NetSuite Feels Some Partner Pain
Adam Ross, vice president of channels, and Kimberly Graham, who headed channel marketing for the hosted ERP company, are both out as of last week. Craig West is now director of channels, NetSuite confirmed.
The departures cap months of angst among some partners, who beef that they encounter conflict with NetSuite’s direct sales force. These partners also contend that the company Web site, which offers lead registration, is a “black hole” for partner opportunities. They claim that some customers they work with visit the site for information and are then approached and sold by NetSuite’s direct sales team.
Three of the company’s 10 Business Partner Advisory Council members have resigned in the past month, while other partners complain that they see no improvement in the channel picture, although a few painted West’s ascension as a good sign.
Kristen Brown, vice president of alliances and channel sales at the San Mateo, Calif.-based company, confirmed the organizational changes and reasserted NetSuite’s intent to be a good vendor partner.
Addressing questions about the Web site, Brown said: “We do as much as we can to drive their leads back to them so they can register them, and when that happens, they’re fully protected. But at the end of the day, we do have a direct sales model and we have our own direct sales force.”
Aside from the management changes, the company’s just-announced NetSuite 11, with its vertical slant, also will impact the vendor’s channel strategy. Brown said that in recruiting new partners, “we’re looking for slightly different stripes. We want solution providers with more of an industry focus.”
NetSuite typically offers partners 30 percent margin on the up-front sale and recurring annual margin that can range up to 50 percent for the life of the contract, depending on volume. But many partners say that is not enough.
“We do a lot of awareness advertising, evangelizing. Then customers typically go click on the NetSuite site. And from there, they disappear to us,” said one disgruntled partner, who requested anonymity.
The net result is often contention between NetSuite’s sales staff and the partner over who owns the lead and ultimately the deal, partners said. “We’ll eventually win, but it’s a big fight and sometimes it involves the customer. It can get ugly,” said another partner, who also requested anonymity.
By way of contrast, this VAR cites experiences with Microsoft Business Solutions. He registered on the MBS site as a potential customer. He got one direct mail piece from Microsoft itself, but otherwise was contacted directly by several Microsoft partners in his locality with expertise in the vertical industry specified. “That’s the way it’s supposed to work,” he said.
Ray Tetlow, CEO of Skyytek.com, a Miami-based solution provider, was one of the NetSuite advisory council members who resigned, but he cited time and resource constraints for his decision.
Rufus Lohmueller, president of Lohmueller and Associates, Raleigh, N.C., is the new chairman of the group, succeeding David Tinjum, CEO of Customer FX, a St. Paul, Minn.-based partner, who also resigned.
“Anytime you have a channel, you’ll have issues. It’s the nature of business,” Lohmueller said. But he believes NetSuite has done well addressing the issues and is pleased with the executive changes. “The fact that they’re doing this sends a message that when there’s a problem, the company fixes it,” he said.
The third council member to resign was Mitch Cannady, president of Spinnaker, a NetSuite partner in Irvine, Calif.
Other partners say the conflicts are more than just business as usual. Some say NetSuite’s aggressive sales culture reveals its Oracle DNA. Oracle CEO Larry Ellison is a majority owner of the company, which is heading toward an IPO. And many NetSuite executives, including Brown and CEO Zach Nelson, come from Oracle, which has seen its share of channel conflict. Some are willing to give NetSuite another chance.
The channel team shakeup “is a step in the right direction, but there are still serious issues,” said Scott Jenkins, managing director of The EBS Group, a NetSuite partner in Lenexa, Kan.
Nelson said he, too, hears the war stories.
“Whenever there are direct and indirect sales organizations, you hear about conflict. And believe me, the direct reps complain as loudly as the partners about supposed conflict,” Nelson said via e-mail.
“But in reality, with a target market of 7 million customers, the likelihood of us actually running into each other is remote. When there is conflict, we make sure everyone gets paid and the customer gets the right solution.”