23 Jan 2013 8:34 AM In our initial two posts (Part One - Streamlined Business Process and Integration and Part Two - Real-Time Financial and Operational Visibility) on this topic we discussed how NetSuite positions itself against Microsoft Dynamics GP in the sales process. Our initial discussions focused on business process integration and real time operational data accessibility. The next topic I would like to discuss is how NetSuite claims to have the upper hand in: Lower Total Cost of Ownership Once again, according to their website, NetSuite claims that "Microsoft Dynamics GP can prove to be an expensive and time-consuming business solution-both in the long and short term. With Microsoft Dynamics GP, customers pay large fees upfront for the software and implementation. But the costs don't end there. Many of our customers who have switched from Microsoft Dynamics GP tell us that the escalating costs and complexity of running their business software environment using Microsoft Dynamics GP was a key reason for their defection". The specific areas that they cite to support their claims fall into the following areas: Complexity of running their business software environment The on premise versus software as a service software (SaaS) delivery model Hosting provided by a VAR versus NetSuite datacenters Web native SaaS delivery model Let us look at how Microsoft Dynamics stacks up to NetSuite in these areas. Complexity of running their business software environment NetSuite makes a compelling argument here due primarily to the fact that relatively speaking they are the "new kid on the block". What they have done well is establish that there is a market for the SaaS delivery model for ERP software. Microsoft and the Dynamics GP delivery channel has suffered from being a late adopter to that business model and from presenting a confusing array of "SaaS" options that in many cases have not been as cost effective or technologically desirable as the NetSuite solution. To get a better understanding of the different types of "SaaS" models there are many excellent discussions found at ERP SoftwareBlog with a quick search. While comparisons to some initial options for delivering Dynamics GP in a SaaS model will indeed yield valid TCO differences that is no longer the case. With dramatic changes in pricing, technology and delivery options that gap is rapidly shrinking and may already be immaterial. The on premise versus software as a service software (SaaS) delivery model By its very nature the SaaS model exists because it reduces the cost of maintain your own internal hardware and IT function. Therefore, comparing on premise software to a SaaS offering truly is comparing apples to oranges. A true TCO comparison has to look at NetSuite versus the latest Dynamics GP pricing model and SaaS delivery options. There is literature available that supports both the NetSuite case as well as the Dynamics GP case. My guess is that how the numbers crunch out is based on what point you are trying to make. The key is to figure out the source of the information and what axe they are trying to grind. An interesting point that can easily be overlooked here is that with Dynamics GP you have an option of on premise versus SaaS. With NetSuite you do not. It is therefore in their interest to spin the conversation in a matter that compares the all Dynamics GP implementation, in particular on premise, to their SaaS offering. The truth is that some people still prefer the on premise model or the freedom to move between SaaS and on premise and back again as requirements dictate. In some instances I have had clients that use the SaaS model as a "test" and then switch to on premise when the software decision is finalized. In this case the SaaS model acts as an insurance policy to make sure the right solution is selected. Hosting provided by a VAR versus NetSuite datacenters Once again this is an area where NetSuite has a great point...yesterday. The demand for ERP software delivered in a SaaS model prompted many forward thinking Dynamics GP partners to set up their own "datacenters". Were some of these less than spectacular in comparison to what is today commonly expected from a tier one datacenter? That is certainly the case but several partners set up excellent SaaS offerings with datacenters, security, services and pricing that are at a level that people expect from banking level transactions "in the cloud". Microsoft is now jumping directly into this space with its own datacenters than can deliver Dynamics through the partner community via their Azure platform. I will look for the inevitable posturing on whose is bigger. With these excellent options in place the argument that NetSuite delivers its software from a "better" datacenter becomes another moot point. Web native SaaS delivery model What does this even mean in terms of practical interest to an ERP customer? If I am able to safely and securely process transaction in my ERP application locally and remotely in a price effective manner does the underlying technology really matter? My experience is that it does not but technology folks love to argue about what is "the best" even if it is irrelevant to the user. If a web based client creates a "do or die" situation for deciding on an ERP solution then everyone should be happy to know that the Dynamics GP 2013 version will include a web client. What I like about the Dynamics GP web client in particular is that it looks just like the desktop or client version of the software. So no user interface re-training is required. Compare that to NetSuite, oh sorry, I forgot that they don't have an on-premise solution. My educated guess is that NetSuite will release information on how the underlying technology on their software delivers their application in a superior manner. Let the tech wiener braying commence. The line starts to the right for bets on how long we need to wait for this "sales messaging" to start. I'll wait. Let's spend a little time in our next post discussing what really drives TCO. Peter Joeckel is the President and Founder of TurnOnDynamics a Microsoft Dynamics GP (formerly Great Plains) and AX (formerly Axapta) partner primarily servicing the Texas, Oklahoma, Louisiana and Arkansas (TOLA) area. While it serves a diverse customer base TurnOnDynamics does have specialized expertise in selecting and implementing advanced ERP solutions for manufacturing and software companies. Additionally, TurnOnDynamics is an investment and advisory firm that focuses on the strategic concerns of executives and owners with unique Dynamic CFO Services.