the British side of the pond. The company is building datacentre capacity in the UK and a recent deal saw Arsenal Football Club become a customer. He sees plenty of opportunity to grab market share from the old guard - and he doesn’t want the rivals that he sees as zombies to have a sniff of a chance.


Martin Veitch is Editorial Director at IDG Connect


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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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