NetSuite has slapped down business software rival SAP for abandoning mid-market customers hungry for Software as a Service (SaaS). Zach Nelson, NetSuite chief executive, said SAP’s decision to stop developing its Business ByDesign service proved the danger of relying on a “last generation provider” like SAP for cloud services …
Still losing $8m a year
Bashing SAP is all very well, but they're still losing $8m a year so I wouldn't be trusting them to hang around while I bet my business on them. I wonder if they use their own product?
I'm not surprised SAP only got a few tire kickers, ERP is mission critical (in most jurisdictions if you don't make payroll, you're dead meat). The sorts of companies who use SAP are generally too big to take a risk like that.
1. Look at Netsuites cash flow and balance sheet and you will see that it is doing fine and assures customers that they will be around for quite a while. In fact, in a few years they might come to dominate the ERP space for the SMB market without making much in profits but will have a healthy balance sheet.
2. It is very difficult to grow profits when your business is expanding at 30% or more a year. The company is throwing all profits into growth areas such as human resource development in areas such a programming, support, and sales. Much akin to what Salesforce.com has done over the past decade.
3. Netsuite really does not go after the big SAP clients and SAP is finding it very difficult to go down market. Over the next few years you will see Netsuite take the ERP market away from SAP much like what CRM did to SAP/ORCL.
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