NetCustomer Capitalizes on Dissatisfaction with Oracle

September 18, 2007 Alex Woodie

NetCustomer grew its third-party maintenance and consulting business by a factor of four last year, and it spent practically nothing on advertising to do it. Instead, the young company capitalized on the dissatisfaction that many J.D. Edwards and PeopleSoft customers have with software giant Oracle. One such company is TNT Fireworks, which tapped NetCustomer after it experienced difficulty upgrading its i5 server to EnterpriseOne.

“Business has been good,” says Punita Pandey, chief executive of NetCustomer, which is based in San Jose, California, and keeps a development and support center in India. From modest beginnings in March 2006, the company, which is staffed with people who used to work in PeopleSoft’s technical support operation, today has more than 15 customers, who have bought maintenance, support, and development services from NetCustomers’ “cafeteria style” menu, where tax and regulatory updates are priced separately from maintenance and support.

One of those new customers is TNT Fireworks, the largest seller of fireworks in the United States. TNT used to be a happy OneWorld XE customer, and rarely called J.D. Edwards (or PeopleSoft or Oracle) for support, says Parag Agrawal, application development manager for the Florence, Alabama, company.

Then, in April 2006, TNT Fireworks upgraded its i5 Model 550 to EnterpriseOne version 8.11, and things have never been the same since. The company would have stayed on XE, but it believed Oracle when it said it was going to end support for XE in 2007. Under pressure from customers, Oracle eventually relented and extended support for XE through 2009. But the EnterpriseOne ball was already moving at TNT Fireworks, and so the company was determined to make it work, for better or for worse.

So far, it’s been for the worse. “It’s a nightmare for us,” Agrawal says. “Every time we develop something and we have to promote it to production, we don’t know if it’s going to work.”

Agrawal sent out requests to four third-party maintenance providers, and NetCustomer was the first to respond. A competition was set up between NetCustomer and one other providers, and NetCustomer won. Since then, NetCustomer has successfully completed two projects at TNT.

Currently, NetCustomer is helping TNT smooth out the rough spots associated with an upgrade to the EnterpriseOne manufacturing module. (TNT imports all of its fireworks, mostly from China, but it still needed the manufacturing functionality). Bugs in the manufacturing module, and the fact that TNT customizes the code, required TNT to modify the rest of its ERP package, including the financials and distribution module.

NetCustomer’s assistance has been instrumental in keeping that project moving forward, Agrawal says. “They’ve been good to work with,” he says. “I have one direct contact. He’s the program manger, the team leader . . . And their prices are really cheap.”

TNT still pays Oracle the 22 percent annual maintenance fee–the upgrade to EnterpriseOne has been far too eventful to cut the vital technical support lifeline. (Indeed, TNT is on the “critical accounts” list, affording it 24-hour support.) But Agrawal does see a day when TNT may utilize NetCustomer for its technical support, as well.

“We want to make sure we are comfortable. Like with XE, we were so comfortable that we didn’t need Oracle, we never called them,” Agrawal says. “Every fortnight, there’s a problem that takes a while to figure out. Oracle keeps coming out with electronic software upgrades. They say ‘Upgrade to another version, upgrade to another version,’ every six months. It costs a lot of service and money to do an upgrade. We want to get to a point where it’s stable.”

Many J.D. Edwards and PeopleSoft customers are hesitant about third-party maintenance, says NetCustomer CEO Pandey. Part of that hesitation comes from the legal battle between Oracle and SAP, in which SAP has admitted to stealing Oracle’s intellectual property (IP). SAP’s subsidiary, TomorrowNow, a third-party maintenance provider that competes with NetCustomer, is at the center of the lawsuit.

The lawsuit hasn’t put a freeze on the third-party market, but it has had an effect, Pandey says. “We see more questions from prospects about IP and how to protect themselves. Customer are more cautious, their due diligence process is being stretched out. In the long term, customers are becoming more aware of third-party maintenance. A lot of them didn’t know about it.”

The potential growth of the third-party maintenance business is directly proportional to the level of customer support provided by the big ERP vendors–or the lack thereof, according to Pandey. “There’s generally a great level of dissatisfaction,” she says. “A lot of the time, it boils down to two things: Getting support for what the customer truly needs, and reducing cost structure. Those two make customers go over the fence.”

Pandey says relationships between customers and ERP vendors are precariously balanced right now. “The market is truly emerging,” she says. “There are inherent problems with a vendor support model that limits the customers’ choice for what they need. They should pay for what they need. Features that vendors are adding may not be what customers want.

“This divergence in interests–where the vendors’ interests lie and where the customers’ interests lie–is getting farther and farther apart. The time is ripe for many of these vendors to innovate.”