NetSuite’s Dublin data centre will be its largest outside the US

Irish base is first move in cloud-based software company’s European expansion

NetSuite CEO Zack Nelson: announced several important new  customers, including WH Smith and Prêt à Manger

NetSuite CEO Zack Nelson: announced several important new customers, including WH Smith and Prêt à Manger

 

The first indication of NetSuite’s intentions came in September, when it quietly posted a job advertisement for an Ireland-based EU data centre manager.

Last week NetSuite stepped forward and officially announced that it is opening a major data centre in Dublin, bringing one of Silicon Valley’s largest and fastest-growing cloud-based software companies to Ireland for the first time.

Until now, the firm has had no direct presence here, not even a sales office. Instead, it has worked with reseller partners to offer its product portfolio to the Irish market.

That all looks set to change in a big way as NetSuite, named in Forbes magazine’s annual list of “most innovative growth companies” last year, establishes its first data centres outside the US (where it has three).

Not only will the Irish centre handle a quarter of NetSuite’s customer data, but CEO Zach Nelson is already signalling that the Irish data centre will be an opening move for NetSuite, with more likely to follow.

“We expect Ireland to become our largest data centre outside the US,” he says in an interview from London. “And our history has been that once we put a footprint down, we tend to expand.”

The company offers a set of software services that customers use to manage company operations and customer relationships. NetSuite doesn’t sell software, but access to cloud-based software products, via the internet.

NetSuite hired 1,000 people last year, and already has 1,500 employees in Europe, which has been its fastest-growing market internationally for the past two years.

The company’s flagship products for managing corporate operations and financials, OneWorld and SuiteCommerce, have multi-language, tax and currency capabilities that fit with Europe’s varied markets, the company states.

“I’d certainly say [the Irish data centre] is a beachhead,” Nelson says, suggesting sales and service jobs are an obvious initial expansion area.

Mark Woodhams, managing director of NetSuite EMEA (Europe, Middle East and Africa) adds that the company is well aware of the plethora of technology sector multinationals that have major operations and international headquarters in Ireland. Such companies are here for good reasons, and “it would be silly to ignore that,” he says.

The development of the data centre –to be located in one of Telecity Group’s four Dublin facilities – has been on the company’s roadmap for some time, says Nelson. It will open by the end of the year, alongside another in Amsterdam.

“We never do one data centre. We always do two, to allow for backup or failure,” Nelson says. Both are sustainable data centres fully powered by renewable energy sources.

The Irish data centre will eventually handle data for NetSuite’s European customers, which already comprise 25 per cent of the capacity of the company’s largest US data centre, he says. New European customers will have their data managed from the start at the Irish centre, while existing European customers will have their data ported over from the US data centres over time, until all European clients are hosted within Europe.

A major reason for establishing a separate European data centre is to stay on top of the changing regulatory environment in Europe, Nelson says.

While NetSuite can provide a faster and more efficient service for European customers by keeping their data closer to home, Nelson says the company can also comply with any additional data protection and privacy measures that may be required in Europe.

Having the European data centres “gives the company an advantage as the regulatory environment changes,” he argues.

Same protection

NetSuite will be able to adjust to manage new compliance requirements resulting from this week’s European Court of Justice ruling on the adequacy of Safe Harbour, the set of principles that were supposed to guarantee that the data of EU citizens are given the same protection in the US as in the EU’s more rigorous data protection environment, says NetSuite’s chief information officer Doug Brown.

An incoming data protection regulation, expected to be approved in the coming months, may also change regulatory requirements, but the company says it is prepared to continue to manage customer data without interruption.

Keeping European data in Europe will in many cases enable the company to avoid data transfers to the US in the first place.

“We care about the compliance regimes, but what drives us more is security,” says Brown.

Because NetSuite handles business data for more than 24,000 companies, security is a priority that in turn enables strong data protection, he says.

NetSuite isn’t the first significant multinational in the cloud sector to move to place separate data centres in Europe. Oracle, Microsoft, IBM, SAP and others have such operations. Oracle cited growing European concerns about data protection and potential changes to the European data regulatory environment among reasons for announcing new EU-based data centres last year. But Nelson argues that NetSuite has better integrated products and a solid understanding of regulatory environments which are complicated but primarily “a challenging technical undertaking.”

“The SAPs and the Oracles of the world – I don’t think they’ve solved the problem of servicing a single application across multiple regions to 24,000 customers.”

Oracle looms large as a bit of a “frenemy” for NetSuite. Like NetSuite rival Salesforce, NetSuite has a complex relationship with the company, with many of its management coming from the software giant. NetSuite was co-founded by Evan Goldberg – now CTO and chairman – and Oracle founder and chairman Larry Ellison in 1998 as NetLedger. Ellison retains 48 per cent of shares in the company and, according to public filings, retains voting control over major company decisions.

NetSuite also makes extensive use of Oracle database software in its services.

Critics question whether NetSuite can maintain vigorous expansion and also generate profits to amply reward investors.

Despite operating at a loss, the company’s high-speed growth has kept investors on board to date, in expectation of future profits. Many analysts feel the cloud-based, software-as-a-service subscription model promises greater stability in income for companies like NetSuite, in comparison with the unpredictability of the traditional software sales model.

For its own part, NetSuite was in a buoyant mood in London this week at its annual SuiteConnect event for customers. It announced several important new customers, including WH Smith and Prêt à Manger, as well as a partnership deal in France with services giant Capgemini, which becomes sole distributor of NetSuite products there.

Such deals reflect important and needed growth for NetSuite in mid and large enterprise customers in both the US and Europe.

“These are really very big announcements, by any measure,” Nelson says.

More of the same promises to make NetSuite a notable new multinational presence in Ireland.

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