NetSuite not only keeps their “user’s group” forum hidden away from the peering eyes of potential customers, but they also can’t resist the temptation to sensor negative opinions within their password protected “NetSuite User’s group” forum. I was just banned for one month and my post removed when I replied to a post about “NetSuite Defects” with the following opinion … More ...
I read about the lack of customer backup services in an eWeek article. It really makes me angry as when we asked our NetSuite sales rep about redundant data centers two years ago he assured us NetSuite provided this redundancy. We would not have gone with them if we knew the truth. And speaking of the truth, I was a bit disturbed to read in the same article that NetSuite offers quite the promotions to journalist who report on the company. The analyst group Saugatuck Technology pointed out in the article that NetSuite " ... is known for sending out cases of wine to journalists ..." This triggered my memory of reading a ZDnet blog by Larry Dignan that said "Salesforce.com sends a lot of chocolate to journalists—and probably bloggers too. In fact, I just opened a box–a rather large one with a bunch of foam peanuts–with three big "S's" made of chocolate (left) and a folder highlighting the AppExchange incubators–never mind I perused the release the day it came out. And I'm not alone–there are a bunch of these boxes floating around the CNET offices in New York." Am I the only one concerned that CRM software vendors are sending expensive chocolate, cases of wine and who knows what else to the journalists that are suppose to be writing independent reviews?
I about fell off my chair this morning when I read the Information Week article - SaaS Vendor NetSuite Has No Separate Backup Center For Customer Data. According to NetSuite's own S-1 filed with the SEC on July 2nd, 2007, the company has no backup data center for any of its services. I don't normally copy and paste media content, however, I've inserted several of the more alarming sections below as I think the article speaks for itself and makes points NetSuite customers should be aware of.
By Antone Gonsalves, Information Week, July 12, 2007
NetSuite, a software-as-a-service vendor that holds customer data for thousands of small and medium-sized companies, said in a filing with the SEC that it has no backup data center for any of its services. In addition, NetSuite acknowledged in its S-1 filing, a precursor to launching an initial public offering, that its single data center is located in a third-party facility in an area of California that's vulnerable to earthquakes. The disclosure left at least one analyst firm scratching its head. "We believe that serious SaaS [software-as-a-service] companies need to provide a portfolio of disaster recovery options, should a client want to pay for them," Saugatuck Technology said in a research alert sent Thursday. NetSuite declined comment on Thursday.
In the SEC filing dated July 2, NetSuite acknowledged using a single data center to deliver its services. "We do not currently operate or maintain a backup data center for any of our services or for any of our customers' data, which increases our vulnerability to interruptions or delays in our service," the company said.
NetSuite, which was started by Oracle Chief Executive Larry Ellison in 1998, went on to say that it planned to add a second data center next year, but not for backup services. "We currently intend to add a second data center facility in 2008, the primary purpose of which is to add capacity," the company said.
NetSuite customer Brad Kugler, chief executive of Distribution Video and Audio near Tampa, Fla., was surprised when told by InformationWeek that his vendor had no separate backup facility. "This is all new to me to be perfectly honest," Kugler said. "I'm actually finding this a little hard to swallow."
DVA, a family-owned business that buys unsold DVDs and CDs from entertainment companies and resells them to brick-and-mortar and online retailers, has all its data with NetSuite, including customer, supplier, inventory, employee and financial information. Kugler planned to contact NetSuite for an explanation. "I have to check it out," he said. Kugler couldn't say for sure what NetSuite had said about backup arrangements when he first signed up with them. NetSuite, in general, charges $499 a month for its entire suite, plus $99 a month per user.
Saugatuck pointed out that many organizations do not have backup facilities. For example, Salesforce.com, the largest pure-play SaaS vendor, operated out of a single data center for several years after its IPO. Nevertheless, the NetSuite disclosure, necessitated by the IPO plans, is expected to have an impact. "While this disclosure may not prove to be a sales and marketing disaster for NetSuite, there are likely to be short-term financial consequences due to distancing by risk-averse buyers," the research firm said.
NetSuite, based in San Mateo, Calif., had revenues of $67.2 million last year, and a net loss of $23.4 million. The company acknowledged in the SEC filing that profitability was unlikely to happen soon. "We have a history of losses, and we may not achieve profitability in the near future," the company said. Saugatuck questioned how much investors would be willing to spend on a company like NetSuite before it has at least broken even. "It is unlikely they will reward NetSuite with a market multiple similar to profitable SaaS market leaders Salesforce.com, Concur and Kenexa," Saugatuck said.