NetSuite is one of the SaaS (software as a service) market's pioneers, having sold its growing family of ERP, e-commerce, and other applications since 1998. The vendor's results have been beating Wall Street's predictions and may yet again in a few weeks when NetSuite is expected to announce its fourth-quarter and year-end results.
NetSuite CEO Zach Nelson spoke with IDG News Service this week on a wide range of topics. The following is an edited transcript of that conversation.
IDGNS: NetSuite is one of the longest-running players in the SaaS market. That gives you the advantage of maturity, but does it also mean that your core architecture is getting dated?
Nelson: No. The good thing about NetSuite is that we architected it correctly from the start. Multitenancy out of the gate, that was a very important decision. We chose to make it very customizable. Not all SaaS applications are customizable. We put deep customization in the first iteration of the architecture. As time has moved on and our customer profile has changed we've had to re-architect some of the subsystems to deal with application performance. Last year we introduced SuiteCommerce. That allowed us to scale up to larger retailers. That was an 18-month re-architecture. I think you'll see us do a subsystem re-architecture once every 18 months.
IDGNS: Legacy software vendors have often been criticized for letting products slide into "maintenance mode," with decreasing amounts of new features being added. Is NetSuite spending enough on research and development?
Nelson: Two years ago it was about 14 percent [of revenue]. Since then, it's come down to somewhere in the 12s. However, in that time frame we have tripled the number of developers. We do our global development on the NetSuite platform. It allows us to scale research and development while spending less.
IDGNS: You're hiring in other parts of the world, including the Czech Republic. Is the potential for lower developer salaries there another consideration?
Nelson: It's not just the lower cost of hiring developers, it's being able to find them. Hiring in the Bay Area for developers is a very arduous process. You have to start looking in other locations. However, in the United States we have a new development center in progress. We still do a lot of hiring in North America.
IDGNS: NetSuite runs on the Oracle stack. Although it might be uncomfortable given that Oracle CEO Larry Ellison is an investor in NetSuite, is there any interest in moving off Oracle to other technologies?
Nelson: No. It's definitely not on anyone's priority list. Oracle is the database of record for most SaaS systems for a reason.
IDGNS: How do you handle deals where you're competing with Oracle, given your deep relationship?
Nelson: We don't really avoid competing directly. If the customer wants to put us and SAP side by side, us and Oracle side by side, we're going to compete and try to win the deal. I think there's a natural separation in our strategies, so we don't collide that much.