Not every CEO would pick Friday the 13th for their company’s first investment analyst briefing. But that’s exactly what NetSuite CEO Zach Nelson did, last week, when he hosted 100 attendees at a briefing at the New York Stock Exchange. The date seems to have been a lucky one for his company; by the time NetSuite rang the closing bell at the exchange, the stock was up 92 cents, or 4.6%, and closed at $21.09.
After opening with a story of his throwing out the first pitch at the Oakland A’s game against the Yankees earlier last week, Mr. Nelson was all business. What impressed me most was how efficient the company had become the past few years.
For example, running NetSuite’s large data center operations consumed 35% of revenues in FY03. From there, it dropped to 15%, 10%, 7.5%, and 5% over the next four years. Meanwhile, performance has been strong enough that he can promise a 99.5% uptime guarantee.
Likewise, the cost of sales represented 180% of NetSuite’s revenue in FY02. This has been trimmed to 40% today.
The average implementation project required more than 300 days in 2Q06. Since then, the services team has expanded to 150 people. Full-suite implementations now take three months. During that same period, it took call center operators 18 minutes to answer the phone in 2Q06. That time has been cut to less than three minutes.
In 2002, the average annual deal size was $149. Now, it’s just above $20,000. Mr. Nelson outlined a plan to get it up to $50,000 by offering industry-specific versions and NetSuite OneWorld (allows companies to support global operations on a single instance).
After his presentation, NetSuite invited three customers to share their experiences. For many in the audience, the most interesting presentation was made by the CFO of a textile company that moved from SAP R/3 to NetSuite in 90 days. The executive had been frustrated by his inability to attract SAP consultants to his site. By switching to NetSuite, he was able to eliminate 11 topical consultants and 2 dedicated consultants. His NetSuite implementation requires no IT staff. Along the way, he took usage down from 90 SAP users to 32 NetSuite users. His spend went from 3% of revenues to “one-tenth of 1%.” He was able to move people to more customer-facing activities.
Oh, and in case you’re curious, Mr. Nelson said that he fired a strike to the A’s catcher.