MYOB takes 35 percent stake in NetReturn

SME accounting software provider MYOB has invested $7 million for a 35 percent stake in NetReturn, the exclusive Australian distributor of the NetSuite range of web-hosted business management software.

MYOB has the option to acquire the remaining equity in NetReturn in either 2007 or 2008.

Delivered under an ASP model, NetSuite integrates ERP, CRM, eCommerce inventory and financial information in one application running on an Oracle database. Companies are charged licensing fees to use NetSuite, which becomes MYOB's preferred mid-range solution.

The NetSuite offering went live in Australia in February last year and the company had sold the suite to about 100 customers here.

The problem, however, was that while NetReturn had a competitive solution for the mid-market, it didn’t have brand recognition of financial resources to take it to the next level, according to NetReturn CEO Mason Little.

"The alliance [with MYOB] takes NetSuite to a new level in Australia. They're a great partner and it's an opportunity to distribute co-branded products through their [MYOB's] distribution network.

"It extends the brand name -- it's frustrating to have a great product, but no-one's heard of it," Little said.

The NetSuite product would be co-branded as MYOB/NetSuite, he said. MYOB customers that had outgrown the suite could move across to the NetSuite product but under the MYOB banner, he said.

These customers wouldn't have to search the market to find another solution, he added.

NetReturn forecasted revenue revenue of more than $7 million for its financial year ending 30 June 2005 and expected to be profitable in the 2006 financial year.

NetSuite competes against mid-market systems such as Microsoft Great Plains, SAP Business One and Sage ACCPAC. As a hosted system, NetSuite eliminated the traditional time and cost of building and maintaining IT infrastructure.

MYOB quoted a recent Yankee Group report that compared the cost of a 20-user NetSuite site versus a Sage ERP and CRM system. Yankee reported that the total cost of NetSuite was half of the Sage cost, equating to savings of $318 per month, per user over five years.