Update: CompUSA to sell NetSuite's hosted software

Retailer will offer NetSuite's on-demand business software in first-of-its-kind deal

NetSuite Inc. believes it has scored a real coup, clinching a deal with CompUSA Inc. announced Tuesday where the technology retailer will offer NetSuite's on-demand business software in all of its U.S. stores.

The deal is the first of its kind where a U.S. mass-market retailer will resell on-demand software, according to Zach Nelson, chief executive officer of NetSuite. "Software-as-a-service is going mainstream," he said.

NetSuite offers an integrated suite of hosted ERP (enterprise resource planning), CRM (customer relationship management) and electronic commerce applications aimed at small to mid-size (SMB) companies.

"We're excited to be able to round out our solutions for SMB customers," Jim Loden, vice president of business services at CompUSA, said.

CompUSA does about 70 percent of its business with firms that employ between 1 and 100 employees, defining the SMB segment as those companies with 20 to 100 employees, he added.

As of Tuesday, 10 CompUSA stores in New York and Connecticut will offer NetSuite software. After a month, NetSuite and CompUSA will evaluate how the partnership has been working and then continue the gradual rollout of NetSuite until the hosted software is available in all CompUSA stores across the U.S., Nelson said.

CompUSA hopes to have completed the rollout within the next 120 to 150 days, Loden said. The retailer also intends to offer NetSuite software in its stores in Puerto Rico, where CompUSA has already experienced strong sales to SMBs.

Customers will be able to purchase NetSuite software through CompUSA Business Services' 1,100-strong direct-to-business sales force.

NetSuite is providing training to CompUSA's sales staff and to the retailer's technology service providers which CompUSA refers to as its Techknowledgists.

CompUSA's customers tend to be early adopters of technology and the retailer initiated the contact with NetSuite, Nelson said.

The relationship came about when a CompUSA customer in New York contacted the company's training department to see if they could provide training on the NetSuite software, Loden said. The training department passed the lead over to the retailer's business services operation to see if it might make sense not only to offer training but also to resell the NetSuite applications.

CompUSA looked at NetSuite and other players in the hosted business applications including Oracle Corp.'s Siebel and Salesforce.com Inc., Loden said.

The retailer had previously considered offering hosted software, but decided it needed to "have its own business honed first," Loden said. Over the past 18 to 24 months, CompUSA has been working on developing its services for SMBs and didn't want to bring on any additional partners during that time frame, he added.

"Our customers have outgrown QuickBooks and Act, the products being sold at CompUSA," Nelson said, referring to Intuit Inc.'s entry-level accounting software and Sage Software Inc.'s contact and customer management product respectively. So, offering NetSuite's business applications is a natural progression for the U.S. retailer, he added.

NetSuite and CompUSA have been in discussions about the partnership for the past four months. "There is a small window of exclusivity," Nelson said, with both organizations agreeing not to sign similar deals with third parties for the next three months.

As to how the arrangement might work in practice, Nelson foresees it may take two to three interactions with a customer before CompUSA makes a NetSuite sale. The CompUSA retail store will be where a customer will see technology demonstrations of the NetSuite hosted software and the place to generate sales leads but then the sales process will likely move online, he said.

CompUSA will look to close sales by itself via its online or field sales staff, but the retailer will be able to call on NetSuite to provide pre-sales or post-sales support if required, Loden said.

Copyright © 2006 IDG Communications, Inc.

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