NetSuite社によるOpenAir社の買収により、Professional Services Automation(PSA)業界のリーダに

NetSuite社がProfessional Services向けのSaaSベンダーであるOpenAir社を買収し、自社のインフラに搭載する意思を発表。 

OpenAirは俗にPSA(Professional Services Automation)と呼ばれるアプリケーションを開発し、SaaSモデルで提供していたベンダー。  Professional Services (コンサルティングやSIの総称)に必要となるプロジェクト管理、リソース管理、を体系的に行い、IT、人的リソースの効率的な活用をITシステム上で保障するアプリケーションである。 

 

 

NetSuite's purchase of OpenAir solidifies their leadership for Professional Services on-demand solutions

NetSuite's purchase of OpenAir solidifies NetSuite's position as the Software as a Service (SaaS) provider for Professional Services firms. As a NetSuite implementation partner, we ran up against OpenAir on occasion and we have a terrific respect for the product. OpenAir is a leading provider of professional services automation solution delivered as SaaS and this acquisition clearly places Netsuite as the leading provider in on-demand services automation for professional services businesses.

While it will take probably six months to a year to fully integrate all of the OpenAir solutions into the Netsuite platform, the NetSuite platform already has a significant set of features designed for professional services firms. Lima Consulting Group has historically focused on serving professional services firms and we are excited about the merger for the following reasons:

• More resources and investment for the OpenAir product. By joining NetSuite, OpenAir gains significantly more resources to continue improving and extending the OpenAir product and continuing to execute the company's vision of revolutionizing how service companies can manage their businesses.

• Breakthrough solutions for automating and managing services businesses. OpenAir and NetSuite are both pioneering leaders in on-demand software. By bringing together OpenAir's deep domain expertise in on-demand Services Automation software and NetSuite's expertise in integrated business suites, we will jointly create exciting, revolutionary new end-to-end business management solutions for professional services companies.

• The integration of OpenAir products into the NetSuite platform. In the short term, the products may be sold separately and NetSuite has not made clear how professional services firms will migrate to NetSuite. We are looking for a release schedule to integrate the OpenAir product into the NetSuite platform but as is typical with mergers of this sort, even that announcement is probably going to take months. Lima Consulting Group believes that NetSuite will merge the the OpenAir technology in its 2009 major release. Announcements of this sort are usually made at the NetSuite partner conference in early October and we would expect that an announcement for a release date would be made at that time. They may surprise us and have an initial roll-out ahead of time for a very limited number of features, but don't count on it.

• An integration of the OpenAir PSA and PPM Solutions might look like this:

• Integrating OpenAir Professional Services Automation into the Netsuite Platform. The OpenAir Professional Services Automation (PSA) Solution helps project-based organizations increase profits by helping professionals perform their jobs more effectively and by providing managers and executives with clearer, more immediate visibility into the key operational and financial metrics. Combining NetSuite's general ledger application with OpenAir's project management, resource management, and project accounting features will improve operations, allow executives to manage by metrics and optimize profits by providing precise, quantifiable, real-time insights.

• Integrating the OpenAir Project Portfolio Management (PPM) Solution with the NetSuite platform will allow executives increased visibility to the status of projects, portfolios and resources. This insight enables managers to align projects and resources to match business objectives. Executives can make smarter, more informed decisions, improve their return on human capital and IT investments, and maximize employee productivity while minimizing project risks. This solution will be particularly useful to organizations that have a significant professional services staff such as accounting firms, ad agencies, consulting firms, law firms, event planning and destination management companies, software development firms, IT services and computer maintenance and support companies. It also might be an interesting use of franchises that offer services in support of one another or non-profits that also bill out their staff for special projects as a source of revenue.

• Lima Consulting Group hopes that NetSuite maintains OpenAir's Defense Contract Audit
  Agency (DCAA) Compliant designation. The OpenAir solution is DCAA Compliant meaning that the software is on a list of approved Commercial-Off-The-Shelf (COTS) software that government contractors can use. It is likely that they will bring the platform into DCAA compliance now and in the short term, they might create this capability as a module in the future. We don't think that will last forever though since many of the DCAA features would require very tight integration into the programming of the core NetSuite application.

• NetSuite recently announced that they opened their platform up to multi-national corporations through their introduction of global accounting, CRM, e-commerce, and business intelligence. They have versions for multi-national businesses with multiple subsidiaries and single-country businesses with multiple subsidiaries. Combined with the OpenAir product, the eventual integration of on-demand project management solutions for virtual teams offers a very compelling value proposition for geographically separated and virtual teams.

• Early adoption promotions. For companies who are already considering both OpenAir and Netsuite, NetSuite announced that they have special incentives to reward their early investment.

