Netsuite Going After Oracle, SAP?

NetSuite has developed programs targeted at large corporations, a person familiar with the strategy said, in an effort to move the software maker beyond the small- to mid-sized business market.

The person, who requested anonymity since the products have not been announced, said NetSuite wants to sell the software to divisions of large corporations that use software from SAP and Oracle.

To date, the company has focused on products for small- to medium-sized companies (SMBs). But NetSuite is eager to get a slice of the enterprise market as corporations account for the bulk of sales of business application software, which researcher Gartner estimates at about $89 billion a year.

The new programs–dubbed "SuiteCloud Connect"–allow corporate divisions to run their businesses on a high-end version of NetSuite’s Web-based software, then easily roll up financial data into their parent companies’ SAP and Oracle systems, the person said.

Shares of NetSuite rose 2.54 percent to close at $12.10 on the New York Stock Exchange.

A spokeswoman for NetSuite, which is majority-owned by Oracle Chief Executive Larry Ellison, declined to comment.

SAP and Oracle sell traditional software, which companies buy and run in their own data centers. The bulk of the world’s biggest corporations either use SAP or Oracle.

That approach can be more expensive than buying a subscription to NetSuite’s hosted, Web-based software, said Rebecca Wettemann, an analyst with Nucleus Research, who had not been briefed by the company on the new product line.

Analysts said they expect the new product will be well received by corporate technology managers looking at NetSuite’s software-as-a-service offering as a low-cost alternative to installing an SAP or Oracle system.

"It is clearly making it easier for customers that might need to do something, but are unable to do something given the capital constraints," said Wedbush Morgan Securities analyst Michael Nemeroff, who had not been briefed on the new product.

He added that corporations have more money to spend on technology these days than NetSuite’s traditional customer base.

"If you are going after deals, it makes sense going after customers that have cash, as opposed to SMBs that are cash strapped these days," Nemeroff said.