NetSuite Poaches from SAP, Boast Big Q4 Earnings

Late last week, NetSuite announced their fourth quarter earnings, and their overall success in 2009 is undoubtedly a harbinger of widespread SaaS ERP uptake within the next few years. And if those numbers weren’t enough, they also announced that RedBuilt LLC switched to their product from SAP—NetSuite has successfully poached SAP customers before, but RedBuilt is the largest one yet.

NetSuite’s annual revenue was up 9% and Q4 revenues were at a record $43 million. Their sales increased as on-premise vendors experienced downward sales trends. SAP’s SaaS sales went up marginally, but their overall software revenues were down 27%, and their biggest boost came from the increase in support sales—typically SAP’s biggest source of income—which increased 11%. Oracle’s numbers fall somewhere in between.

So SaaS sales are on the up and up, but on-premise ERP products are not slipping entirely into obscurity. SAP’s Business Objects line does very well, despite the heavy fire they’ve endured for less effective cloud offerings. Still, RedBuilt’s switch to NetSuite is a good sign for SaaS ERP delivery. RedBuilt is an innovator and supplier of engineered wood products for the commercial and multi-family construction industry, and they’ve switched to NetSuite for managing their corporate offices and four production plants, and perhaps most importantly, the NetSuite deployment means RedBuilt no longer has to pay the $275,000 annual salary costs for SAP and database administration.

NetSuite certainly offers a very complete SaaS ERP package, as do other companies, but the SaaS deployment’s biggest coup so far is its cost, which explains why on-premise ERP is not extinct, and will probably take longer than expected to die out. When SaaS ERP packages are more extensive, then we’ll really begin to see some change.

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