NetSuite社が OpenAir社を買収

NetSuite社が初の買収先として今日発表したのは、PSA(Professional Service Automation)ソリューションのOpenAir社。  Professional Service AutomationはSEやPMのプロジェクト管理、人材管理、などのタスクを経理面、ワークフロー面なども含めて一括管理し、SIビジネスの生産性向上を提供するもの。  NetSuiteのようにERP系のソフトウェアの事業と平行して比較的セールスサイクルの短い事業を組み合わせる事が大きなAdvantageになると考えられる。  買収額は＄２６Mの現金に加え、OpenAir社のCash Reserveに相当する金額。  PSIビジネスのSaaS化に注目が集まる事が想定される。 

 

NetSuite cuddles up with OpenAir buy

NetSuite made its first ever acquisition today, buying Boston-based professional services automation vendor OpenAir, which I once described as "one of the most consistent performers of the on-demand applications sector." I had a joint call this morning with OpenAir CEO Morris Panner and NetSuite CEO Zach Nelson, both of whom I've known for the best part of a decade now. Here are my takeaways about why this deal was done and what it means for NetSuite.

There will be more acquisitions. Nelson made the expected noises about how "we're going to have our hands full now" and how "very unique" the OpenAir deal is. But at the same time he admitted it had "opened our eyes to the opportunity" for growth through acquisition. I'm not expecting a sudden flurry of M&A activity, but I'm certain that NetSuite is keeping a watchful eye for other potential candidates.

NetSuite needs more than organic growth. On-demand financials are a tough sell, the cost of which is reflected in NetSuite's consistently high spend on sales and marketing. Adding OpenAir allows it to have something else to sell instead, benefitting from what Panner describes as "the rising trend for services businesses." Then, when those customers reach a point where they're ready to upgrade their financials or their CRM system, NetSuite will be in the right place at the right time. "This enables us to get toeholds in accounts that aren't ready to change their ERP system yet," explained Nelson. This is at the core of why I believe there will be more acquisitions. Sure, there are some unique reasons for buying OpenAir, such as acquiring a substantive East Coast presence, but there are plenty of other potential targets that could further expand NetSuite's customer footprint.

NetSuite's strategy is pure Ellison. I say this on two counts. First of all, Nelson stated flat out that the OpenAir acquisition follows the Oracle playbook: "Our approach is very much like the Oracle approach across every front." For example, the OpenAir codebase will continue to be developed for another decade, giving customers a free choice whether to stay with what they know and trust or move across to a newly developed alternative offering on the NetSuite codebase. In the meantime, there will be web services integration for those who want to add NetSuite CRM or financials to the OpenAir core. The second count is the strength of the verticalization play. NetSuite already has a services industry edition, but with OpenAir it's going much more deeply into the service industry vertical, adding a string of OpenAir functions around proposal management, service delivery and revenue management that NetSuite doesn't currently have. This is an exact copy of Oracle's current acquisition strategy. It's also an interesting reflection on the market's demand for business solutions rather than technology toolkits: "Every business application sale becomes vertical very quickly," said Nelson.

OpenAir's owners pocket a decent, but not huge, return. NetSuite is paying $26 million in cash plus the value of OpenAir's cash reserves, which are not stated but could be quite substantial as they'll include any prepaid revenues. That compares to total venture funding of about $16 million. In addition, NetSuite is assuming a further $5 million in stock that will vest to OpenAir's employees over the next couple of years, which sounds like a sweet deal for staff.

Watch out for a cuddlier NetSuite image. OpenAir has always been a good partner to other SaaS vendors, and has strong relationships with NetSuite rivals such as Salesforce.com and Intacct. "We're going to do everything we can to maintain those integrations with other vendors," Panner told me. That's an interesting statement given that one of the avowed motivations for the acquisition is the opportunity to steal those customers away to NetSuite's software when the time is ripe. But I have a hunch that one side-effect of bringing Panner's company on board is that NetSuite may soften up its image as something of a lone figure and start to be seen as more of an industry player.

Netsuite社が収益増を記録、順調な成長とSaaSの市場への浸透を示す。

SaaS helps NetSuite report record revenues

The recently-floated company is moving closer to posting a profit after the recent introduction of its large enterprise product.

NetSuite, the US-based software-as-a-service (SaaS) provider with UK customers including Carphone Warehouse and BT, has announced a sharp rise in turnover, reflecting the growing interest in hosted applications by both small and large businesses.

The company reported revenue for the first quarter of $34.1 million (£17 million), up 47 per cent on the first quarter of 2007, and eight per cent up quarter on quarter.

Losses at the company, which floated on the New York Stock Exchange five months ago narrowed to $2 million (£1 million), compared to $9.3 million (£4.6 million) in the first quarter of 2007.

Revenue from its international operations, including the UK, accounted for $6.3 million (£3.15 million), while overall the company added over 400 new customers and over one million unique log-ins in the quarter.

"Our first quarter 2008 results and record financial performance are the result of continued execution against our product, distribution and partnership strategies," said Zach Nelson, chief executive of NetSuite. "With the recent introduction of NetSuite OneWorld and our alliance with BT, we continue to extend our leadership in cloud computing and set the stage for continued success."

