NetSuite Looks for Profits in SAAS Partner Model

By Renee Boucher Ferguson  |  Posted 2007-10-24 Print this article Print

NetSuite rolls out SuiteBundler, which lets partners reuse and resell one-off application customizations.

NetSuite, one of the few companies to offer a full on-demand enterprise resource planning suite, announced new technology Oct. 24 that should help the company build an ecosystem of partners that sell add-on software around its ERP suite. At its annual Revolution user conference in San Francisco Oct. 23-26, NetSuite announced SuiteBundler, a set of capabilities that builds off its SuiteFlex application development platform and lets partners bundle customizations theyve done for customers into applications they can sell. The move will allow NetSuite to respond to the competitive challenged posed by Salesforce.coms AppExchange. NetSuite, of San Mateo, Calif., is one of a few companies that offer a full on-demand ERP suite. Most, like, focus on a business niche, such as CRM (customer relationship management).
"We believe that SuiteBundler will prove to be one of the most important pieces of software written in the last decade," said NetSuite CEO Zach Nelson, in a statement. "The ability to take a piece of custom functionality that was designed as a one-off for customization for a single customer and use it repeatedly for other implementations has been the holy grail for services companies."
The hope at NetSuite is that ISVs will utilize SuiteBundler to build vertical applications on NetSuites SuiteFlex platform and resell them in the marketplace. To utilize the third-party, on-demand applications, new customers would, of course, need a NetSuite ERP subscription. Click here to read about NetSuites eBay integration Its a crafty move, one pioneered in a sense by with its Apex development platform and language. But NetSuite will come up against more than in the nascent on-demand infrastructure market—one that really requires partner investment (and belief) in a given platform to flourish. SAP, of Walldorf, Germany, the biggest business applications company in the world by revenue, unveiled its Business ByDesign Suite in September. While BBD, as its referred to, is being billed as an on-demand ERP suite, its also (quietly at this point) a development platform. "There is a great business opportunity for [partners] to use our infrastructure, our components, our composition capabilities to build solutions," said SAP Deputy CEO Leo Apotheker in a Sept. 19 interview with eWEEK. Apotheker is working to build out a multichannel ecosystem around BBD that includes ISVs who would build add-on components to resell. SuiteBundler is actually a compilation of tools that lets ISVs package together their code—things like vertical customizations, add-on applications, business process customizations and integrations built using the SuiteFlex platform. Read more here about NetSuites IPO application. Bundle Builder is a graphical assistant that ISVs can use to bundle components (custom tabs, centers, reports, lists and forms), database elements like custom fields and objects, and scripted application development elements, according to NetSuite. Bundle Distribution has three different distribution modes for making SuiteBundles available to customers. SuiteSource Bundle Repository is an area where ISVs can "save off" the customer-installation-ready version of SuiteBundler while they work on the next iterations. And Bundle Installation is what it sounds like—an installation tool that also has an uninstall feature, just in case. But NetSuite, like its competitors, is facing a bit of an uphill battle building a viable partner channel., for example, has a fervent cadre of partners around Apex and its applications marketplace, AppExchange, but there hasnt been a whole lot of revenue recognition generated—for or its partners. NetSuite is hoping to change the economics of on-demand selling for partners by enabling them to capitalize on the concepts behind reusable code (build it once and sell it many times) played out in SuiteBuilder. NetSuite, on its way to an IPO (initial public offering), has made some headway in developing an indirect partner channel. In an e-mail response to questions, NetSuite spokesperson Jay OConnor said that NetSuites partner channel generates about 20 percent of the companys total revenues. "Channel partners can resell NetSuite and make 30 percent to 50 percent margins on a recurring basis," said OConnor. "Unlike with other SAAS [software as a service] vendors, they make this margin on recurring subscriptions, not just on the first-time sale. The channel has been an important part of our growth and the [SuiteBundler] announcement takes our channel strategy to the next level, providing exciting new revenue and margin opportunities for solution providers." Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.

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