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