Jason Carter with PartnerCompete found that “based on NetSuite’s average sales price and customer add rate during Q409, it looks like the company saw a shocking amount of revenue (as in 1/4 of it) walk out the door due to churn.”

Jason was confronted with a comparison of revenue growth rates leading people to conclude that the Saas vendors like NetSuite (+3.78% last quarter) are really outperforming the on-premise vendors like Dynamics (+1% last quarter). This is proving to not be the case and here are Jason’s findings on why we can no longer take this information at face value:

$41.4 million
That’s NetSuite’s revenue from a year ago, in the fourth quarter of 2008.

$11.2 million
That’s how much “software” the company says it sold during Q409. Specifically, on the earnings call NetSuite said that during Q409 it added 295 customers at an average sales price of $38,000 each. That equates to $11.2 million in revenue.

$52.6 million
Just straight math. Take $41.4 million from last year, add the $11.2 million from new customers, and you get to $52.6 million. In theory, absent churn this is the revenue NetSuite should have delivered in Q409.

$43.0 million
Is the amount of revenue the company actually delivered in Q409. It’s a 3.8% increase over $41.4 million during Q408. In dollar terms it was an increase of $1.6 million.

$9.6 million
Is the difference between those two numbers. What could that be but the amount of revenue NetSuite lost to churn?

This is troubling for NetSuite, and when the pundits compare NetSuite’s 3.8% growth with an on-premise vendor that grew at a lower rate, they are not taking these issues into account. From $41.4 million in revenue during 4Q08, NetSuite lost $9.6 million by the end of 4Q09. That’s a “revenue churn” of 23%. Ouch.

Microsoft has recently invested a huge amount of time and resources in order to make SaaS easily available for Dynamics ERP. If you’re interested to learn more, please contact us here at Computeration.

Specializing in ways to enhance your company’s solutions with Microsoft Dynamics GP in Idaho and the Pacific Northwest, with clients around the world, Computeration makes your implementation successful by offering experienced project management, data integration, training, and consulting services.

By Gloria Braunschweig with Computeration, an ID and Pacific Northwest Microsoft Dynamics GP Partner.

Related Posts

1. ERP Software Churn—Microsoft Dynamics versus NetSuite
2. NetSuite vs. Microsoft Dynamics GP: Truth, Consequences, and Industry Analysis – Oh My!
3. 5 Reasons To Consider Microsoft Dynamics GP On Demand Vs. NetSuite

Check out this interesting article by Jason Carter on LinkedIn called:  NetSuite’s math problem….are customers paying them to use the software, or are they paying their customers?

Jason uses lots of figures and equations (sure to make a CFO’s heart go pitter pat) but bottom line is that his research shows that “NetSuite says for Q1 they added 240 customers at an ASP of $25,500 and that 65 of those customers paid over $100,000. The only way the math works is if the remaining 175 new customers on average paid NetSuite -$2,171 each.”

Interesting research Jason!

by CAL Business Solutions – Connecticut Microsoft Dynamics GP Partner

Related Posts

1. Who’s Really Outperforming Whom? NetSuite vs. Dynamics
2. NetSuite vs. Microsoft Dynamics GP: Truth, Consequences, and Industry Analysis – Oh My!
3. 5 Reasons To Consider Microsoft Dynamics GP On Demand Vs. NetSuite

First, you’re probably saying to yourself, “How can they even compare Microsoft Dynamics with NetSuite it’s apples and oranges? NetSuite is a SaaS (Software as a Service) application and Microsoft Dynamics GP isn’t.” But that’s only partly true, while NetSuite is strictly a SaaS application, Microsoft Dynamics GP can be configured either on-premise or on-demand-expertly hosted by a Microsoft Partner.  So let’s start our comparison right there.

Reason #1 – NetSuite SaaS Only versus On-Premise and On-Demand with Microsoft GP
Microsoft Dynamics GP offers flexibility in deployment models, hosted (on-demand), on-premise and even a hybrid of both.  With a GP deployment you can change as your company or business needs change.  For instance, if you’re a start-up or small business, an on-demand Microsoft Dynamics GP solution is ideal.  You can pay a low monthly fee to license the software, and access it via the internet without having to buy any hardware or software, maintain cash flow.  Then, as your business grows and you add users, it may make sense to establish an IT environment, add IT resources to your staff and bring the accounting solution in house.  You can’t do that with NetSuite.

Reason #2 – Familiar and Role-tailored Experience
Most business people today spend a good deal of their time within the Microsoft Office applications whether it’s Excel, Word or the biggie, Outlook.  The interface for Microsoft Dynamics GP was modeled to look and feel like the Microsoft Office tools we use every day.  Additionally Dynamics GP offers an industry role-tailored interface for a task-centric experience.  This adds up to ease of use with minimized training time and costs as users easily adapt to the familiar structure.  You don’t get that with NetSuite.

Reason #3 – Total Cost of Ownership and ROI
According to information from Forrester and Nucleus Research, 87% of Dynamics GP small and mid-sized business customers achieved positive ROI from their deployment with an average payback time of 21 months.  In contrast, NetSuite fees and add-on module costs can exceed the Microsoft Dynamics GP maintenance fee per user, adding up to higher overall TCO.

Reason #4 – R & D, Stability and Experience
Microsoft invests around $5 billion dollars a year in research and development as part of their commitment to their customers’ long term success.  This investment along with 25 years of experience helps support almost 39,000 Microsoft Dynamics GP customers worldwide.  And with over 2300 certified solution partners, compared to NetSuite’s estimated 150 resellers, you have no trouble finding a partner to deliver a successful GP implementation. You don’t get that with NetSuite.

Reason #5 – Functionality and Adaptability
CPA Technology Advisor’s review of high-end accounting systems gave Microsoft Dynamics GP a 5 out of 5 stars rating and labeled it as “an adaptive solution with a broad set of functionality” which crosses financials, supply chain, manufacturing, project, payroll human resources and business intelligence with built in functionality specific to the manufacturing, distribution, retail, service, healthcare, public sector and not-for-profit industries. A report from the Accounting Library states that 84% of Microsoft Dynamics GP overall customer needs were met.  The same report states that only 31% of NetSuite customers basic features needs were met.

If you’re considering a SaaS application for your accounting solution because of the upside associated with a monthly subscription, ease of implementation and hassle-free IT, look at Microsoft Dynamics GP on-demand and you’ll also get the flexibility to move on-premise, the familiarity of Microsoft Office and a low total cost of ownership.

by OmniVue Business Solutions – Georgia Microsoft Dynamics GP Partner

Related Posts

1. NetSuite vs. Microsoft Dynamics GP: Truth, Consequences, and Industry Analysis – Oh My!
2. Who’s Really Outperforming Whom? NetSuite vs. Dynamics
3. ERP Software Churn—Microsoft Dynamics versus NetSuite