Other examples that have punctured my attention bubble in recent years are platform-as-a-service, infrastructure-as-a-service and storage-as-a-service, and there are probably many more. Then they get turned into ever-weirder acroynyms: Saas, PaaS, Iaas. You get the idea.

Today, Netsuite, the cloud player whose traditional approach is essentially to run your business from the cloud, today contributed its own new thing offered as a service: Commerce. (Cue the acronym: CaaS.)

One of the big things that businesses have to do is buy and sell goods and services from other businesses. The most basic example is that widget makers have to buy cardboard boxes from a supplier, because the goods don’t show up on the loading dock by magic. The same goes for every bit of physical stuff a business needs and also the services it pays for to keep its operations running smoothly.

Netsuite isn’t just managing the back-end business-to-business commerce, but also the direct-to-customer type of commerce. And the experience works pretty much anywhere a customer may be coming from: On a phone, tablet or PC, in a store or on social media.

As customers have essentially come to expect to be able to buy anything and everything online, the traditional back-end commerce engines like Microsoft Dynamics, Great Plains, Sage and even SAP were imperfectly combined with patchwork solutions for selling on the Web. And the bits of the system that faced customers have rarely if ever been unified with the ones that also face suppliers, which has a way of complicating things like inventory, the supply chain and everything else that stems from basic ebb and flow of supply and demand.

And things are getting even more complicated as machines are programmed to automatically buy things from other machines based on a pre-defined set of circumstances.

NetSuite has built what it calls a commerce engine — dubbed SuiteCommerce — that speaks directly to the core enterprise resource planning (ERP) and customer relationship management (CRM) functions that are already its bread and butter. In English that means that the new engine comes into the process already knowing what everything is, and also who everyone is. That makes it ready to wheel and deal not only with customers but also with suppliers. And when you get down to it, that’s a good way to reduce a lot of friction in any business, which is pretty much what cloud computing is supposed to be about.

The commerce service was probably the biggest news to come out of Netsuite’s SuiteWorld conference in San Francisco today, where CEO Zach Nelson (pictured) gave a keynote address. The company also announced a partnership with Square, the maker of little white credit-card reading thingies that you can insert into an iPhone or iPad for the purpose of accepting payment. Square’s Register application has been integrated with SuiteCommerce, so if you see more businesses using Squares, maybe this has something to do with it.

Nesuite, based in San Mateo, Calif., reported per-share earnings of 6 cents on a non-GAAP basis, double the consensus that analysts had projected. Revenue for the quarter was $69.3 million, which also beat the consensus and represented year-over-year growth of 30 percent. Cash flow from operations, at $10.6 million, was up 58 percent. Calculated billings — the sum of revenue plus the change in deferred revenue, and a key indicator of future revenue given Netsuite’s subscription-based business — rose 26 percent to $78 million.

Netsuite shares rose during the regular trading session to $50.47, up $2.45 or more than 5 percent, before the results were reported. The shares fell 89 cents or 1.75 percent in after-hours trading.

Netsuite’s statement is below.

NETSUITE ANNOUNCES FIRST QUARTER 2012 FINANCIAL RESULTS

• Record Q1 Revenue of $69.3 Million, a 30% Year-over-Year Increase

• Recurring Revenue Grows 27% Year-over-Year to $58.0 Million

• Non-GAAP Net Income Grows 116% Year-over-Year

• Operating Cash Flow Grows 58% Year-over-Year to $10.6 Million

SAN MATEO, Calif. – April 26, 2012 – NetSuite Inc. (NYSE: N), the industry’s leading provider of cloud-based financials / ERP software suites, today announced operating results for its first quarter ended March 31, 2012.

Total revenue for the first quarter of 2012 was $69.3 million, representing a 30% increase over the prior year. Subscription and support revenue for the first quarter of 2012 was $58.0 million, representing a 27% increase over the same period in the prior year.

Calculated billings, defined as revenue plus the change in deferred revenue, were $77.9 million for the first quarter of 2012, a 26% increase over the first quarter of 2011.

Cash flow from operations was $10.6 million in the first quarter of 2012, an increase of $3.9 million, or 58%, over the same period last year.

