CRN Interview: Zach Nelson, Netledger

deputy news editor Jeff O'Heir recently spoke with Zach Nelson, president of NetLedger, a developer of CRM and ERP applications in San Mateo, Calif., about new product features.

CRN: NetLedger recently added new CRM features to its NetSuite enterprise product. NetLedger usually focused on smaller businesses with its Oracle NetLedger Small Business Suite. Does this represent a change in strategy for the company?

Nelson: NetLedger's strategy from the beginning was to create this application, this one system to run your business,to bring together accounting, sales, support and your Web site all in an integrated app. We began in 1998 with the hardest app to build: accounting. Over the past year, we've turned our guns to CRM, tying CRM to ERP.

CRN: Describe the new features.

Nelson: With this release of NetSuite, we've effectively covered the bases in CRM functionality with the addition of opportunity management. It allows you to manage more of a complex sales environment. We've added new forecast management technologies, including forecast master to allow the end user to edit and change the probabilities of deals. The third thing is quota management, which allows you to manage the quotas by month, quarter, year, whatever. They're all part of the same process.

CRN: Is NetLedger 100 percent channel-focused? If not, will you be relying more on solution providers to tap the higher-end CRM space?

Nelson: We're about 35 percent channel and 65 direct. I would say we're still focused on that small-business segment because our products fit really well with those companies that are growing. We love small businesses because they grow up to medium businesses, and those medium businesses grow into large businesses. We see our place in the food chain with the companies that have outgrown QuickBooks and don't need all the functionality of a Great Plains [package]. When you look at the recurring revenue model, the ability to add seats over time makes the model attractive to solution providers.

CRN: What are the new cost structures and margins for Small Business Suite and NetSuite?

Nelson: With Small Business Suite, there's a $1,200 start-up fee, and that includes one full user. With NetSuite, the initiation fee is $4,800 and includes three full users. After that, it's $50 per user, per month, for all products. Margins start at 30 percent, which solution providers get for the life of the [account].

The incentive for resellers is to balance their traditional license models with this recurring revenue stream. There's also the same amount of consulting and integration work with both products: You still have to map the business process and train and service the customer. So that doesn't change. You don't have the hardware margins, but those must be ridiculously low anyway.