NetSuite pitches 'omnichannel e-commerce meets marketing automation' mantra

Stuart Lauchlan Profile picture for user slauchlan April 23, 2015
Steady quarterly numbers and an e-commerce marketing acquisition - busy day for NetSuite CEO Zach Nelson.

Zach Nelson CEO NetSuite speaks on stage
Zach Nelson, CEO NetSuite

NetSuite yesterday turned in its eighth consecutive quarter of 30%-plus revenue growth, but attention was stolen by the firm’s surprise announcement of a $200 million investment in pulling together e-commerce and marketing automation.

First the numbers from the quarterly results:

  • First quarter net loss was $22.7 million, compared to a net loss of $22.2 million for the same period last year.
  • Total revenue was $164.8 million, a 34% increase year-on-year and beating consensus Wall Street revenue estimates of $161.54 million.
  • Over a quarter of revenues (26%) came from outside the US.
  • Recurring revenue was $133 million, up 34% year-over-year.
  • Deferred revenue was up 36% to $323.4 million.

CEO Zach Nelson pointed to an increase in the number of deals signed in excess of $250,000, the latest being HP:

HP’s deployment of NetSuite is another shining example of how a Fortune 50 company can bring agility to a legacy infrastructure. In just six months, HP unified mission critical processes including order to cash and revenue recognition across multiple subsidiaries in 15 countries and 11 different currencies.

In fact HP is a good example of the NetSuite mantra of two-tier ERP where instances of NetSuite sit alongside an incumbent, typically on premise provider:

This is a big SAP shop, lots of instances of SAP and particularly in the software division. As you know there has been lots of change there at HP with acquisitions and that has grown organically and as a result, you see lots and lots of different systems doing lots and lots of different functions.

It was an exciting deployment and a great example to other large organizations that there is light at the end of SAP tunnel and it is called NetSuite.

HP hasn’t gone for NetSuite’s SuiteCommerce front end - Nelson noting “they don’t have people doing renewals “ - but this is the kind of non-retail sector organisation that could start to invest in omnichannel e-commerce. Nelson predicted:

We believe this omnichannel problem is not just a retail problem, it’s an every company problem and I use HP as an example of what could happen in a software technology company.

Bringing in Bronto

Just prior to the results being released, NetSuite announced a $200 million buy out of Bronto Software to add to its growing e-commerce footprint. Nelson said both companies had been “powering parallel pads” around the commerce sector with:

NetSuite as end-to-end commerce platform and Bronto really focusing all of their efforts on marketing automation particularly around commerce and e-commerce. I think that’s a unique characteristic of Bronto. Certainly it was exciting to us and certainly we saw a lot of synergy between that vision and what we are doing on the commerce platform.

The next big thing for us to add to the world was a deep marketing automation piece. We’ve always had some capabilities in marketing automation, but they’ve been more centric around B2B. We have a lot of use of our marketing automation frankly in the suite, particularly in e-commerce, but this really gives us the opportunity to get the domain expertise and the capabilities of a company that’s only been focused on this area for that for a decade.

The other thing I think is very important going forward, something that Bronto is focused on, is how do you start to deploy campaigns not just for an e-commerce channel, but across all of your touch points? How do you do a campaign that works in retail and works online and works in your call center and works on phone? You really need a tightly coupled marketing machine and then omnichannel machines. So, bringing those two things together is going to unleash I think some really interesting capabilities.

Bronto signing
Signing the deal

The deal is the result of a year long search around the marketplace, said Nelson, a competitive landscape that he feels has not evolved greatly:

You have all the old ancient commerce platforms that everybody is stuck on by channel, the retail set of systems that run point of sales, e-commerce set of systems that run e-commerce, the call center systems that run call center. And that’s why I think ultimately trying to deliver on this omnichannel vision that almost every retailer has today, they understand that multiple systems cannot solve the problem as omnichannel will, dealing multiple front ends on a unified back end.

As for why Bronto fitted the bill, Nelson explained:

What we were really looking for was a company that was focused on not the last generation of marketing challenges. B2B marketing is still going to be there is still going to be a challenge but it really is our last generation challenge, but the next generation of marketing challenges which are all about omnichannel commerce. That was their differentiation, building a system designed for next generation marketing challenges all around commerce.

My take

A busy day for NetSuite in a busy few weeks, what with SuiteWorld coming at the start of May. That's going to be an interesting event this year with the company's new CMO Fred Studer putting his mark on it. Much more to come on that I imagine.

On a more tongue in cheek note, it did occur to me that the analyst call with Nelson was markedly less combative than some others have been, with much less calling out of rivals. Beyond the SAP swipe quoted above, I only really spotted a reference to putting Sage "out of its misery" and a "cloud washing" dig at Infor.

Frankly, given the Bronto theme, I was hoping for a few dinosaur quips, But then Informix tried that one in the nineties against Oracle and look what happened there...

Still, then I saw a promo for SuiteWorld:


Bring it on!

 Disclosure - at time of writing, Infor, NetSuite, Oracle and SAP are premier partners of diginomica. 


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