On a GAAP basis, net loss for the first quarter of 2012 was $7.7 million, or $(0.11) per share, as compared to a net loss of $7.7 million, or $(0.12) per share, in the first quarter of 2011.

Non-GAAP net income for the first quarter of 2012 was $4.1 million, or $0.06 per share, as compared to non-GAAP net income of $1.9 million, or $0.03 per share, in the first quarter of 2011.

“NetSuite’s Q1 results continue the momentum of 2011 as companies large and small accelerate their move from pre-Web client/server solutions to NetSuite’s cloud-based offerings. Our great Q1 reinforces that this migration from legacy offerings like Microsoft Dynamics GP/Great Plains, Sage and SAP to NetSuite continues unabated in 2012,” said Zach Nelson, CEO of NetSuite. “All companies, even non-technology companies, have realized they are cloud companies, and to effectively transition their business to this new model of reaching customers, they need to build their enterprise around an application suite like NetSuite that was designed to support operations in the Cloud Age.”

But there’s another alternative, called SugarCRM, that has been gaining traction, and which positions itself as an alternative to Salesforce. It’s open source, runs both in the cloud and on-premise, and it has a million end users at 7,000 companies in 192 countries.

Today, SugarCRM announced that it had raised $33 million in equity and debt financing. New Enterprise Associates led the round, and Brooke Seawell, an NEA partner, joined Sugar’s board. Silicon Valley Bank and Gold Hill Capital joined as new investors, while prior investors Draper Fisher Jurvetson and Walden International also participated.

The company saw sales increase by 67 percent last year and added 2,700 new customer companies, making SugarCRM, by its count, the third-most popular CRM product in the world.

For the fourth quarter, sales were $64.1 million, up 23 percent over the prior year, led mostly by growth in subscription and support revenue. Non-GAAP profits were 5 cents per share or $3.4 million. Sales for the year were $236 million, up 22 percent year over year. The EPS number beat the consensus of analysts by a penny. Shares are up by 4 percent in after-hours trading, having risen 4 percent already during the regular session.

I’ll be talking to CEO Zach Nelson (pictured) within the hour and will be adding a comment or two from him.

Update: I just got off the phone with Nelson and we had a quick chat about the results. Here’s a summary.

AllThingsD: Zach, the results were pretty positive. You grew revenue 23 percent year on year. What’s driving the growth?

Nelson: It’s really about the acceleration of cloud computing. There no other way to say it. Cloud computing is now moving to mission-critical functions. In 2007 I said we were reaching a tipping point with the cloud, and now the market has tipped. The new generation of companies like Square and Roku think of the cloud first as they build their operations. They’re not going to build the big IT staffs that other companies have. They’re going to skip that entirely.

What kinds of headwinds are you seeing and where?

Nothing significant. We grew by double digits in Europe, Asia and the U.S. There’s been a lot of discussion about IT spending shrinking. I think that’s a tailwind for us because we help companies cut their IT spend. We help them eliminate costs.

What are you seeing in 2012? What kind of guidance did you give?

We said we see revenue in the range of $295 million to $300 million and earnings per share of 19 to 21 cents non-GAAP. We’re going to continue to grow the top line and we’re going to hire 500 people this year.

After SAP acquired SuccessFactors and Oracle bought RightNow, people started saying Netsuite is one of the cloud companies likely to be acquired soon. What do you think?

We’re a public company, and so if anyone came along with a serious offer we’d have to consider it. But our whole mission is to build the next great software company.

SAP and IBM and Oracle and Microsft have the cloud religion these days, too. They say they can deliver their apps in the cloud just as you do. What about that?

I love it when SAP and Microsoft talk about the cloud. All they do is talk, and all they do is create more demand for Netsuite. They give credibility to the product we have built over the last decade. They may try to build a product that looks a lot like Netsuite. We’ll gobble up the demand they create along the way. It will take them a decade to do it because there’s no shortcut.

NetSuite’s press release is below.

SAN MATEO, Calif., Feb. 2, 2012 /PRNewswire/ — NetSuite Inc., the industry’s leading provider of cloud-based financials / ERP software suites, today announced operating results for its fourth quarter and fiscal year ended December 31, 2011.

