Hosted providers shake things up a bit

By Barney Beal, News Writer 22 Jun 2004 | SearchCRM.com

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NetSuite and Oracle are now free to see other people.

San Mateo, Calif.-based NetSuite Inc. will re-brand the Oracle Small Business Suite, ending a three-year marketing relationship with Redwood City, Calif.-based Oracle Corp. The Oracle Small Business Suite is essentially a scaled-down version of NetSuite's product that provides hosted back-office and CRM capabilities for small businesses that don't need the full breadth of NetSuite services.

"[The relationship] served both parties very well while we had it," said NetSuite president and CEO Zach Nelson. "It was always our product. We were able to brand it and, in return, we paid a royalty. Oracle got a name in the small business market."

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According to Nelson, the small business suite now accounts for only 5% of NetSuite's revenue.

One analyst said that Oracle is now interested in someone else.

"It's pretty clear Oracle's eyes are focused on larger enterprise opportunities where they're trying to acquire PeopleSoft," said Denis Pombriant, managing principal of Beagle Research in Stoughton, Mass. "I thought Oracle's foray into the hosted CRM market was a good thing for the company. For NetSuite, it gives them the opportunity to position themselves as a player out from Oracle's shadow."

The two companies will likely keep close ties since Oracle CEO Larry Ellison owns a 50% stake in NetSuite.

The Oracle Small Business Suite will now be known as the NetSuite Small Business Suite, the same product in all but name -- and price.

NetSuite is lowering the startup per user fee from $117 to $99 a month. Customers will also be able to purchase additional modules, such as NetSuite's integration with UPS tracking.

"That will allow us to address a wider part of the market," Nelson said. "We're making a big push over the next three months, that's why we've reduced the price point."

NetSuite is targeting businesses using a combination of QuickBooks and ACT or QuickBooks and Salesforce.com, Nelson added. It hopes to convince them that it's wiser to contract a single provider for hosted CRM and financials.

Siebel OnDemand news

Meanwhile, hosted CRM competitor Siebel Systems Inc. is planning to extend discounts for its hosted application to existing customers.

Since teaming up with IBM to provide Siebel CRM OnDemand, the San Mateo, Calif.-based company has signed on more than 1,000 new customers on the platform, two-thirds of which are new to Siebel, according to Robert Chen, group director of product marketing.

Yet the company has also seen some success with companies adopting a "hybrid" model, using the on-premise version in one corporate location and the hosted version at a far-flung office or division.

As a result, Siebel will begin offering OnDemand discounts to reward valuable on-premise customers, Chen said.

Siebel has also announced a slight change in its lineup of hosted vertical offerings. In August, industry-specific versions will be available for the high tech, insurance, automotive and life science markets. Siebel will address manufacturing, consumer goods, financial services and communications and media verticals next winter. Previously, Siebel announced communications and media would be available in August.

The hosted vertical applications will cost $100 per user per month.

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