Too Much Too Soon

The CEO of business software maker NetSuite made news this week when, in an interview in London, he said “I think in 10 years we’ll be bigger than SAP.”   Zach Nelson, CEO of NetSuite, cited the growth of software-as-a-service, the foundation of NetSuite’s offering, as the driving force behind his optimism.

I’ve got nothing against Zach Nelson or NetSuite.  In fact, I agree that he should be optimistic for their future outlook and that the company will continue to succeed against SAP (and Oracle and other big ERP vendors).  They’re growing, they have good customer success stories, and they’re riding a technology wave that’s really hot.

But, “bigger than SAP” – that’s just ridiculous.  SAP is more than 80 times bigger than NetSuite.

NetSuite’s 2009 revenue was $166.5 million, up 9% from 2008.

SAP’s 2009 revenue was $13.63 billion, down 9% from 2008.

Clearly, NetSuite is doing well.  They’re growing at a steady rate, in a troubled economy.  Just as clearly, SAP is struggling and the challenges they face are well-documented.

Let’s make some outrageous projections to see how NetSuite might be “bigger than SAP” in a decade.  If SAP revenue declines by 10% every year for 10 years, it would be about $4.7 billion.  [Reality check: this could never happen.  If it DID happen, don’t you think SAP would do something to reverse that trend somewhere along the way during that decade?]

Here’s a graph that shows some very optimistic growth possibilities for NetSuite, compared to that unrealistic precipitous decline for SAP:

Why make outrageous claims that can never be supported by facts?  NetSuite is doing very well and they deserve a lot of positive attention.  Don’t screw it up by making claims that are just ridiculous.

For now…I’ll leave you with this thought:

Don’t make baseless claims.   They make you look silly.

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