Total revenue for the fourth quarter of 2011 was $64.1 million, representing a 23% increase over the prior year. Subscription and support revenue for the fourth quarter was $54.2 million, representing 23% growth over the same period in the prior year. Total revenue for the year was $236.3 million, a year-over-year increase of 22%.

Calculated billings, defined as revenue plus the change in deferred revenue, were $78.8 million for the quarter, a 36% increase over the fourth quarter of 2010. For the year, calculated billings were $266.9 million, an increase of 32% over 2010.

Cash flow from operations was $11.7 million in the fourth quarter of 2011, an increase of $7.1 million, or 156%, over the same period last year. Cash flow from operations was $36.3 million for the year, an increase of $18.0 million, or 99%, over the prior year.

On a GAAP basis, net loss for the fourth quarter of 2011 was $7.6 million, or $(0.11) per share, as compared to a net loss of $6.4 million, or $(0.10) per share, in the fourth quarter of 2010. GAAP net loss for the year ended December 31, 2011 was $32.0 million, or $(0.48) per share, as compared to a GAAP net loss of $27.5 million, or $(0.43) per share, in 2010.

Non-GAAP net income for the fourth quarter of 2011 was $3.4 million, or $0.05 per share, as compared to non-GAAP net income of $2.8 million, or $0.04 per share, in the fourth quarter of 2010. Non-GAAP net income for the year ended December 31, 2011 was $10.8 million, or $0.15 per share, as compared to non-GAAP net income of $8.5 million, or $0.13 per share, in 2010.

“NetSuite’s Q4 showed the benefit of being the disrupter rather than a disruptee, as our Cloud Computing suite continued to take market share from traditional mid-market and enterprise ERP vendors. The acceleration of our business that we saw throughout the year continued into Q4, and we turned in a Q4 that could be considered our best quarter ever as a public company,” said Zach Nelson, CEO of NetSuite. “As we enter 2012, I believe we are the best positioned company to benefit from the shift to the Cloud as customers abandon aging mission critical systems designed before the Web existed and move to NetSuite.”

The traditional narrative of cloud companies like SuccessFactors, NetSuite and Salesforce.com has looked a little like this: Scrappy cloud upstart aims to change the established way of doing things and paints a target on the established, big software company that controls the marketplace. Said upstart systematically goes after its customers, starting with the smaller ones. Big company pretends not to notice.

SAP has regularly been portrayed as the villain in that story. Talk to any vendor of cloud-based software that’s aimed at running some aspect of a business, and it doesn’t take long for the founders to start talking about SAP as the company whose business they would most like to disrupt.

The part of the story that hasn’t played out yet, but which appears to be starting, is that eventually the big companies do notice, and when they do, they start buying. SuccessFactors is the second acquisition of an enterprise cloud software company in as many months. The other was Oracle’s $1.4 billion deal for RightNow.

The first and most obvious thing that’s going to result from the SAP deal is that speculation will surge about another, similar deal. Already this morning, analysts at BMO Capital have upgraded Taleo, a SuccessFactors rival, on the theory that it is now in play and that Oracle is the most likely buyer. Taleo specializes in cloud-based talent management software, and is about the same size by revenue as SuccessFactors. Publicly traded since 2005, Taleo saw its shares close Friday at $32.96, within 13 percent of its historic high of $37.10, giving the company a market capitalization of about $1.4 billion and making it a relatively easy target for Oracle and its $32 billion war chest. BMO boosted its price target on Taleo shares to $40 from $28.

Another one to watch is Workday, yet another provider of cloud-based human resources software, which last month raised $85 million at an implied valuation of $2 billion as warm-up for an expected IPO next year. It’s on track to do about $320 million in billings in 2011, and is nearing profitability.

Another company that will probably be considered for takeout is NetSuite, the company that specializes in cloud-based software for running a business. Trading as of Friday at a valuation just shy of $3 billion, it could be a takeover target, too, though its business is humming along just fine. It’s on its way to closing the year with sales north of $235 million — much of that derives from taking customers away from SAP.

