NetSuite bags more than 500 Sage customers

by admin on November 17, 2010

in Cloud Computing/SaaS

Post image for NetSuite bags more than 500 Sage customers

Zoli Erdos beat me to the punch so I’ll quote him:

Today NetSuite claims over 500 customer defected from Sage to NetSuite.  Make no mistake, this is not simply one software company “stealing” another one’s business… it is defection from ancient on-premise software to SaaS solutions.

It’s yet another proof point that SaaS Continues to Strenghten in the Enterprise – and that within the realm of SaaS, ERP, Integrated Business Solutions, All-in-One, Suites or Pick-Your-Name continues to gain momentum.

Let’s put this in perspective. Sage claims 800,000 customers in the UK, 6.2 million globally. NetSuite claims 6,600 total. Around 30% of NetSuite customers are on its OneWorld offering which the company would like to think nets them around $100,000 pa. That leaves it supporting many small businesses that might be moving from a Line 50 or similar.  Even so, Sage will barely register what’s going on because the relative numbers are little more than a rounding error in their books. At the moment. But NetSuite clearly sees value in going after the Sage installed base in much the same way that Salesforce.com sees similar value in doing an end run around both Oracle and SAP.

NetSuite is not alone. As I was saying in a back channel conversation with colleagues, I am seeing increasing numbers of customer who would otherwise be a natural feeding ground for Microsoft moving to cloud based solutions. Operational cost reasons are often cited as the driver but it is not as simple as that anymore. From the NetSuite blurbs:

Technologygroup, based in London, provides data management, IT infrastructure design, and application delivery and security services. As the company’s growth accelerated, the disconnected and limited functionality found in Sage TAS Books, TAS Payroll, and Sage Forecasting limited the company’s potential, prompting a move to NetSuite. “We need an integrated system to keep up with our growth and ensure our business processes are slick,” said Abbey Robinson, Technologygroup Director. “We just didn’t have this with Sage as there was no integration into our CRM or our forecasting and budgeting models.

This is a pattern I see repeated time and again. When the time comes for an SME to assess its IT assets, its first port of call is to understand where an integrated SaaS/cloud based offering fits. Even assuming that Sage could re-organize its own software assets – and that is far from a slam dunk given all the code bases they’ve acquired – they still have the problem of competing against competitors that are more nimble and have a better story.

The only remaining question for Sage is this: if NetSuite is doing this to the company and I am seeing a similar pattern elsewhere, at what point do these defections become a tidal wave? And what will be their response?

Oh yes – and I liked the illustration Zoli used so much that I pinched it ;)

Comments on this entry are closed.

Stuart Lynn November 20, 2010 at 6:24 pm

Hi Dennis, The headline is sensational, but what does it really mean?  over what geography and  timescale etc?  Also, I can’t get the numbers to add up here, are you comparing apples with apples? … You state that NS have 6,600 customers and in your related post on ZDNet you state annual revenue to be $192 million… unless I’m missing something that works out at an average revenue of $29,090 per customer per year. Which roughly equates to 60x (sixty times) the price of a fully supported Sage 50… which in turn has to question the assertion that NS is comparable with or comes even close to being more cost effective than Sage 50? What’s more in searching to validate your figures, I could only find this post whereby NS claimed to have passed the 6000 customer mark way back in 2003,

“On March 27, 2003, NetSuite issued a Press Release announcing top management changes and stating “… the company has reached the unprecedented 6,000-customer milestone …”.

If this were true, it means only 600 net customers have been added in 7 years, is that right?

Dennis Howlett November 20, 2010 at 8:13 pm

600 in 7 years isn't right by a long stretch.

Jason Carter November 24, 2010 at 10:52 pm

Netsuite’s response to that 6,000 customer milestone was that it was a gross, not net number. In other words, a good chunk of those 6,000 were no longer using NetSuite by 2003. But the implication about churn is an important one that I don’t think they’ve come close to solving yet. I wonder how many former NetSuite customers have been bagged by other vendors, Sage included.

Some of that churn is to be expected from a Saas accounting system at the low end of the market, but given Intacct’s significantly lower churn the target market can at best be only partial explanation.

I do enjoy NetSuite’s aggressive marketing of late, but as it is with a lot of really effective marketing, the message tends to be grander than the truth.

Felix Ware December 6, 2010 at 8:42 pm

We are one of the “defectors” as we are currently in the process of abandoning the MAS200/SalesLogix CRM platform in favor of the NetSuite OneWorld Platform. We found NetSuite to be the clear solution to the “hairballs” MAS200 has created for us over the years.

We’re movin’ on up . . . out of the Flintsone’s neighborhood and are moving in to a mansion next door to the Jetson’s.

Felix M. Ware, President & CEO
Capitol Scientific, Inc.

Felix Ware December 6, 2010 at 8:42 pm

We are one of the “defectors” as we are currently in the process of abandoning the MAS200/SalesLogix CRM platform in favor of the NetSuite OneWorld Platform. We found NetSuite to be the clear solution to the “hairballs” MAS200 has created for us over the years.

We’re movin’ on up . . . out of the Flintsone’s neighborhood and are moving in to a mansion next door to the Jetson’s.

Felix M. Ware, President & CEO
Capitol Scientific, Inc.

Jason December 6, 2010 at 10:50 pm

If any clients in the Pacific Northwest of the USA needs NetSuite or One World, you now have our name & contact information. Thanks much! Cheers. Jason Sjobeck, http://www.sjobeck.com, +1.503.283.7779

Jason December 6, 2010 at 10:50 pm

If any clients in the Pacific Northwest of the USA needs NetSuite or One World, you now have our name & contact information. Thanks much! Cheers. Jason Sjobeck, http://www.sjobeck.com, +1.503.283.7779

Stuart Lynn December 9, 2010 at 12:40 pm

Hey Dennis, what happened to my earlier comments… I’m assuming technical errors with Disqus as opposed to a modding decision?

Stuart

Stuart Lynn December 9, 2010 at 12:40 pm

Hey Dennis, what happened to my earlier comments… I’m assuming technical errors with Disqus as opposed to a modding decision?

Stuart

Jthompson January 7, 2011 at 7:36 pm

We have just initiated our Netsuite software implementation and we really like what the software can do for us and our business. I would suggest however that Netsuite get more customer service support during the work day so we can get through to an agent without having to wait an hour on the phone. I must say that the customer service people are getting much more knowledgeable on what the system does and what it can do.
We do need some help though so if there are any accounting wizards out there that could assist in setting up our system for a retail/distribution business I would love to hear from you. We are located in Eastern Canada. Our phone # is 902-481-0717.

Thanks,

President of CTI

Jthompson January 7, 2011 at 7:36 pm

We have just initiated our Netsuite software implementation and we really like what the software can do for us and our business. I would suggest however that Netsuite get more customer service support during the work day so we can get through to an agent without having to wait an hour on the phone. I must say that the customer service people are getting much more knowledgeable on what the system does and what it can do.
We do need some help though so if there are any accounting wizards out there that could assist in setting up our system for a retail/distribution business I would love to hear from you. We are located in Eastern Canada. Our phone # is 902-481-0717.

Thanks,

President of CTI

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