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On-demand enterprise resource planning software developer NetSuite is taking SAAS (software as a service) mainstream by selling its software directly to consumers through a partnership with CompUSA, announced June 27.
In addition to its retail stores, CompUSA, one of the nations biggest business-related retailers, racks up more than $1 billion a year selling services and products to the SMB (small and midsized business) sector—mostly around network and desktop management.
The partnership with NetSuite (an exclusive engagement for the next quarter for both companies) rounds out CompUSAs SMB portfolio with a business applications offering.
The idea with the partnership is to “up-sell” to those customers who have grown out of their QuickBooks or Act off-the-shelf accounting packages, but dont want a huge, IT-intensive product to replace it.
With an initial rollout in 10 stores in New York and Connecticut starting June 27, CompUSA plans to feature NetSuites on-demand software in its namesake business services centers—a first contact point for small business owners or employees looking for products and services.
“We position ourselves as kind of an IT group to help with networking, data storage, wireless and data security, things like that,” said Bill Maddox, executive vice president of business and technology services at CompUSA, in Dallas, Texas.
“NetSuite allows us, as part of that, to offer an integrated suite to businesses that have outgrown their other software, like QuickBooks, that need more robust software but dont want to invest in bigger programs like SAP.”
Maddox said that with an integrated suite of applications for finance, human resources and sales force automation NetSuite offers a “really good total solution for SMBs.”
NetSuite also offers a good deal to a VAR, which is what CompUSA becomes in the grand scheme of things.
Zach Nelson, NetSuites CEO, said his compensation plan is a pretty good draw for VARs.
“Were the only company that allows our partners to enjoy a piece of the first sale, but recurring as well,” said Nelson, in San Mateo, Calif.
“Salesforce has 10 points on the first deal, and thats it. Our margins are anywhere between 30 and 50 percent on the first deal … and when the deal renews they get the same percentage.”
The deal with CompUSA suits NetSuite pretty well too. CompUSA, owned by a Mexican holding company, has 247 stores, 1,100 sales people and a huge stable of VARS that help sell and implement products and services to SMBs.
“We have over 20,000 technicians nationwide, where we have stores and where we dont, that can provide services to SMBs,” said Maddox.
“Its a good fit for NetSuite because its really an integrated business solution that just needs training and implementation.”
Both companies will tap their reseller network to help tackle the SMB market, though CompUSA clearly has the bigger reach.
“In terms of foot print, nobodys even close,” said NetSuites Nelson. “With our traditional VAR channel, a 20-person VAR partner is a big deal. This is far beyond the scope.”
Nelson added that the deal has huge implications for SAAS as well.
“CompUSA is mainstream,” he said. “Theyre on every main street. Theyre everywhere. [This deal] is indicative of the growing demand in the market and the future of SAAS. Its a major milestone.”