A recent RFP for consulting services regarding strategic platforms for SAP from a major European company which included, among other things, a request for historical and forecast data for all the relevant platforms broken down by region and a couple of other factors, got me thinking about the whole subject of the use and abuse of market share histories and forecasts.
The merry crew of I&O elves here at Forrester do a lot of consulting for companies all over the world on major strategic technology platform decisions – management software, DR and HA, server platforms for major applications, OS and data center migrations, etc. As you can imagine, these are serious decisions for the client companies, and we always approach these projects with an awareness of the fact that real people will make real decisions and spend real money based on our recommendations.
The client companies themselves usually approach these as serious diligences, and usually have very specific items they want us to consider, almost always very much centered on things that matter to them and are germane to their decision.
The one exception is market share history and forecasts for the relevant vendors under consideration. For some reason, some companies (my probably not statistically defensible impression is that it is primarily European and Japanese companies) think that there is some magic implied by these numbers. As you can probably guess from this elaborate lead-in, I have a very different take on their utility.
Cloud computing continues to be hyped. By now, almost every ICT hardware, software, and services company has some form of cloud strategy — even if it’s just a cloud label on a traditional hosting offering — to ride this wave. This misleading vendor “cloud washing” and the complex diversity of the cloud market in general make cloud one of the most popular and yet most misunderstood topics today (for a comprehensive taxonomy of the cloud computing market, see this Forrester blog post).
Software-as-a-service (SaaS) is the largest and most strongly growing cloud computing market; its total market size in 2011 is $21.2 billion, and this will explode to $78.4 billion by the end of 2015, according to our recently published sizing of the cloud market. But SaaS consists of many different submarkets: Historically, customer relationship management (CRM), human capital management (HCM) — in the form of “lightweight” modules like talent management rather than payroll — eProcurement, and collaboration software have the highest SaaS adoption rates, but highly integrated software applications that process the most sensitive business data, such as enterprise resource planning (ERP), are the lantern-bearers of SaaS adoption today.
NetSuite was kind enough to invite me to the analyst day at its SuiteWorld 2011 user conference — an event packed with product, strategy, customer, and partner information. The focus was clearly on its platform and ERP solutions. Here are my thoughts and takeaways:
NetSuite wants to ride the SaaS wave into the enterprise. NetSuite is the only SaaS-based ERP suite of scale. It reports that its data centers get 2.2 million unique logins and 4 billion customer requests a month. However, NetSuite wants to do better. It wants to take its well-tested and well-adopted solution in the midmarket and extend into the enterprise. The timing is right, as Forrester reports that enterprises are ready to consider SaaS-based ERP solutions. In fact, NetSuite reports that sales to enterprise customers increased 37% between 2009 and 2010.
NetSuite has a solution package targeted at the enterprise. NetSuite announced a new “Unlimited” package for about $1 million, which includes all modules, unlimited storage, applications, SuiteCloud customizations, subsidiaries, and unlimited users. The exact pricing is based on functionality and number of users (which starts at 500), and scales up from there. It is a package targeted to compete with traditional on-premise ERP vendors as well as SAP’s on-demand solution, Business ByDesign.