NetSuite announces alliance with Microsoft

NetSuite CEO Zach Nelson

NetSuite CEO Zach Nelson

What a difference a year makes. A year after taking time in his keynote session at his company’s SuiteWorld conference to label then-new Microsoft CEO Satya Nadella as “the guy that actually presided over the decline of the Dynamics ERP line,” at this year’s event NetSuite CEO Zach Nelson announced a major new partnership for his company – with Microsoft.

A hush fell over the theatre-in-the-round keynote hall when Nelson introduced Nadella to address the SuiteWorld crowd, as, for a moment, the audience wondered if Microsoft CEO would actually join Nelson on stage. He would not, but offered a greeting video that talked about Microsoft and NetSuite and their potential to work together in the cloud world.

Nelson acknowledged he hasn’t always had such a positive view of Microsoft. “Usually, I have them on the competitors slide, but now they’re in the partners section for the first time,” Nelson told SuiteWorld. He described “a whole host of opportunities for Office 365,” closer integration between NetSuite’s cloud-based business software and Microsoft’s flagship productivity products, Outlook in particular. The company also announced a flip in support from Amazon Web Services to Microsoft’s competitive Azure platform.

In a press conference after the keynote, NetSuite CTO Evan Goldberg said the company has three already gone through three iterations of integrating its offerings with Microsoft Outlook, but “we found it hard to get the depth of integration we want.”

“The fourth time will be the charm now that we’ve got better access to the Microsoft technology,” Goldberg said.

Mark Rhyman, CEO and chief business development officer for Montreal-based NetSuite partner Big Bang ERP welcomed the partnership, in particular the potential for tighter integration with Outlook.

“Many times we’ve run across sales deals where they’re looking for Outlook integration. It’s a gap right now, but making it seamless in the next few releases will be perfect,” Rhyman said.

NetSuite channel chief Craig West said the partnership means opportunity for a variety of NetSuite partners, especially around Office 365 as “a lot of our partners consider themselves cloud consultancies.” West added that he feels there may be the opportunity to add new NetSuite partners from the broad ranks of Microsoft partners selling Office 365.

So what changed in the course of a year to make the partnership with NetSuite, which still features a scrappy underdog mentality that has it take shots at rivals like SAP and Microsoft whenever possible? A few times, Nelson pointed to Microsoft’s new CEO as one of the biggest reasons for a change. And while the core analysis of the new CEO remains the same, the language surrounding that analysis certainly has shifted since last year.

“When Satya Nadella came in, I could see a sea change. We began to think of what we could do with Microsoft differently,” Nelson said in his keynote address.

Later, in the post-keynote press conference, Nelson was more frank.

“We were blinded by the competition with Great Plains and the 20 other ERP systems Microsoft has. We couldn’t see the forest for the trees,” Nelson told reporters and analysts.

The trees in this case are competitive business software products. The forest is the broader appeal and opportunity of the cloud.

“The investment at Microsoft isn’t going into Dynamics, it’s going into Office and Azure, and that’s all complementary to what we’re doing,” Nelson said.

Later he would quip: “I’m voting for Satya for president. He’s a great guy.”

However, the biggest development in paving the way for an agreement between the new alliance may have been the hiring of new NetSuite CMO Fred Studer six months ago. Before coming to Netsuite, Studer had served as marketing chief for Microsoft’s business software offerings. Nelson acknowledged that having “an insider’s view” into the workings of Nadella’s Microsoft was key to the deal coming together between the two.