This week sees thousands of financial and professional services software buyers descending on Las Vegas to attend NetSuite’s annual SuiteWorld conference.
This year’s event is particularly interesting since it is the first SuiteWorld held since Oracle's acquisition of NetSuite. All eyes are on the event to see how the Oracle acquisition is changing the product, marketing and partner thrust of NetSuite, and what impact that will have on the most important people: customers. Anecdotally, I’ve heard from a number of different parties that this year’s event “feels different” -- not necessarily better or worse, but significantly different and more akin to an Oracle event than in years gone by.
One of the organizations watching the event most closely is NetSuite’s arch-rival, FinancialForce. (Disclosure: both FinancialForce and NetSuite are current or past clients of mine and both vendors have covered travel and expenses for me to attend their events). A quick potted history: NetSuite started over a decade ago as an SMB-focused accounting software tool backed by none other than Larry Ellison and founded by Oracle alums. Since then it has pivoted into a mid-market product and, as stated before, been acquired by the “mothership.”
For its part, FinancialForce is a newer vendor that is built on top of the Salesforce platform. Part owned by Unit4, a large European software house, and Salesforce itself, FinancialForce has strongly leveraged the Salesforce connection to scale rapidly.
Which takes us to today and something of a blitzkrieg that FinancialForce has launched on the NetSuite event. From when attendees alight at McCarron airport, they are bombarded with messaging telling them that they have options beyond NetSuite. While in years past NetSuite’s former CEO, Zach Nelson, went to great pains to assert that he didn’t see FinancialForce as a serious competitor, that messaging hasn’t gotten through to FinancialForce -- hence their all out campaign on this year’s event.
That campaign is fueled, at least in part, by FinancialForce recently hiring Fred Studer as CMO. Studer was NetSuite's CMO from 2014-2015, and that makes this particular battle even more interesting than it would otherwise be. While competitor-bashing is part and parcel of the software industry, there seemed to be more going on in this particular case and so I spent some time questioning both Studer and Tod Nielsen, newly minted CEO of FinancialForce to get a sense of their thinking.
I firstly wanted to get their impression on the landscape, all too aware that the Oracle acquisition of NetSuite has changed the cloud ERP landscape. Studer articulated his perspective clearly, not mincing his words to point out what he sees as potential risk factors for NetSuite customers:
I was very involved while I worked at Oracle with the PeopleSoft/J.D. Edwards acquisition and it was no surprise that the PeopleSoft customers and employees were not pleased with being forced to assimilate into Oracle. Customers want stability, certainty, and confidence that you will take care of them and their investments. And you have to prove that through actions over time. I think all of the NS customers should give the PeopleSoft and JD Edwards customers a call on how their future may look.
While FinancialForce’s has clearly stated its perception that it is a NetSuite competitor, the latter spends more of its time differentiating itself from the traditional on-premises ERP solutions it is striving to disrupt. Studer was relaxed about NetSuite’s positioning; in his view, the fact that NetSuite doesn’t see his new employer as a competitor is a good thing:
I love that they say that! It gives us more time to continue to switch hundreds more of their customers as we continue “not competing” with them. I hope they continue to formally “not recognize” us a competitor. It’s always the legacy vendors like NetSuite who love to tout that they don’t have any competitors and past grasping claims like they were the first cloud company on the same old platform that was built in 1998. I’m not sure there is anything on the internet that is the same as it was in 1998. The reality is that FinancialForce is flat out a significantly better choice for a cloud ERP, and we are growing customers across all segments, including NetSuite customers. You’ll hear some of those customer facts ongoing starting this week.
I wanted to challenge Studer on the campaign he’s begun. Guerrilla marketing approaches sometimes fare poorly in the market and are seen as tacky. Indeed the “FrankenCloud” campaign that FinancialForce launched a couple of years, also targeting NetSuite, wasn’t hugely well-received. Is there a risk that this campaign will see a similar response?