NetSuite CEO Zach Nelson said the SuccessFactors deal basically confirms that Netsuite’s approach has been the right one all along. “It’s far more beneficial for NetSuite than it is for SAP,” he told me by email over the weekend. “With this acquisition, SAP has told their customers that the path NetSuite pioneered a decade ago is the future, while the acquisition does little to advance their own product architecture.”

Which raises another question: What will this deal do for SAP? In the plus column, it makes SAP a share-gainer and not a share-loser in the $13 billion talent management software business, and improves its competitive stance against Oracle, says Brian Schwartz, an analyst with ThinkEquity, in a note to clients today.

In the negative column, SAP has spent about half of its cash — as of Sept. 30 it had €5 billion ($6.8 billion) in combined cash and short-term investments — to acquire a company that amounts to less than 4 percent of its revenue. SAP will have to struggle to get SuccessFactors to scale up to the point that it moves the needle. Even SAP co-CEO Bill McDermott concedes that it will take awhile, telling Bloomberg News that SuccessFactors could add €1 billion in incremental revenue — by 2015.

Or maybe buy a tiger. Today SAP said it will pay $3.4 billion to acquire SuccessFactors, a cloud-based maker of human-resources software. The deal values SuccessFactors at $40 per share and works out to a premium of about 53 percent. SuccessFactors shares closed at $26.25 a share on Friday. The shares have fallen by more than 9 percent this year, but traded as high as $40.27 a share during 2011.

SuccessFactors’ software is a cloud-based suite of tools around managing various personnel issues in a business: Performance management, goal setting, managing compensation and even planning for succession among senior managers. Its also has a pretty rich set of customers for so small a company: Among them are chipmaker Advanced Micro Devices, cable giant Comcast and hedge fund BlackRock. The company has about 15 million active subscription seats, and boasts in its earnings reports about one customer in Europe that has 400,000 users and another in the U.S. with 2 million.

The company reported $205 million in revenue in 2010 and a GAAP loss of $12.5 million, but a 7-cent per-share profit on a non-GAAP basis. It was on track to do $330 million or more in sales in 2011.

What’s it mean for SAP? Basically SuccessFactors gets integrated directly into the SAP Business ByDesign portfolio that McDermott talked about. SAP says in its statement that the deal will be paid for with cash on hand, and by a 1 billion euro loan facility.

The question I have now is this: Is this the starting gun for a new round software acquisitions? There are numerous cloud-based enterprise application companies out there. Among those that come to mind are Netsuite, Taleo, and Workday, to name but a few.

The SAP statement is below.

WALLDORF, Germany and SAN MATEO, Calif. , Dec. 3, 2011 /PRNewswire/ — SAP AG and SuccessFactors, Inc. today announced that SAP’s subsidiary, SAP America, Inc., has entered into a definitive merger agreement with SuccessFactors, the market-leading provider of cloud-based human capital management (HCM) solutions, pursuant to which a subsidiary of SAP would offer to acquire all outstanding shares of common stock of SuccessFactors for $40.00 /per share in cash, representing an enterprise value of approximately $3.4 billion . The acquisition will add SuccessFactors’ widely respected team and technology to SAP’s powerful cloud assets, significantly accelerating SAP’s momentum as a provider of cloud applications, platforms and infrastructure. The combination of SAP and SuccessFactors will establish an advanced end-to-end offering of cloud and on-premise solutions for managing all relevant business processes.

The SuccessFactors board of directors has unanimously approved the transaction. The per share purchase price represents a 52% premium both over the December 2nd closing price and the one month volume weighted average price per share. The transaction will be funded from SAP’s cash on hand and a euro 1 billion term loan facility. The closing of the tender offer is conditioned on SuccessFactors stockholders tendering at least a majority of the outstanding shares of SuccessFactors common stock (on a fully diluted basis) and clearances by relevant regulatory authorities. The transaction is expected to close in the first quarter of 2012 and be slightly dilutive to SAP’s Non-IFRS earnings per share in 2012 and accretive in subsequent years.

