It has taken me a while to find the time to sit down and write this and that's a shame because the lag gives the impression that our intro to OpenAir was less than it was. Though my procrastination may not impress, the OpenAir demo certainly did. First, just let me say that the breadth and depth of functionality in OpenAir was amazing. They have the professional services automation (PSA) piece down cold. Of course like any application there are many things that practitioners would like to see added, but the functions that I saw were well conceived and executed, representing the complete PSA loop from project conception to resourcing, billing and revenue recognition. I also thought the UI was very well done. It was only what was needed and no more. Simple to understand and navigate, the system also breaks down to a set of configurable roles so that each user has a subset of functionality. This is as it should be. So overall we had an excellent impression of the OpenAir Software as a Service (SaaS) offering. One thing that really impressed was the ability to manage human resources in a project context. This is one of the functions that traditional software suites, like Oracle and NetSuite, have not added until much later in product development. OpenAir's excellent demo has led me to think about the role of best of breed software, software that serves a specific business model or function, and how it changes in the SaaS economy. In the past, on-premise best of breed software provided a lot of work for the IT department. They would wrestle a best of breed AP system to work with a best of breed G/L. Likewise a best of breed HR/Payroll system to G/L. On premise best of breed software was more geared to business functions than business models. Also, it was much more limited in its scope. It did one thing really well. In fact when the first software suites started to enter the market they actually offered themselves as a set of best of breed modules. Solomon, for example, took up an entire bookcase shelf with separate books and diskettes for G/L, AP, AR, Purchasing, Payroll, etc.. Eventually large companies grew tired of the best of breed approach and they started to implement software suites. These provided an integrated system, and less work for the IT department. But there were always outliers that did not really fit, and the functionality was wide but not always as deep as needed. The newer SaaS best of breed offerings are more complete in how they tackle the requirements of a specific business model - OpenAir for professional services automation - or business function - Concur's SaaS offering for corporate travel and expense management. In OpenAir's case, I think that it answers the need that many have raised for better deep vertical applications in markets that have been under served by software vendors and their broad offerings. The Deal Architect, for one, often raises the point that there are still several markets, like Health Care, where the large software vendors have no interest. In fact I have seen it reported that SAP is no longer interested in trying to serve these markets - the costs do not justify the revenues. Also consider for a moment the challenges that NetSuite faces in integrating the OpenAir system with its own: Both offer billing and revenue recognition, so how this integration will work is still a big question mark. NetSuite will continue to sell OpenAir as a standalone system with a Web Services integration to NetSuite. Eventually the goal is to also offer a completely integrated system. But in the meantime I have to say that a best of breed offering like OpenAir has an awful lot going for it. Its functionality is much deeper than what NetSuite would ever have offered on its own, and with a tie to the back end of NetSuite for Accounting, and to the front end for CRM, it looks like a true winner. I can see other vertical market SaaS offerings integrating with NetSuite for its CRM, ERP and Web Presence, and, just as in the OpenAir case, adding value to both systems. And as both systems as SaaS, the user company does not have to worry about installing and maintaining multiple systems on multiple platforms. Hooked together with web services, it's really not that hard to run two SaaS solutions: One with deep vertical market functionality and the other with end to end business process integration. How NetSuite handles the licensing is also going to be a challenge. If they integrate the OpenAir product completely it's bound to add a fair amount to the price, but then do you charge all users a higher rate or just the users of the PSA functionality? Or do you come up with a different pricing model? Well, pricing issues are down the road a piece, but in the meantime we are already fielding calls from prospects interested in PSA with NetSuite. | 
