An ERP shootout: NetSuite takes SaaSy approach to competing with SAP

It is probably not a coincidence that NetSuite issued a press release on a specific set of new customer wins a day before ERP market leader SAP opened its North American user conference.

05/12/2009


It’s probably not a coincidence that NetSuite issued a press release on a specific set of new customer wins a day before ERP market leader SAP opened its North American user conference. NetSuite , a supplier of on-demand business applications for mid size enterprises, has made it clear that it sees SAP as a competitor in that space.
On Monday, NetSuite issued a press release naming three companies that had selected its solutions over SAP. Today, SAP opens the North American version of SAPPHIRE , its annual user conference, in Orlando.
“By turning to NetSuite's unique integration of ERP, CRM, and e-commerce capabilities in a single on-demand application, customers are now realizing the benefits of a modern, enterprise-class business operations platform accessible anywhere in the world, at a fraction of the cost and administrative overhead of SAP,” the NetSuite release stated.
The release also referred to a July 2008 report from Forrester Research which concludes that complications associated with upgrading and maintaining traditional on-premise software are pushing companies toward the on-demand or Software-as-a-Service (SaaS) model.
The first real indication of NetSuite’s desire to compete directly with SAP in the mid-market came in April with the launch of a package called NetSuite OneWorld for SAP.
Reporting for companies of all sizes
That solution allows companies of all sizes to run divisions of their businesses on the SaaS-based NetSuite solution while rolling up necessary reporting data to a corporate-level SAP package.
Large companies have long taken that approach with on-premise software—using ERP packages geared for smaller companies at the division level and connecting them to an SAP package at corporate headquarters.
NetSuite claims its SaaS model makes this strategy easier to execute. “For those companies already deeply reliant on SAP solutions looking to embrace the advantages offered by SaaS, NetSuite OneWorld for SAP offers seamless integration for subsidiaries and corporate divisions which need their own enterprise-grade capabilities while maintaining transparency with the central system of record,” the NetSuite release said.
NetSuite also touts its OneWorld solution as a superior alternative to SAP Business One, a package that SAP introduced several years ago in hopes of capturing new business among mid-sized enterprises.
Faster shipments, fewer errors
The NetSuite release said Schaeffer Manufacturing Co., a St. Louis, MO-based producer of synthetic motor oils and other lubricants, chose NetSuite over SAP Business One. NetSuite enabled Schaeffer to cut shipment preparation time, reduce errors from data re-keying, and eliminate substantial expenses on everything from software maintenance to redundant paper forms. Because NetSuite is built to make electronic trading and payments easy, Schaeffer has more than doubled its electronic data interchange (EDI) order volume, and conducts ten times as many transactions through electronic funds transfer (EFT), the release said. It then went on to quote the company’s CFO.
"NetSuite makes it easy for us to offer EDI and EFT because it automates the processes, so not only is our billing time reduced, but our competitive advantage is strengthened,” said Schaeffer CFO Will Gregerson. "With NetSuite, we're saving over $100,000 per year, we get our products to customers in half the time, and we haven't had to add to our staff."
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