The Village View

Monday, July 02, 2007

Ellison's NetSuite Headed for IPO

Thought this was an interesting title for the BW article. Technically, it's true as Larry owns almost 2/3 of the company, but I wonder how many guys at NetSuite consider themselves working for Ellison. Still as the dear professor from my grandpa's alma mater points out:

"As long as Larry Ellison has a controlling stake, the company is going to do whatever Ellison wants, even if other investors don't like the strategy," says [Jay] Ritter, the University of Florida finance professor.

This IPO, of course, has been widely anticipated. Jason and Zoli both had good posts on the implications earlier. I anticipate a lot of stories in the mainstream media and tech pubs about SaaS being the Holy Grail. I'll reiterate my position that SaaS is an important delivery method, but there is a time/place and situation for both on premise and SaaS. If you're starting a small business and need a system that's easy to use and install (and cheap) to manage your customers, why not go with a hosted solution. But is this really the BEST answer if you're a Fortune 1000 customers and need a complete enterprise solution? Maybe for some LoB's, maybe not. Anyway, don't expect to see those arguments, as things will be "all Saas, all the time" I would imagine.

In the same vein, these sentences caught my attention:

....but NetSuite has struggled with the productivity of its sales staff, which hasn't offset its costs with bigger deals and faster closes as it has expanded, according to one venture capitalist with knowledge of the company. "They've hit the low-hanging fruit of the lower end of the small and medium-sized business market, and then it got harder and more expensive to reach more of the smaller guys, or go upmarket and hit the bigger guys," he says

I don't think this is endemic to NetSuite. My sense is that Salesforce.com has liklely encountered similar issues (although in SFdC's case overall Sales Marketing costs may not have moved much, I would bet that the mix of Marketing -declining- to Sales -increasing- has changed). At the end of the day, regardless of how you deliver your software, to sell large enterprise deals, you're going to need an Account Executive (and perhaps pre-sales, vertical specialists etc).

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