Cloud-based ERP company NetSuite will be relying on the channel to fuel the next stage of its growth as it begins to roll out its SuiteCommerce Commerce as a Service (CaaS) platform.
Founded in 1998 with financial backing from Oracle founder Larry Ellison, NetSuite has grown “from zero revenue to a US$300 million a year company” according to its CEO, Zach Nelson, who says the company now has 12,000 customers worldwide.
Nelson says NetSuite had to overcome a lot of resistance from resellers in its early days, but the company’s direct/channel sales ratio is now approaching 50:50.
Over the last year NetSuite’s channel sales grew by 50 percent worldwide and by 150 percent in Australia and New Zealand, according to Nelson.
“Initially, like most SaaS companies when we started we had to sell direct because nobody believed in it and so you had to have your own people pushing it,” Nelson told Reseller News at a recent media event in Sydney.
“Resellers didn’t want to support a NetSuite-like application because it was a huge disruption to their business model. They made money installing servers, upgrading servers, a lot of the things that we have eliminated from the cost of the software. Those items they used to charge for, in our model they can no longer charge for.”
But Nelson says industry dynamics have since changed the way resellers view cloud applications.
“Two things happened,” he says. “One is the customers began to demand applications that looked like NetSuite – maybe they had some success with a salesforce.com or something like that and they said, ‘Wow this stuff really is cheaper, I want more of something like this,’ so the demand equation changed. And secondly I think they realised they had to shift their business model. If they were a VAR and their business was predicated on upgrading servers then they could see the writing on the wall.”
However Nelson says that cloud-based applications are “a huge boon” for resellers because they can focus on the customer rather than the vendor.
“There is still plenty of revenue, but the revenue is all about ‘how do I apply NetSuite or other cloud applications to your business problem’. [Resellers] are going to have become experts in their customer’s business rather than our software.”
Nelson says NetSuite is now looking for resellers to help it to market in those parts of the world including New Zealand where it would be uneconomic for the company to open its own sales offices, and to support and help to “verticalise” the product in specific markets.
“The last piece of the puzzle for us in terms of the business strategy, and we’ve been working on this for four or five years is the verticalisation of the application, designing NetSuite to run specific types of business.”
Foreman travelled to Sydney as a guest of NetSuite.