By David Sims
[email protected]

The news as of the first coffee this morning, and the music is a song so good you wonder if James Taylor really wrote it, “Mexico:”

A couple columns ago First Coffee^SM ranted about how companies wishing to “do CRM” run out and buy a lot of shiny new technology from a big name vendor, unpack it, plug it in and pat themselves on the back for having gotten that taken care of, just wait for the improved customer satisfaction scores to roll in, what’s next week, ERP?

There’s no excuse for that – First Coffee^SM and former colleague Bob Thompson of CRMGuru told you that wasn’t the way to do it in 2000. We can’t understand why there still seems to be a problem – didn’t we tell you the right way to do it?

The impetus for that particular splenetic columnar rant – it doesn’t take much, folks, it really doesn’t – was a report Forrester did on the dissatisfaction with CRM vendors from such companies. First Coffee^SM has less than zero sympathy for such companies, since 99.7 percent of the time they screwed up the process themselves, and blame the technology for the resultant mess the way some clod who spills coffee on her hand will blame McDonald’s.

Got a note from William Band about the column:

David- I wrote the Forrester report on CRM enterprise suite vendors. I fully agree with the points in your article. Bob Thompson and I had a good chat about the issues that you raise. I always advise my clients to pay more attention to CRM strategy, process and people issues- rather than technology- but, they often resist hearing this information. Regards, Bill Band, Forrester Research

It’s a tough, lonely life hectoring companies to make sure they’ve covered their strategic, procedural and personnel heinies before buying technology, kudos to Bill for shouldering the task.

Last time: Folks, buying technology is the end of the process, not the start. By the time you’ve purchased technology for your CRM project you’ve figured out the particular business problem you need to solve, exactly what you think you can achieve by solving it, how your employees are going to solve it, why they need that specific technological tool to help them do it and why solving it justifies the expense.

At that point, not before, you pick up the phone and call tech vendors.
…

NetSuite’s CEO Zach Nelson recently took time to answer some questions. Here’s an abridged edition of his comments, the full version can be found in an article by First Coffee^SM’s mild-mannered reporter alter ego on the TMC site.

Hi Zach, thanks for taking the time to talk. So, what’s it like to work for Larry Ellison?

A pleasure, David. Larry has a wealth of knowledge about what works and what doesn’t in the software applications business, and he’s not shy about sharing that knowledge.

What was the opportunity you saw at the founding of NetSuite? What wasn’t being done in the hosted space that you were confident you could do?

We felt that the way SMB companies tried to run their business – attempting to tie together an accounting application from one vendor to a sales application from another vendor to an ecommerce application from another vendor – would never work.

We also felt the way software was traditionally sold by vendors, in effect shipping customers a disc and daring them to install it, was also going to be replaced by a service like Amazon.com where you just log-in and use the application.

Siebel’s Bruce Cleveland said here a while ago that hosted is simply a delivery method, that the actual CRM has to stand on its own. Is there in your mind any real difference between building hosted or installed CRM?

A customer’s first decision when looking at application is not usually “how is it delivered” but rather “does it solve my business problem?” In the early days of hosted business applications, they didn’t solve many problems as they were just beginning to be developed. Once you get that “yes,” then the distribution of the software as a service over the Internet will heavily tilt the playing field in the direction of a web-native application over a traditional on premise solution because the web-native offering costs the customer nothing to manage, upgrade or maintain.

In terms of building a hosted solution… the difference can be summed up in one concept: if the vendor writing the software has to manage it themselves, they will write a lot better software. In the case of stone-age software, the vendor hands the customer a box of 200 discs and wishes them good luck. So for those software vendors who think it is trivial to deliver software as a service, I wish them a lot of luck. It’s not something you wake up one morning and know how to do.

Let’s hear about the new product – what does it add to the discussion?

We’re rolling out hundreds of really great customer-requested features that we’ve been working hard to include in V10.6. NetSuite 10.6 includes a major break-through in browser based user interfaces that allow users to perform complex business functions that dynamically change data without requiring the entire browser page to be regenerated.

You were quoted recently as saying that you, salesforce.com and RightNow are all established in the on-demand space. What would an upstart have to do to elbow into the market? Where is there still room for competitive difference?

Developing a successful web-native solution takes time, money and great software developers. NetSuite and the others you mention have been at this for seven years. It will take an upstart today at least that long to get to where we are. And of course, we won’t be sleeping during those seven years.

You really want to be retired by 2012? And do what?

I don’t think I will ever retire. This is the best job in the world.

You say right now the on-demand market’s big enough to support you, salesforce.com and RightNow. At what point will that change?

There are about 7 million small businesses in the United States. No one company has a strong grip on this market but someone will eventually emerge as a leader, though I think NetSuite has the longest “legs” of any company in the on-demand space and offers the most robust solution. Again, you have to remember that it takes a tremendous amount of skill and experience to develop software via a hosted model. It’s not easy.

Salesforce.com is talking about expanding beyond CRM, basically becoming a rival to Windows. Any Multiforce-style vistas of grandeur for NetSuite?

We have a similar capability in NetSuite 10.6 called NetSuite Customer Centers. Customer Centers allow you build new applications on top of NetSuite’s infrastructure, which enables those applications to leverage the NetSuite user interface as well as our data center hosting and security model.

Salesforce.com’s core application stores data that is pretty useless when running a business, data like who are the prospects and contacts for a sales lead. It is much more likely that meaningful business applications will be written on the core business data than based on a bunch of suspect sales contact data.

What’s the best music to play while at work?

I can’t work and listen to music at the same time…

Now that SAP and Microsoft are both threatening to jump into on-demand CRM, which one do you think has a more realistic shot of success?

They will be too late to the party when they jump in. I don’t care how much money or how many developers they throw at the problem. But I hope they do announce on demand products… it will be the ultimate validation of what we are doing.

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