Why isn't there a real competitor to Salesforce and Netsuite, even though their users hate using them?

The short answer is that a lot of companies fell by the wayside over the years primarily because general purpose enterprise cloud software (like CRM and ERP) is expensive to build (because of the depth of functionality required by larger companies) and even more expensive to sell to larger companies because of the longer sales cycles. This is not an industry where you can simply apply lean launch techniques and hope for any measure of success. It takes 10+ years and over $100M in investment to reach success for the average cloud enterprise company.

There were literally dozens of startups launched in 1999-2001 and another wave followed in 2004-2007 in the online accounting, online CRM spaces. Most never survived the dot com bust of 2001 which dried up investment financing overnight. There were also a host of entrenched companies (Siebel, Intuit, Oracle, SAP, Microsoft) that were one press release away from throwing the entire market into disarray. Most of them eventually launched online products but they were usually too little too late (Siebel, Microsoft) or they vastly underestimated the complexities involved in selling, building, and operating software as a service (SAP, Oracle).

Salesforce launched with a simple web product compared to the incumbents at the time (Siebel, PeopleSoft) which made switching very easy and compelling for sales managers. Even as the product grew more bloated with features (marketing, support, app exchange, etc..), Salesforce did such an amazing job of marketing their product that even free / open source solutions like "Sugar CRM" never were able to make a dent in their growth trajectory. Siebel tried valiantly to fight off Salesforce but failed and eventually got acquired by Oracle.

NetSuite with the benefit of over $100M in investment from Larry Ellison took almost 10 years to build an enterprise class cloud ERP service. By the time the market was ready in 2006 to swap out legacy ERP investments (SAP, Great Plains, Sage, MAS90) made in the late 90s, there really wasn't another cloud ERP solution on the market. Basically if you bought into the benefits of the cloud, then your only real option for an ERP solution was NetSuite. SAP threatened to launch a cloud ERP product in 2005. It's 2014 and as far as I know they still haven't launched it yet. This product is incredibly difficult to build (and even harder to sell).

For a startup to dislodge either incumbent, they would not only need the capital required to build the product and sell it to large enterprises, their product would require an order-of-magnitude improvement in benefit to overcome the mindshare occupied by Salesforce and the inertia advantage occupied by NetSuite. This happened in 2000 when Salesforce launched and in 2006 when NetSuite's big bet on cloud ERP coincided with the industry wide replacement cycle of legacy on-premise ERP systems in the midmarket.

It can happen again in 2014 with a combination of Social Networks, Mobile Devices, Big Data Analytics, and On-Demand Cloud Computing technologies that did not exist in 2000 or 2006. We are looking forward to seeing who the next Salesforce or NetSuite in the Mobile Enterprise era is going to be, and we're putting our best foot forward to be a key player in the local industry.


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