The acquisition marks another stride in SAP’s strategy of delivering solutions on premise, in the cloud and on mobile devices. It builds on a series of strategic moves in SAP’s targeted growth areas to drive innovation in its core applications and analytics; introduce breakthrough in memory technology; establish leadership in enterprise mobility; and grow its cloud portfolio. SuccessFactors’ solutions are highly complementary to SAP’s core HCM offerings as well as SAP’s strong cloud assets: SAP Business ByDesign for the suite cloud market and SAP’s line of business cloud offerings for large enterprises such as SAP Sales on Demand.

“The cloud is a core of SAP’s future growth, and the combination of SuccessFactors’ leadership team and technology with SAP will create a cloud powerhouse. The acquisition will help us address the top priority for CEOs globally – managing people and talent,” said Bill McDermott , Co-CEO, SAP. “Together, SAP and SuccessFactors will create tremendous business value for customers, with potent synergies to accelerate our growth in the cloud.”

“The depth and experience that SAP brings to customers via our cloud and on-premise portfolio fit elegantly with SuccessFactors’ world-class expertise in providing high-performing, low-cost, native cloud applications that customers are passionate about,” said Jim Hagemann Snabe, Co-CEO, SAP. “Together, we will lead the industry in providing end-to-end solutions consistently to meet any deployment preference, whether on premise, in the cloud or on device.”

“This is a revolutionary combination of proven capabilities that will allow SuccessFactors to accelerate our roadmap by 10 years, and bring the world’s leading application knowledge and intellectual property to our customers through the cloud, and the largest applications customer base instantly,” said Lars Dalgaard , Founder and CEO, SuccessFactors. “Expanding relationships with SAP’s 176,000 customers with our speed to value, friendly user interface, on mobile devices and the web, and seamlessly delivering more SAP solutions in the cloud will be legendary, as organizations adopt the cloud to improve their business. SuccessFactors has proven we have the technology and people to deliver the world’s biggest cloud deployments in terms of users and countries per customer, and also the most applications per customer from the same flexible scalable cloud platform. The business world is ready for enterprise-class cloud applications and together, we can deliver incredible new innovation for global businesses.”

SuccessFactors is believed to operate the largest scale of paying cloud users with 15 million subscription seats. With more than 3,500 customers in 168 countries, SuccessFactors is growing rapidly, recording 77 percent revenue growth year-over-year in the third quarter 2011 and 59 percent revenue growth year-over-year in the first nine months of 2011. SuccessFactors’ scalable cloud application platform supports organizations of all sizes from dozens to millions of users. With proven deployments in SAP environments at companies in diverse industries, the combination of SuccessFactors and SAP holds significant growth potential considering the more than 500 million employees of SAP customers and its 15,000 HCM deployments.

With headquarters in San Mateo, California , and more than 1,450 employees, the SuccessFactors team is widely regarded for creating innovative technology, generating more than 80 percent of new sales from applications that did not exist five years ago, and as one of the fastest growing leaders in cloud applications. Upon completion of the transaction, the CEO of SuccessFactors, Lars Dalgaard , will lead the cloud business of SAP in addition to his responsibility as CEO of SuccessFactors. SuccessFactors will remain independent and be named “SuccessFactors, an SAP company”. The chairman of SAP’s supervisory board, Hasso Plattner , recommended that Lars Dalgaard be appointed to the executive board of SAP AG.

SAP and SuccessFactors Customers to Benefit from Combined Application and Technology Footprint

The combination of SuccessFactors and SAP will create a comprehensive HCM solution, marrying strength in enterprise applications with people-focused cloud applications.
SuccessFactors’ complementary solutions will be an attractive option for more than 500 million employees of SAP customers.
SuccessFactors’ applications are designed for businesses of all sizes, and offer easily adopted solutions for customers of SAP Business Suite, SAP Business ByDesign, SAP Business All-in-One, and SAP Business One.
SuccessFactors’ cloud expertise and know how, rapid cloud innovation and proven success running large scale cloud deployments will help SAP customers more rapidly adopt cloud applications.
SuccessFactors’ mobile applications combined with the mobile expertise of SAP and Sybase will offer customers a powerful business-to-employee mobility portfolio.
SuccessFactors’ focus on enabling business insight and execution fits well with SAP’s business analytics platform, promising new levels of real time decision making across the enterprise.

