NetSuite Finds A Partner In CompUSA
The companies will start a trial at 10 CompUSA stores in New York and Connecticut this week, and CompUSA's 1,100 small-business sales reps in the field also will be able to sell NetSuite products, said Bill Maddox, executive vice president of business and technical services for Dallas-based CompUSA. The effort will then spread to 220 CompUSA locations that feature business centers, he said. NetSuite's service will be touted in the stores.
Maddox and NetSuite CEO Zach Nelson said this move should be viewed as a boon, not a threat, to existing NetSuite solution provider partners. This appears to be the first major linkage of a major retailer and a Software-as-a-Service provider.
A partner selling NetSuite's service gets 30 percent of the initial sale in margin, a cut that continues for the life of the contract. If CompUSA makes the sale, it will receive that residual money. However, Maddox said CompUSA will rely heavily on solution providers for service and other expertise.
"I think [the pact will] do two things—it'll continue increasing visibility of NetSuite as well as promote the viability of the on-demand business application model," said Joe Giegerich, partner, Horizon Associates Group, a Marlton, N.J., NetSuite premier solution provider.
"CompUSA would get the 30 points [on the sale], but most of our revenue stream is based on services, both initial and ongoing," Giegerich said. "We make about 70 percent of our living out of NetSuite-related sales."
Maddox said CompUSA's business sales force already works with VARs and expects that collaboration to continue and grow as a result of the NetSuite relationship.
"We'll use them to help us train people and deliver this product. We will get the recurring revenue stream, and that's actually an enticing thing for us and unique to NetSuite. But the VAR channel is very important. We need certified VARs to help us," he said.
Nelson said the deal will be a win for the whole NetSuite community. CompUSA plans "to sell a lot of this long term, and that will expand the market vs. contracting it for existing VARs," he noted.
Nelson will announce the relationship Tuesday at the C3 Expo show in New York.
CompUSA's Maddox said many small businesses need tech help. "Not just service, repair and break-fix. They want help with productivity applications, managed services, VoIP, wireless networks, data security," he said.
Some NetSuite partners are optimistic. "This could be good for a couple of reasons. First, if NetSuite ever got mass marketing down and could get the word out, we wouldn't have to sell anything, just take orders. The advantage of working with a national chain is it'll get the name recognition," said Dan Edwards, president of Ncompass Business Solutions, an Atlanta-based NetSuite partner. He also said if CompUSA focuses on very small businesses where the owner buys PCs at retail, there won't be much conflict with VARs and other solution providers. "We don't discount those small accounts but we don't have the resources to chase them. You spend as much time talking with a small account as to a 10,000-seat account," Edwards noted.
Ncompass's average customer has revenue ranging from $24 million to $150 million a year, with a few accounts logging more than $400 million, he said.
Rufus Lohmueller of Lohmueller and Associates, Raleigh, N.C., agreed that a volume retail push could grow the pie for all channel players.
"You get national play anytime you can get your name into hundreds of stores. It's better than signing up one solution provider at a time. This is a strategic move for NetSuite," he said.
This is not NetSuite's first attempt to engage a national retail-oriented partner to sell what is essentially a service in the cloud.
Sources said the company had approached Best Buy for Business about a similar alliance. Questioned about this a month ago, NetSuite executives said there was no Best Buy deal in the works.
When questioned about a potential pairing of NetSuite with Best Buy, another partner said such a pact would lead to channel conflict. "You mark my words, the retail guy will get better discounts and will take sales from solution providers," said the partner, who requested anonymity.
NetSuite, San Mateo, Calif., formerly known as NetLedger, is partly owned by Oracle CEO Larry Ellison and is headed for a possible IPO.