NetSuite Blog

Post Featured Image

Nucleus Research Finds Partners Grow an Average of 30% with NetSuite

Posted by John Goode, Senior Director Channel Marketing

A quick search for jobs with “NetSuite” in the title on the popular IT job search website Dice.com quickly reveals what many NetSuite partners already know: there is intense competition for talent in the marketplace right now.

In fact, finding people to meet the NetSuite demand is their chief challenge, partners interviewed told Nucleus Research. The Boston-based research consultancy, taking stock of the NetSuite partner program, recently released its “Guidebook for the Oracle NetSuite Partner Program,” based on conversations with several NetSuite partners.

“Our problem hasn’t been getting new customers, but rather getting people to deliver the projects we have,” one of the partners interviewed for the guidebook said.

NetSuite partners are growing their businesses, with annual revenue increasing an average of 30 percent, according to Nucleus. Results like that are forcing providers that have built practices around legacy vendors, and business models based on billable hours associated with implementation and ongoing maintenance, to reexamine their strategies. Should they stay with legacy vendors, continuing to collect on customizations and perpetual licensing fees while concurrently implementing legacy solutions re-written for the cloud? Or join (or increase their commitment to) a partner ecosystem rich with potential because the product they built their businesses on was born-in-the-cloud, and innovate for their customers, not simply ensure stability?

NetSuite partners offered insight into the benefits of the latter approach, as they shared with Nucleus Research what they’ve experienced by being part of the NetSuite partner program.

NetSuite Enables a Shift to a Full-service Consulting Business

When stability and extensibility are table stakes in the software selection processes, the relationship must be driven by value-add engagements, not simply ongoing support. NetSuite partners on average derive more than half of their revenue from professional services. Because of the stability of the NetSuite product, partners require fewer support staff. According to the Nucleus report, organizations averaged between 10 and 15 percent fewer support personnel relative to other products.

“We do a lot of aftermarket optimization services. Because the platform is so robust, there is a longtail to the implementation and additional opportunities for our clients as a value-add,” one NetSuite partner interviewed said.

NetSuite has a Mature Partner Program, and Strong Partner Incentives

Because the cloud shifts revenue streams from annual maintenance fees to annual subscriptions, the rates of revenue sharing are a significant driver of a partner’s bottom line, according to the Nucleus report. NetSuite structures revenue sharing in tiers, based on the amount of selling a partner completes; the higher the tier a partner achieves, the greater share of revenue they win. NetSuite Partners can earn margins between 30 and 50 percent on new licenses and 10 to 30 percent on renewals. These incentives, in part, help motivate partners, to lead with NetSuite over other solutions they sell, securing new customers and maintaining those customers on the platform long term. Nucleus found that NetSuite partners find their own prospects and manage the sales cycle from beginning to end, establishing themselves as the trusted go-to for customers.

What’s more, the NetSuite Partner Program itself is mature and structured in a way that partners can work collaboratively with each other, and aren’t pitted against NetSuite direct sales, partners interviewed said. Partners can even swap deals without NetSuite interfering.

“NetSuite doesn’t pit partners against each other to drop the price. They want to ensure that the deal is good business for the partner,” a NetSuite partner interviewed said.

NetSuite’s Continual Enhancement of the Product Serves as Springboard for Growth

One partner told Nucleus they plan to grow about 120 percent annually for the next four to five years. This strong growth potential can be attributed to three things. The NetSuite platform is highly scalable, and a small customer can adopt functionality as it grows. In turn, NetSuite is being sold more and more up market, for larger deals and larger initial revenue. And its industry-specific strategy lends partners the ability to develop their own add-ons and intellectual property (IP) that is deeply relevant and attractive to their potential and existing customers.

“One upside of being a NetSuite partner is that the clients are bigger and can grow on the system. We can close a deal that is small initially but then becomes hundreds of hours of work for our consultants as the customer grows,” a partner said.

Because the NetSuite product portfolio is stable and scalable, partners spend less time on implementing and maintaining the product, and more time on optimizing their customers’ business processes. Partners have the time and trust to engage with their customers to find new ways to deliver value, creating an ongoing relationship in which the partner truly lives up to that title.

Read the full report on the advantages of partnering with NetSuite.