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A number of top resellers at the two-day conference - SuiteCloud 2010, held here -agreed that the company's future focus needs to be on offering more industry-specific product options in markets such as health care, manufacturing, professional services and inventory control, or at least developing a more vertically focused channel.

In his opening keynote, chief executive Zach Nelson admitted that the channel itself needs to diversify. NetSuite has traditionally had independent software vendors, original equipment manufacturers and traditional value-added resellers as its channel partners. Nelson announced that it is moving into other areas, looking to add systems integrators and consultants - particularly CPAs - as well as business process outsourcing companies.

One of those CPA firms is Denver-based Hein & Associates, which joined NetSuite's partner network earlier this year. While not a traditional reseller, the firm partnered with NetSuite to provide companies with accounting and regulatory compliance systems using Web-based technology. They have customized NetSuite's cloud computing software to offer tax, financial reporting, growth plan development, and other types of systems.

Carolyn Duffy, a director at Hein, agreed with the goal of diversifying the channel. She also stressed that the focus should be on expanding the product's capabilities for larger enterprise clients. "I think their next hurdle is going upmarket. Their partnerships are strong and we are thrilled to see their workflow [management capability], which we thought was a weakness at one time," she said. "They are positioning to go up-market, and you can see now with their functionality they are ready to go to the next level."

Toronto-based Enabled Success was responsible for the largest single NetSuite transaction over the past year and has been a part of the company's channel since the partner program began. CEO Walter Merkas, who is also on NetSuite's Business Partner Advisory Committee, sees a need for the partner channel to be more vertical, rather than traditional VARs. "The biggest takeaway [from the conference] was that it's time for NetSuite to 'verticalize' - for example, we do inventory control and we built that solution using the NetSuite platform," he said. "They need to pick up more partners out there who have already developed something good and not just a traditional VAR."

Merkas's firm also resells SAP and Salesforce.com and noted that at one time, for every 20 leads that came in, 18 were for SAP and two were for NetSuite or Salesforce. Now, the majority of his leads are asking for some kind of SaaS-based solution.

Other top resellers - like Minneapolis-based Forward Hindsight, the No. 1 worldwide NetSuite reseller for the past three years - believe NetSuite needs to do more than just add diverse VARs to its channel if it wants to compete in the ERP space. "From a sales perspective, they are still way ahead of anyone when it comes to going from lead to cash, but the messaging needs to be more focused," said Ashish Gadnis, Forward Hindsight's managing partner and CEO. "They need to sharpen their messaging and not just push the product. If I'm a potential customer, don't talk to me about the platform and the product, talk to me about the customer experience."

NetSuite vice president of sales Craig West is well aware of his channel's concerns, and there are plans to address them, and to aggressively go after the company's competitors' channel partners as well.

West also noted that he realizes that the company needs to do more to mitigate fears about direct competition, since it still does direct sales, but it is making progress on that front. In addition, he said that NetSuite's SP 100 Program is working to help increase channel membership and it's "an effective incentive." In a bid to draw in more VARs, NetSuite back in March began offering resellers a 100 percent margin on first-year license subscriptions. The program offers 10 percent margins on renewals.

Even while the channel is growing, West recognized that size is not what's most important. "We want to be smart and strategic; we don't need to have 5,000 in our channel," he said. "If it stays at a few hundred, I'd rather have all top-tier providers."

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