NetSuite is one of a number of companies benefitting from the growth in popularity of SaaS products. Companies are increasingly turning to such products to simplify and update their application base, to provide on-demand scaling in capacity-driven environments such as telesales and customer service, and as a cost-effective and rapid approach for providing IT resources to new business units.

NetSuite社が OneWorld Edition を発表、グローバル企業向けの 共通ワークフロー、為替変換、等の機能を搭載してSaaSベースのERPソリューションを提供

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Business systems for a faster, flatter world

One of the biggest problems facing enterprises today is that the world is communicating faster than their IT systems can keep up with. This is particularly obvious in businesses that operate multinationally. Their managers collaborate and communicate daily across timezones and geographies by phone, email and Web conference, but their business applications don’t. Those applications were designed for an older, slower-paced world, in which business metrics were rolled up on a monthly schedule and it was quite an innovation to actually analyze last month’s data to look for emerging trends.

In today’s faster, flatter, world, that kind of monthly batch reporting style seems distinctly old-fashioned, but it’s quite a challenge to graft new real-time reporting capabilities onto the older generation of software applications. It’s even more of a challenge in organizations that operate internationally.

This is an opportunity that on-demand application vendors seem to be realizing is tailor-made for them. Today, NetSuite launches its OneWorld edition, describing it as the company’s most biggest announcement since it introduced its first release in 1999. Dan Farber on CNet appropriately headlines his coverage NetSuite finds a sweet spot.

What struck me when VP of product management Craig Sullivan outlined the concept to me on a visit to London last week was how similar it sounded to the pitch delivered by another ERP cloud vendor, Workday. Intriguingly, one of NetSuite’s announced charter customers is online customer service vendor Kana, which Workday also announced as a charter customer at its launch in November 2006. It seems Kana is using Workday for people management and now NetSuite for financials and sales force automation.

Business decision-makers in today’s highly connected world feel a pressing need to have access to accurate, real-time data when they make decisions, and conventional midmarket business software doesn’t give them that, especially if they operate internationally or across multiple business units. Only the largest multinationals have the resources to fix those integration challenges with costly consolidations of their SAP or Oracle infrastructures. Move down a tier into mid-size companies that still have to operate across multiple locations, and you’ll find that each separate business operation has its own business systems and the data from each system has to laboriously aggregated at the end of each month before it can be evaluated. This time lag is going to be even more keenly felt now that everyone is nervous about the effects of the credit crunch. If your sales have suddenly reversed the rising trend of the past few years, you need to know that straight away, not six weeks after the fact.

The new NetSuite OneWorld system gives managers much-needed instant visibility into the business (see screenshot above), aggregating real-time information all the way up the management chain so that the CEO can get a constantly updated real-time view of how the business is doing, and can instantly drill down to look at regions, countries or even individual sales orders. All of this is done with real-time currency conversion and role-based views, which means that the CEO in California can pick up the phone to discuss a deal with a regional sales manager in France and they’ll each see the same information on-screen, presented in their local language and currency.

Another intriguing side-comment: NetSuite gets its real-time exchange rates from a third-party on-demand service, Xignite, which is one of those under-the-cover Web service ventures that seems to be doing quite well for itself. The arrangement is a great example of the back-end service provider opportunities opening up on the Web. NetSuite doesn’t want to get into the business of providing exchange rate data, and its customers certainly don’t want the bother of sourcing it themselves. Having a specialist service like Xignite built into the NetSuite application solves the problem for both parties.

Of course it’s open to conventional on-premise software vendors to pursue the same opportunity that NetSuite and Workday have each latched onto (note, though, that the Xignite service would be individual to each customer implementation, highlighting one of the innate benefits of the on-demand model). However on-demand vendors are more alert to the potential, and their customer base is probably skewed more towards companies with this mid-size-but-multinational profile. “As a SaaS vendor, we’re predisposed to having customers with multiple geographical locations,” Sullivan commented. Such companies of course face greater infrastructure challenges implementing conventional on-premise software than those that operate within a single location.

Sullivan also mentioned that it was NetSuite’s move into Europe five years ago that first set in train the development of the OneWorld suite. “When we landed here in 2003, the first thing I took back to the team was, we’ve got to have a multinational version.” It was a much bigger issue for European companies than for US ones because the individual country markets are so much smaller, forcing them to go multinational to expand. The story illustrates how long NetSuite has been working on this capability, and its maturity seems to be assured by the news that there are already 30 customers already live on the system — including some well-known tech industry names such as Kana and blogging software vendor Six Apart, but also from industries as diverse as airliner leasing and TV production. NetSuite itself was running on the OneWorld code through its IPO last year, I’m told.

The OneWorld option is available for a monthly per-organization fee of $1999, paid as a supplement to the per-organization and per-user fees paid for the core application and other optional modules. The option enables the organization to then deploy multinational subsidiary units. Organizations that already operate internationally with their existing NetSuite implementation will require some professional services help to migrate their existing records to the new architecture.

Software as Services / Thu, 17 Apr 2008 15:33:03 GMT

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