NetSuite Puts Development Tools, Sales Resources Behind Its Channel Expansion

NetSuite debuted the next generation of its SuiteCloud development platform Thursday in a move the company said will help expand the partner ecosystem the company is building up around its on-demand ERP, CRM and e-commerce applications.

Holding its SuiteCloud 2010 conference for customers and channel partners in San Francisco this week, NetSuite also announced a strategic initiative with Amazon's cloud service, a partnership with business process outsource service provider Genpact, and an alliance with systems integrator WiPro.

The announcements, combined with channel-friendly keynote speeches by executives and plans to increase resources for the company's channel program, were all designed to hammer home the message that NetSuite is serious about expanding its solution provider program and growing sales through the channel.

CEO Zach Nelson, in a keynote speech, dismissed as a myth the view that cloud computing and the channel are a bad fit.

"While many people have said the channel is disintermediated by SaaS, I believe this year you're going to see incredible new business models emerging [from partners] around how to deliver this new technology to customers so they can run their businesses more efficiently," Nelson said.

Nelson's speech is in line with other comments he has made recently, including during an earnings call in February in which he predicted that 2010 will be the year that solution providers fully embrace Software-as-a-Service applications.

Last month NetSuite unveiled the "NetSuite SP 100" program, offering resellers 100-percent margins for first-year revenue generated by new customer contracts, in an aggressive bid to recruit channel partners from Microsoft, Sage, SAP and other vendors.

"That's opened up tons and tons of conversations" with resellers expressing interest in joining the NetSuite program, said channel sales vice president Craig West in an interview. About 10 have actually signed up for the 100 percent margin program (which pays 10 percent on annual renewals), while others have opted for NetSuite's traditional program of 50 percent margins on first-year subscription revenue and 30 percent on subsequent years.

While West said, "there's some really great names in the pipeline," he wasn't ready to identify newly recruited resellers. NetSuite has about 125 channel partners in the U.S. and Canada today and another 75 to 100 around the world. In his keynote Nelson said revenue from NetSuite's channel operations has been increasing at a compound annual growth rate of 39 percent.

Next: Netsuite Aligns Sales Organization With Channel Efforts

NetSuite is making changes to its sales organization to better align them with its channel efforts. The company has increased spending for channel sales and development by 40 percent in the last six months, said Mark Huffman, senior vice president of worldwide sales. That includes adding a handful of channel account managers, who report to West, to serve as liaisons between the company, channel partners and their customers.

"I want you to know that NetSuite gets it as far as optimizing its sales organization for the channel," Huffman said, addressing resellers in a speech. "We're not just a direct sales organization, we're an organization that's looking to optimize our distribution. NetSuite doesn't have any interest in competing with you for your clients."

That message is resonating with the company's channel partners. Dave Rice, CEO of True Cloud, a Scottsdale, Ariz.-based solution provider, said he's seen NetSuite steadily improve its channel efforts in the two years his company has been a reseller. The new channel account managers and other resources "are a really great sign that they are becoming more sensitive and devoted to channel partners and their needs."

In contrast to some who argue that SaaS vendors may not need the channel, Rice said SaaS -- because of its subscription/recurring revenue model -- is more dependent on continued customer satisfaction for success than vendors selling on-premise software. And solution providers are best positioned to maintain that satisfaction, he said.

At the conference NetSuite held up its reseller relationship with Iron Solutions, a Franklin, Tenn.-based solution provider, as an example of how solution providers can work with cloud application vendors. Iron Solutions developed an equipment configuration and lifecycle system on NetSuite that's used by agricultural, industrial and outdoor power equipment vendors.

NetSuite likewise trumpeted its new partnership with Genpact, which will develop business process outsourcing services -- including financial, accounting, procurement and human resource management services -- for midmarket customers based on the NetSuite application set, said Biplab Adhya, Genpact vice president of banking and financial services Genpact. And under NetSuite's strategic partnership with Wipro Technologies, the global services business of Wipro Ltd., Wipro will develop and implement cloud systems based on NetSuite.

And NetSuite and Amazon Web Services will further integrate their cloud platforms, improving the ability of systems integrators, developers and customers to leverage NetSuite's ERP applications with Amazon's on-demand S3 storage service.

Next: SuiteCloud 2 A Critical Component Of Channel Push

NetSuite portrayed the new SuiteCloud 2 platform, for building and deploying applications that work with NetSuite's software, as a critical technology component of its channel push. The toolset includes new cloud application management capabilities for ISVs and channel development partners, the ability to integrate cloud applications with each other with single sign-on authentication, and graphical business process customization.

More significant are NetSuite's plans to provide channel partners with the ability to customize applications for customers without coding. Migrating coded customizations when upgrading SaaS applications can be difficult and that is widely seen as a hurdle to channel adoption of cloud computing given the need for solution providers to customize apps for vertical industries and individual customers.

NetSuite founder and chief technology officer Evan Goldberg demonstrated the SuiteFlow technology the company has added to SuiteCloud 2 that partners and customers can use to develop custom business processes to NetSuite applications without coding. Customizing NetSuite using older SuiteScript tools required writing scripts.

NetSuite is also working on even more advanced technology code-named "Tiramisu" that will separate components of the NetSuite core infrastructure and make them available to third-party developers -- a plan that ultimately will provide partners and customers with the same development capabilities as NetSuite's own development team.

Those moves were applauded by Steve Jones, CEO of Explore Consulting, a Bellevue, Wash.-based NetSuite channel partner. Explore Consulting initially began working with NetSuite seven years ago because of the vendor's open APIs and Jones sees the SuiteFlow and Tiramisu technologies as a natural evolution.

"Today's message is so spot-on to what we said years ago, that customers have to be able to customize their ERP," he said. "Generally, I like the concept, taking the platform openness to the next level."

TrueCloud's Rice agreed: "It's very cool the way it's been very-well integrated into the product," he said of SuiteFlow.

Between presentations SuiteCloud 2010 attendees were treated to videos, based on Apple's "I'm a Mac, I'm a PC" advertisements, that poked fun at NetSuite rivals Microsoft and SAP and their cloud computing efforts.

"Everybody today says they are a cloud vendor. I don't agree with that," Nelson said in his keynote. "You can't just take what you did before, host it on the Internet and call it 'cloud.'"