The 'accidental' cloud commerce company

NetSuite says commerce-as-a-service platform is a result of 'accident of architecture' in 2000

Cloud-based ERP company NetSuite last week announced the availability in Australasia of its SuiteCommerce commerce as a service platform for its NetSuite cloud-based ERP system.

Zach Nelson, CEO of NetSuite says the SuiteCommerce platform has evolved directly from two basic ideas behind the founding of the company. Both ideas came from Oracle founder Larry Ellison during a meeting in 1998 with Evan Goldberg, a developer who had left Oracle to start his own business.

Nelson says the first idea was to build a system that was designed to run a business as a whole.

“Most application software is designed to run a department – accounting software, support software, sales force software,” says Nelson.

“Evan had been an entrepreneur, a big time developer. He left Oracle, started a company that ultimately went belly up and he was complaining to Larry about how hard it was to run his business because of this multi-system environment.”

“Larry said: ‘Well, I have an idea, why don’t you build the application that solves that problem, because everybody has that problem’. That was the first idea behind NetSuite. The second idea was that Larry also said ‘Oh and by the way, deliver it over the internet.’”

Nelson, who became NetSuite’s CEO in 2002, says those two ideas are the core strategic principles that drive NetSuite.

“We continue to flesh out that concept over time but a couple of things have changed since 1998. Initially when we started on this journey of a building a cloud-based system as it is now called nobody believed it would happen, right? There was a lot of doubt. And today, pretty clearly, everyone is running to the cloud, so the market environment has changed dramatically. And of course we have grown enormously. We’ve gone from zero to $300 million in revenue this year, and gone public on the New York stock exchange.

Nelson says NetSuite has never competed directly with Oracle, but it is increasingly being used alongside Oracle implementations.

“The first iterations could only meet the needs of the smallest companies. Today, thirteen years later, we have built up enough functionality that we are starting to go in around the edges of SAP and Oracle implementations in large corporations.

“Oracle are trying to meet the needs of the world’s largest corporations, multi-billion dollar companies. While we are starting to appear in those companies we tend to appear in the divisions that behave like mid-sized businesses.

“What has failed in many of those large corporations is that they’ll say let’s take an instance of SAP or Oracle designed to run a $12 billion dollar company and let’s jam it into our $100 million subsidiaries.”

Nelson says that an “accident of our architecture” led to NetSuite’s entry into electronic commerce.

“Because we had this system designed to run a business and because it was on the internet, a company would use it with a browser but it had a business application look to the system. In 2000 Evan figured out, ‘Hey can we just put a website on top of that and let their customer interact directly with their ERP system’ — effectively turning it into an e-commerce system. And that actually worked. Once you have all data in one place exposing your data to the customer becomes a display issue.”

At a media event in Sydney last week Australian NetSuite customers, including agricultural business supplier Elders and online retailer Kitchenware Direct praised the back end capabilities of the NetSuite ERP system but some complained that its web front end had been restrictive.

Kitchenware Direct managing director Peter Macaulay said that his company had resorted to developing its own front end to overcome NetSuite’s limitations in this regard.

Nelson admitted that NetSuite’s web front end had some shortcomings but promised that the SuiteCommerce platform would give customers complete control over the appearance of their websites “down to the level of individual pixels”.

• Foreman travelled to Sydney courtesy of NetSuite.

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