The main one is Box.net, the red-hot cloud storage and collaboration start-up. Yammer users will now get notifications that new files have been uploaded.

Another Yammer integration that will get attention is Zendesk, the cloud-based help-desk service. If your job involves helping people with their IT troubles, Yammer can publish help-ticket updates as different people work on them.

Expensify is a cloud-based expense-reporting service. I’m not sure I see the point of broadcasting anything about expense reports to coworkers. But if you’re a boss, and you need to do a little public praising and/or shaming around the size of expense reports (or people who file theirs chronically late), then I guess it could make some sense.

TripIt is a cloud-based travel and itinerary management service. The Yammer integration will let you know when a coworker is traveling, about to travel, or has come back from a trip.

The other two: Badgeville, which helps companies create loyalty programs through the creation of Foursquare-like game-and-badge programs; and Spigit, which aims to get employees sharing ideas in order to better “tap into the collective intelligence of an organization.”

These aren’t the first integrations with other services that Yammer has done, and certainly not the last. The first three were NetSuite; Salesforce.com’s Chatter, which was kind of meant to tweak Salesforce a bit; and Microsoft’s SharePoint.

The other piece of news out of Yammer today is that it has debuted something it calls its Activity Stream Ticker, which is a live-streaming side module on the homepage that looks an awful lot like the new activity stream on Facebook. Well, if it looks familiar, that’s because it is based on Facebook’s Open Graph protocol. In fact, Yammer is starting to look less like “Twitter for work” and more like “Facebook for work” all the time. (To see what I mean, click the image below for a bigger screenshot.) You can argue that knowing what music your friends on Facebook are listening to isn’t all that useful. But it might be useful to know who in the office is out on a trip, and who is available for that important meeting.

I talked with Yammer co-founder Adam Pisoni, who told me it all comes down to working with the open APIs of pretty much any service. That means there will be a lot more integrations like this.

And it makes perfect sense. While there’s a lot of activity around social enterprise software and collaboration services — Salesforce.com’s CEO Marc Benioff can’t stop talking about the subject — Yammer has quietly emerged as the market’s leader, on track to have four million verified corporate users. And last month it landed a $17 million Series D round of funding from the Social+Capital Partnership, a new fund established by former Facebook VP Chamath Palihapitiya.

Revenue grew by 23 percent year over year to $61 million, while earnings per share on a non-GAAP basis were five cents. The results beat the consensus of analysts by a penny on earnings and $1.5 million on sales — just two of the eight records that NetSuite set in the quarter. Recurring revenue — a key metric that combines both subscriptions and ongoing support — was $51.3 million, also up 23 percent. Cash flow from operations was $9.4 million.

Looking ahead, NetSuite said it expected to earn four cents a share in the current quarter, a penny below the consensus, but that it expects to finish the year with earnings of 15 cents a share, which would be in the upper range of its prior guidance of 13 to 15 cents a share.

NetSuite, which last year did $193 million in sales, has already done $172 million for the first nine months of the year; it said it expects to finish the year with sales in the range of $235.2 million to $235.7 million, slightly ahead of its prior guidance, which topped out at $234 million. It also said it expects sales in the range of $290 million to $300 million.

I had a chance to talk with CEO Zach Nelson about the results and the state of NetSuite’s business. And as usual, he had a lot to say — especially about his biggest competitor, SAP. NetSuite started small, but as its software has grown more complex, its customers have gotten bigger and bigger, lured by the promise that they can not only run their expensive enterprise resource planning (ERP) software cheaper in the cloud than in their own data centers, but do it better.

AllThingsD: Zach, NetSuite is setting records on a lot of fronts this quarter. What’s driving the business? Is it companies swapping other stuff out for yours?

Nelson: In our case, because we do all the back-office stuff, someone is always swapping something out for NetSuite. And what’s changing is the profile of what they’re swapping out. In the old days, when we were getting started, it used to be QuickBooks. Today, it’s SAP and Great Plains and Infor, the very large, midmarket and enterprise ERP. We also set a record for average selling price, and that’s because we keep selling to larger and larger companies.

