NetSuite Signing Up New Web Customers. How Does Uncle Larry Feel About That?

By Sarah Lacy , written on February 15, 2012

From The News Desk

NetSuite is announcing a series of new customer wins today. Usually that's not big news. Software companies sign up new customers all the time. At least the ones that stay in business do.

What's interesting is the types of companies they are winning business from. They include Yammer, Box, Square and Ooma. This follows a win of Groupon's business last year.

Square and Groupon are interesting because they are high-growth companies and in the past, these types of companies have gone with Oracle for financials. Even other cloud vendors like Salesforce run Oracle financials. It's a sign of confidence that NetSuite-- which has long billed itself as making software for medium-sized companies-- can grow as these companies become huge.

Indeed, Groupon is already a publicly-traded company using NetSuite across forty-four countries. "We rolled that out in less than a year," says NetSuite CEO Zach Nelson. "That would have taken SAP ten years."

Yammer and Box are also particularly interesting wins because they're leaders of the modern enterprise software wave. It's like the hip dogs eating the dogfood. "These are all cloud companies, and there's a notion that you can't be a cloud company and run your business on systems build before the browser was invented," Nelson says.

Beyond these wins, NetSuite has increasingly been making a push into large companies, like did years earlier. In the last quarter average selling price of its software was up more than 50%.

NetSuite is by no means gobbling up all the Web companies. Large ones like Twitter are still running on Oracle. And according to Gartner, NetSuite is the eighth largest ERP vendor with a still small 3% market share. Says Nelson, "But the first seven on that list are all the oldest software you've ever seen, all designed before the Internet."

There's another interesting twist to this: These wins are suddenly making NetSuite competitive with Oracle, and Oracle's Larry Ellison was NetSuite's biggest backer in the company's pre-IPO days.

Ellison invested in Salesforce too, and that relationship has become more complicated over time. Marc Benioff kicked Ellison off its board years ago for becoming too competitive, and last year the two clashed again.

Ellison lost much of his control over NetSuite when the company went public and doesn't serve on the board. Still, you have to wonder: With Oracle is buying cloud vendors, and NetSuite is starting to compete on larger deals, will Nelson have his own Marc Benioff moment?

(Nelson is an investor in PandoDaily.)