SAP Responds to NetSuite Competition Talk

SAP could find itself with a new competitor, NetSuite, which reportedly plans on developing new applications for enterprise customers. Formerly, NetSuite focused primarily on SMBs. Oracle is another company marketing software solutions to the enterprise that finds itself with a new competitor.

SAP and Oracle could have a new competitor in their space: NetSuite, which reportedly plans on expanding the reach of its applications beyond traditional small and midsize businesses to target the enterprise.
Called SuiteCloud Connect, the new NetSuite cloud-based applications would theoretically allow corporate subsidiaries to run operations using NetSuite software, before sending the financial data from those operations to the parent company's data center, which would likely be running SAP and Oracle software.
According to Reuters, Oracle CEO Larry Ellison and his family own roughly 61 percent of NetSuite, although Ellison's direct stake has been put in a "lockbox" company in order to avoid a potential conflict of interest.

Despite NetSuite jockeying for a larger slice of the enterprise market-share pie, SAP publicly appears unconcerned about the idea that corporate subsidiaries could dump their SAP software for NetSuite offerings.
"We have thousands of customers running SAP applications in their subsidiaries," Bill Wohl, vice president of global field communications for SAP, said in an e-mail, "and we intend to continue expanding the options we provide to them in terms of packaged value, TCO reduction, and fit to their complex and varied requirements that only SAP can address."

Wohl added in a later interview, "What subsidiary companies want to do is connect their business processes across the system; they want to be able to run a business process. NetSuite is talking about leveraging data across the system, but what customers are telling us is that they want a business process, not a data exchange."

"We do allow for business process connectivity," Mini Peiris, vice president of product marketing for NetSuite, said in an interview, defending the NetSuite product as "not about moving data around - it's about automating the business process and tying the data back to [headquarters]."

This is not the first time that NetSuite has challenged larger players for market share.
In June 2008, NetSuite rolled out NetSuite for Manufacturers, targeting SMBs in vertical markets. The SAAS (software as a service) solution allowed users to manage assemblies, work orders, bills of materials and demand-based inventory replenishment.

More recently, SAP made inroads among SMBs with extensions to its SAP BusinessObjects Edge solutions, giving organizations of that size access to SAP BusinessObjects Polestar software, which allows employees to engage in a granular search for data across the company.

SAP announced a new version of its SAP BusinessObjects Global Trade Services Application on March 18, designed to automate regulatory compliance across the supply chain. Oracle released its own SAAS solution for strategic sourcing, Oracle Sourcing On Demand, on March 9.

Editor's Note: This article has been updated with a comment from NetSuite.