This is not guerrilla marketing, it is highly targeted at customer’s fact-based reality. This isn’t just disruption for disruption's sake nor is it just to get attention. This campaign was a well-thought-out authentic communication strategy to an audience for whom we have a very unique solution. When you’re the new company with an amazing story to tell, you have to be aggressive and grab your opportunity to communicate your differentiated value proposition and make it an obligation. This was a perfectly timed moment to share our genuine and relevant value to one of our best targeted audiences.
So how much of this campaign is about the Oracle acquisition specifically, and how much is related to general software adoption trends? Studer was bullish on the overall opportunities saying that:
There are very few moments in a market when all the stars and planets align…This is that moment for ERP! Oracle/NS confusion, ERP cloud is finally mainstream and customers are evaluating more than ever, AND we have a Y2K-like market driver in revenue recognition. It’s a perfect storm and we have a significantly more ideal solution and value proposition to help a lot of companies weather this storm.
Nielsen backs his new hire up reiterating that:
This is a once in a lifetime market opportunity and FF has such an incredible ERP solution to help customers get past the Oracle mass assimilation machine AND to help them get easily and safely to compliance with their revenue recognition needs. FinancialForce has amazing products that we have successfully delivered to over 1,300 customers, our solution directly solves for an immediate pain point that CFO’s and COOs have around agility and optimizing resources PLUS we have an amazing partnership with Salesforce.
Market traction and independent accolades are key measures
FinancialForce isn’t out there with puffery and vapor. They’re backing up their claims of being a good option for disgruntled NetSuite customers with empirical data. In the PSA space, FinancialForce is hands-down beating NetSuite's OpenAir solution -- both in terms of analyst recommendations and also as most-installed solutions.
When it comes to PSA, FinancialForce has seen some big progress -- in the year 2015-2016 they saw 130+ net new customers, 40% year-on-year growth, and 73% net new logos. And the financial side of the house isn’t doing too badly, either, seeing 40%+ revenue uplift year-on-year. This all adds fuel to FinancialForce's claims that its “single platform” offering (as opposed to an amalgam of differing code-bases and products) is the best solution for customers.
MyPOV
Recently I’ve done some consulting for companies looking to use a combined PSA/ERP solution. For these customers, the feeling has overwhelmingly been that NetSuite offers less -- mainly due to the somewhat sub-optimal integration and product cohesiveness between its financial and professional services offerings.
I would say that for organizations looking for a financial solution as a standalone offering, the situation isn’t so clear. In this arena, NetSuite scores well. It is, after all, a financial-centric offering, whereas (anecdotally at least) FinancialForce has historically been hampered by being built on a platform that is CRM, rather than ERP, centric.
NetSuite also has a theoretically, although yet to be proven, value proposition when it comes to “two-tier ERP.” Two tier refers to the approach of using a lighter-weight solution for business units and then rolling up the financial data into an enterprise solution for group reporting. NetSuite's newly minted Oracle status should help them appeal to these sort of customers wanting a solution that ticks both these boxes, and FinancialForce doesn’t have a strong answer in these cases.
At the end of the day, it’s a case of horses for courses. Right now NetSuite has the strength of numbers when it comes to two-tier ERP use cases. For standalone business unit use, both offerings are strong, and the decision comes down more to one of customer perception and perhaps how much of Salesforce product is in use by the particular prospective customer. When it comes to PSA, however, FinancialForce has some real justification in articulating competitive differentiation from NetSuite.
As to one’s assessment of the wisdom of FinancialForce’s aggressive guerrilla campaign, it comes down mainly to which side of the fence you sit on. While all is certainly fair in love, war and business, I suspect some prospects might be turned off by the aggressiveness of the campaign. But as a way of gaining attention, at the expense of an important competitor, it is certainly a master stroke.
The fact that it was a campaign created by someone who, until recently worked within NetSuite upper echelons only increases the irony and appeal of the campaign for commentators.