A couple of days ago NetSuite introduced NetSuite Business Operating System. It’s their version of a development environment for ISV’s and VARs to build applications on top of their platform. At first glance, this is a direct shot at Force.com. However, both companies are heading in 2 different strategies with their platform.

Force.com is Salesforce.com’s way of being The Platform for all enterprise SaaS applications. Customers don’t get the CRM or Salesforce Automation Tools when they purchase Force.com. Instead they use the platform to build an application from the ground up. ISV’s are concentrating on finding the next ‘killer app’ for Force.com so they can piggy back off of Salesforce’s infrastructure and build a profitable business. On the other hand NetSuite is still trailing.

NetSuite has made it clear that the intention for BOS (Business Operating System) is to allow ISVs to customize their ERP and CRM suite to fit the need of specific verticals. They want to ISVs to extend their product and to make it attractive to niche markets. They’re pursuing the strategy of ‘product tailoring’.

That being said, executives at NetSuite have probably realized that they need to start pursuing larger and more mature enterprises. That being said, large pragmatic customers look to purchase technology from the industry leader. Why? Because industry leaders typically have a large ecosystem of for support, consultants, system integrators and ISVs. There’s a huge backbone of services that follow the product. In the software industry, your product doesn’t need to be the best or the fastest. It just has to work well and the massive services ecosystem will bridge any gaps that remain.

This is a necessary move by NetSuite, if they don’t want to impose a glass ceiling for themselves. Although NetSuite’s platform may be more technologically advanced than when Salesforce first launched AppExchange; NetSuite is still playing Catch Up. It takes time to build that ecosystem. This could be the reason for their vertical-ization strategy. They want to continue to focus on the core ERP and CRM suite while this ecosystem develops. It’s pretty obvious that once their ecosystem gains momentum they’ll enter the pure-platform fight. Why else would they call it an Operating System? If they were going to stick with a customization and vertical-ization strategy they would have called their current release a Toolkit.

To read the press release on NetSuite BOS Click Here