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NetSuite Tries To Lure Sage Customers To SaaS

NetSuite has gotten some fire in its belly lately. Today it offered Sage Group customers 50% off the first year of a SaaS subscription, and 100 hours of free professional services, if they sign up by June 30, calling it the "Sage Switch" program. This follows a program for SAP R/3 customers that it calls "Business ByNetSuite," a jab at SAP's idled Business ByDesign ERP SaaS.
NetSuite has gotten some fire in its belly lately. Today it offered Sage Group customers 50% off the first year of a SaaS subscription, and 100 hours of free professional services, if they sign up by June 30, calling it the "Sage Switch" program. This follows a program for SAP R/3 customers that it calls "Business ByNetSuite," a jab at SAP's idled Business ByDesign ERP SaaS.The "Business ByNetSuite" program, launched in November and recently extended through June, guarantees at least 50% off of what R/3 customers are currently paying in services and maintenance to SAP. Well, that's not too hard to do, since SaaS customers almost always pay less in services fees since they don't have the software on site. The "Sage Switch" program is a little different, though, as it offers a straight discount on the subscription fee, and free services. Sage is based in the United Kingdom, but more than one-third of its business comes from the United States. The company has reportedly been testing a SaaS service in Europe.

This may be the year that NetSuite gets aggressive with its competition, and in some ways, it doesn't have much choice. Publicly traded, yet majority owned by Oracle CEO Larry Ellison, NetSuite has been in business for 10 years with double-digit revenue growth every quarter, but has not yet turned a profit. NetSuite has said that will happen once it reaches a certain number of customers. I'd say after 10 years, it needs to reach that number soon.

It was recently within spitting distance of profitability: In it's fourth-quarter financial report issued last month, NetSuite said it would have posted a profit of 1 cent per share, if it excluded stock-related and other expenses. (It's even been calling that its first profitable quarter, but my personal belief is that "generally accepted accounting principles" exist for a reason.)

Forrester Research VP Ray Wang did some number crunching, and ranks NetSuite as the No. 5 vendor of SaaS in 2008 based on revenue of $152.5 million. It follows Salesforce.com (CRM), Concur (Expenses), Ultimate (HR), and Taleo (HR); RightNow (CRM) comes in as No. 6.

Wang ranks Sage as the No. 7 ERP vendor based on 2008 revenue of about $1.9 billion.