An Interview with NetSuite CEO, Zach Nelson

Earlier this month, Info World published an interview with NetSuite’s CEO, Zach Nelson, and today we would like to share some of the highlights of this interview with you.  Chris Kanaracus from IDG News Service conducted this recent interview with Mr. Nelson and you can read on to hear about NetSuite’s operations, involvement with Oracle, and plans for the future.

NetSuite is one of the longest-running players in the SaaS market. That gives you the advantage of maturity, but does it also mean that your core architecture is getting dated?

Nelson: No. The good thing about NetSuite is that we architected it correctly from the start. Multitenancy out of the gate, that was a very important decision. We chose to make it very customizable. Not all SaaS applications are customizable. We put deep customization in the first iteration of the architecture. As time has moved on and our customer profile has changed we've had to re-architect some of the subsystems to deal with application performance. Last year we introduced SuiteCommerce. That allowed us to scale up to larger retailers. That was an 18-month re-architecture. I think you'll see us do a subsystem re-architecture once every 18 months.

Legacy software vendors have often been criticized for letting products slide into "maintenance mode," with decreasing amounts of new features being added. Is NetSuite spending enough on research and development?

Nelson: Two years ago it was about 14 percent [of revenue]. Since then, it's come down to somewhere in the 12s. However, in that time frame we have tripled the number of developers. We do our global development on the NetSuite platform. It allows us to scale research and development while spending less.

NetSuite runs on the Oracle stack. Although it might be uncomfortable given that Oracle CEO Larry Ellison is an investor in NetSuite, is there any interest in moving off Oracle to other technologies?

Nelson: No. It's definitely not on anyone's priority list. Oracle is the database of record for most SaaS systems for a reason.

How do you handle deals where you're competing with Oracle, given your deep relationship?

Nelson: We don't really avoid competing directly. If the customer wants to put us and SAP side by side, us and Oracle side by side, we're going to compete and try to win the deal. I think there's a natural separation in our strategies, so we don't collide that much.

Is NetSuite in the market to acquire a cloud-based HCM (human capital management) vendor, like SAP did with SuccessFactors and Oracle did with Taleo?

Nelson: Historically, our customers have not been demanding HR solutions. What NetSuite has been designed to do is run business processes. Procure to cash, procure to pay. We rarely, rarely get asked for HR. I think you're seeing the evolution of three core processing clouds that are somewhat independent. One's an HR process: Finding employees, onboarding them and training them. NetSuite runs an operational process: How does data about sales move through your core transaction processing system? Finally there's the sales force cloud: How do you prospect and find new leads?

What about analytics? Will NetSuite make any acquisitions in that area?

Nelson: We have good core reporting today. One of the biggest challenges in reports is getting the data consolidated so you can visualize it. We solve the big problem, in that [customers'] data is all in one place. We're delivering real-time BI to all user types today. That said, if you look at the things we're doing in e-commerce, the massive amounts of customer data, then you might do something different. You might see some new efforts in that area of analytics.

If you would like to learn more about NetSuite and what a web based ERP system or cloud based ecommerce solution can do for your organization, feel free to contact The Vested Group today.  We can set you up with a free demo and discuss our unique Phase Zero offering to ensure a successful implementation.