Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Interview: Zach Nelson, CEO Of NetSuite - The Last Great Software Market...

Posted by Tom Foremski - September 9, 2010

I recently caught up with Zach Nelson, CEO of NetSuite, a cloud computing company that offers CRM to mid-sized companies. The company is enjoying a surge in business thanks to the downturn and a growing realization among companies about the many benefits of cloud based IT.

Mr. Nelson is a 20 year Silicon Valley veteran. He has worked at Oracle, Sun Microsystems, and McAfee/Network Associates.

Here are some notes from our conversation:

- We have benefited from the recession. Companies have long known that they are spending way to much on maintaining their CRM systems and now the recession has pushed many to the cloud. We have had four quarters of accelerated business.

- I see tremendous opportunities in our markets, I see it as one of the last great software markets because no one vendor dominates the market. The largest companies own between 10 and 20 per cent shares and that's the same the world over.

- SAP is moving into this area with its Business ByDesign but it has a long way to go. We've been at it for ten years, we have a ten year head start. You can't just port your software to the cloud, you have to completely rewrite it. But that's just one small part of what you have to do, you have to figure out the data center issues. SAP is used to mailing a disk and getting the customer to set it up on their data center. It's not that easy. Also, the deal sizes are smaller.

- Social media capabilities will eventually be built into all software. We are adding such features, to help CRM data become more social. But we don't charge extra for that. Making customer data more accessible within corporations makes a big difference, it enables users to run their own reports, for example.

- Security is no longer the issue it used to be. Ten years ago it was the first question from customers but now it is the last one because we have more than 6600 customers. The top question is how does it solve my business problem? ANd it is a different question in each industry. We have many different versions focused on different industry sectors, and we help companies customize the application.

- We have made two acquisitions in the past and we will look at others so that we can gain domain experience. But we don't spend any time worrying that we may be a target.

- Our largest challenge is how do we reach the Fortune 5 million? If your target is the Fortune 500 you can hire a salesforce. But when you are trying to reach the Fortune 5 million you have to adopt different tactics. The deal sizes are smaller but you still have to offer services that help customize the application.

- Smaller companies aren't much different from larger companies, they have similar problems to solve but different resources.

- Large companies are using NetSuite for their overseas operations. It's far easier to deploy. We see a lot of demand at the departmental level.

- The Internet is very important to businesses and if you don't have the Internet in the core of your business you will lose out to competitors.

- We want to become the Salesforce of the medium sized business market, that's the opportunity.


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