When Dell bought Boomi in 2010 it marked a clear shift in focus away from its desktop and laptop business, towards a cloud computing focus.
One of the biggest supporters of the move was NetSuite’s CEO Zach Nelson, not least because NetSuite has become Dell’s go-to partner for cloud integration services.
[Disclosure: Zach Nelson is an investor in Pando investor]
“Since Dell’s first foray into the cloud they’ve really taken it right back to servicing what customers’ want,” Nelson says.
Now NetSuite and Dell have decided to take this professional affection into the enterprise equivalent of going steady. The companies announced this morning that Dell will become an international reseller and implementation partner for NetSuite products, with the end goal of taking NetSuite’s uniform cloud software platform and combining it with Dell’s range of cloud consulting services and applications, to further encourage the market-wide trend toward cloud adoption.
Nelson says that the most major change for NetSuite will be that with Dell reselling its software it will also own that relationship with the customer, a shift in NetSuite’s long established business model. Ultimately though, talking to Nelson he clearly sees it as a small adjustment to make for a larger strategic win. Through Dell, NetSuite can bring its software to the ever expanding base of small and medium enterprises taking to cloud computing.
NetSuite search for new friends wasn’t because the company was struggling. Revenue has increased for four consecutive years. It reported $414.5 million in revenue for 2013, representing 35 percent year-over-year growth. This improving bottom line came on the back of new product innovations, such as its SuiteCommerce software platform, which allowed NetSuite clients to handle transactions across multiple platforms.
But Nelson thinks that NetSuite has yet to tap into its full market potential. It has never experienced overly rapid growth as a company. He says that, to him, the company has always been under distributed. He wants it to expand its focus from outside the Fortune 500, to the so-called Fortune Five Million, represented by the smaller businesses that enterprise software companies often neglect.
“We want five million touchpoints. This deal expands our footprint. And it allows us to not just reach the accounts, but to service them,” Nelson says.
NetSuite offers cloud software that its customers can use for all aspects of its business. Its “horizontals” are strong, Nelson says. But Dell’s verticals, its granular understanding of how health and financial sectors work, for instance, allows NetSuite access into whole new spaces.
The cloud industry is changing, its business models are evolving and there are increasing demands for newer products and services, Nelson says. Parts of the market for cloud services have become saturated, like customer relationship management (CRM) and enterprise resource planning (ERP) software.
In the cloud computing industry lately, partnerships are in. Dell partnered with Oracle last year, as did NetSuite. Oracle partnered with Microsoft and Salesforce, outside of that, just to really spread itself around.
The partnership between Oracle and Dell had different motivations than NetSuite’s does, says Nelson. “I got the sense that with Dell, for Oracle a lot of that was more about managing existing cloud demand and not looking toward the next generation.”
“What we’re at a tipping point with core business systems. The last four years revenues have accelerated tremendously and there’s not another company that’s as well positioned to take advantage of that as we are now,” Nelson says. “We’re ten years ahead of everyone else now.”
[Image credit: Dell, ten years ago.]