NetSuite Breathes Fresh (Open) Air With Recent Acquisition

NetSuite’s tuck-in purchase of Boston, Massachusetts-based OpenAir signals a significant movement towards consolidation in the SaaS space, similar to what we’ve been seeing in the on-premise world. OpenAir, which focuses on providing PBS Solutions for professional services organizations, will be wholly retained, along with its 65-member staff.

Why the fuss?

The $26 million acquisition and eventual web services integration, if successful, is important for two reasons:

• OpenAir professional services customers gain end-to-end engagement planning, execution, and maintenance across one platform through integration with NetSuite’s ERP/CRM/E-commerce suite.

• NetSuite gains an additional industry client base of services-centric industries through the OpenAir platform.

The BLUF (Bottom Line Up Front) for users:

• Professional service organizations will have a broader choice of end-to-end solutions to manage their engagement-based business.

• The combined company provides a proven, lower cost subscription model (see Salesforce) as an alternative to an on-premise environment.

• Users gain deployment flexibility to adjust their solutions quickly to how they do business and how their businesses change. This does not discount the need to coordinate with the IT mother ship, but hopefully facilitates the business’s ability to drive solutions, and frees IT to work on other value-added issues.

• The expected partnering by the combined firms’ channel.

The bottom line for vendors:

• The acquisition bolsters SaaS’s importance as a strong deployment alternative to on-premise rivals.

• The pace of SaaS consolidation will quicken as the competition heats up to build up mindshare through inorganic growth.

• Assuming NetSuite successfully completes the OpenAir integration, the combined firms’ respective channel partners gain new entry points to extend their offerings and last mile solutions of OpenAir’s leading Project Based Solutions.

Andy Salunga, Senior Analyst
Business Process & Applications
Forrester Research