NetSuite Acquires QuickArrow
NetSuite Makes a Giant Leap forward in the Services Sector
Let’s continue to celebrate the 40th anniversary of man’s landing on the moon! The acquisition of QuickArrow by NetSuite represents a monumental step forward in the Professional Services Automation solution market — there are no longer any independent “major players” left in PSA.
Is that such a bad thing?
The combination of QuickArrow with NetSuite (and OpenAir acquired a year ago) creates the largest base of Software-as-a-Service (SaaS) PSA users in the industry with over 600 companies and 80,000+ users. NetSuite has positioned itself as a market leader in this rapidly growing space and is well-positioned to lead the market as the entire global economy shifts from products to services.
This industry consolidation underscores two key facts: service and project-oriented organizations are starting to dominate the technology sector; and they are demanding greater PSA functionality and better integration “out of the box” with core financial solutions. The shift from products to projects and services and the solutions required to drive them has evolved from a “nice to have” to a “gotta have” in today’s market – the winners understand this shift and lead with compelling solution value propositions while the losers scramble to add service capability.
The technology professional service market is characterized by extremely large independent service providers like Accenture, Tata and Infosys; small to large embedded service organizations within product companies like IBM Global Services and HP services; and a host of mid-size independent service providers who specialize either by application or vertical. The sheer number of small to mid-size professional services organizations dwarfs the big guys and they can now count on suppliers that include NetSuite, Deltek, Epicor, Maconomy, Microsoft and Oracle/PeopleSoft to provide an integrated business information solution. Although the independent PSA market has consolidated, buyers will find the new suppliers provide broader functionality; improved “out of the box” application integration and greater financial stability – a winning combination!
While the marketing buzz in the PSA market may become quieter now that one of the largest independent suppliers has gone away, the market for integrated PSA will gain momentum as PS buyers can now choose from a limited, but more powerful selection of suppliers.
What does this mean for independent PSA solution providers?
The change in the PSA market means smaller vendors will be at a significant disadvantage in terms of marketing, name recognition and integration with financial solutions. However, they won’t go away. Over the past decade all the early leaders in PSA have been acquired, creating a competitive market vortex. After NetSuite’s acquisition of OpenAir a year ago, QuickArrow was left as the De Facto independent industry leader. Now QuickArrow is gone, and while many small independent PSA solution providers remain, none have wide market awareness or global reach yet the market for PSA is expanding.
What to Expect Next?
NetSuite continues to emerge as a leading Software-as-a-Service (SaaS) provider. It, along with Salesforce.com, has led the on-demand (now called cloud computing) application market for several years. Both companies with Oracle background, roots and temperaments fiercely compete with one another. Based on this acquisition, NetSuite has upped the ante and Salesforce.com will be forced to develop PSA functionality. Both OpenAir and QuickArrow have extensive partnerships with Salesforce.com and should continue to work together in some deals, but compete in many others when buyers need CRM functionality.
OpenAir and QuickArrow will continue to develop integration across the enterprise — from CRM (Salesforce.com, NetSuite and others) to Financials (JD Edwards, Oracle, SAP, NetSuite, QuickBooks, and others). NetSuite will be the primary platform for PSOs that want one solution — making this combination very powerful in the marketplace.
SPI Research Conclusions
It has been a wild ride in the Professional Services Automation market over the past decade. All the early leaders are gone. With NetSuite’s acquisition of QuickArrow, the independent PSA market is changed forever. One thing is clear – NetSuite sees and has decided to capitalize on the shift to a service and project-oriented economy. They have thrown down the gauntlet to Salesforce.com with this acquisition so it should be interesting to watch the next move. SPI Research makes one very clear observation — for mid-market service providers, who want an on-demand solution, there is now only one game in town. NetSuite plans to become the dominant player in the Professional Services sector, and no doubt will continue to bolster its portfolio with more business solutions for project- and services-driven organizations. Good move NetSuite!