It’s funny you should mention SAP. I visited with its co-CEO Bill McDermott the other day, and he was talking about SAP’s new cloud-based offerings. What kind of a threat do you see there?

I think when SAP talks about the cloud, it’s enormously helpful to our business. We are the only pure-play cloud-based ERP solution out there. For SAP to be giving it credibility only helps us, because they having nothing to back their claims up other than desire. No traditional software company has successfully made the transition to the cloud, and there are a whole bunch of reasons for that. So it’s great that they’re talking about it. It’s just driving our business more. They have a low-end cloud product called Business ByDesign that doesn’t have much functionality. But we saw more competition from their traditional on-premise product than we did from that. So we’re getting sucked into these deals because SAP is telling the customer they should be looking for a cloud solution, and they really don’t have much to offer in that regard.

You’ve tended to stay away from business functions that aren’t transaction-driven. I’m thinking a little about something like Workday, which does a lot in the human resources area. Do you partner with other companies to shore you up in areas you don’t tend to specialize in?

We have a platform like Salesforce.com does with Force.com. We call it SuiteCloud. So as we go to a lot of these larger companies, it’s important that we augment in areas we haven’t built in, where we don’t have domain expertise. We work with Box.net, for example, on file storage and collaboration, and with SuccessFactors in the human capital management area.

Everyone’s worried about the world economy, especially Europe. Are you?

We aren’t that exposed to Europe. We do some business in the U.K. But Asia has been strong all year. And with regard to the world economy, its important to understand that moving to the cloud is a massive cost reduction for these companies.

You once told me an interesting metric about the costs of on-premise software. It was about how much companies spend to support and run their software.

Every SAP customer I’ve ever talked to tells me that they spend about 2 percent of their revenue getting it running and keeping it running, after you add up all the consultants and other things you need. That’s not just their problem, it’s the customer’s problem. If you’re competing with a company that’s running NetSuite and you’re running on-premise software, you’re at a competitive disadvantage. People are realizing that it’s not just saving them money but it’s also helping them do things better. Disruptive technology doesn’t just help enable you to do the things you’ve always done cheaper than before, but it helps you do them better; and it also helps you do new things that you couldn’t do before. Improving the cost model gets you that 2 percent back, but the real payoff comes from the productivity gains that come on top of that.

Here’s the direct quote taken from the transcript:

“IPhone continues to be adopted as the standard across the enterprise with 93 percent of the Fortune 500 deploying or testing the device, up from 91 percent last quarter and 60 percent of the Global 500 testing or deploying iPhone, up from 57 percent last quarter. A recent example of iPhone’s enterprise success is Lowe’s. Lowe’s is in the process of rolling out over 40,000 iPhones with a custom application to allow their store associates to execute real-time inventory checks, product orders and interactive customers with how-to videos.

Additional examples of companies around the world supporting iPhone on their corporate networks include L’Oreal, Royal Bank of Scotland, SAP, Texas Instruments, Jacobs Engineering Group, Tenet Healthcare, Jaguar Land Rover, Takeda Pharmaceuticals, Lincoln National and CSX Corporation. And of course, we’re thrilled to begin shipping iPhone 4S this month.”

And later, a similar section devoted to the iPad:

“Every day, we learn about innovative new ways our enterprise customers are using iPad. The airline industry is a great example of the momentum we’re seeing. United Continental Holdings is putting iPads in every cockpit to replace heavy, paper-based flight bags. In Japan, All Nippon Airways is now using iPad in training programs for flight attendants.

Sonic Automotive is using iPad for customer check-in at the service department and also to provide analytics to regional managers. Aflac, Biogen and General Mills have developed internal apps that their field sales teams leverage daily, and technicians of Siemens Energy are bringing iPads along when they do maintenance work at the top of their wind turbines.”

It turns out that it’s not a new thing, exactly. Cook has recited similar lists on Apple conference calls before. But as recently as 2008, when Businessweek published its cover story called “The Mac in the Gray Flannel Suit” (which, full disclosure, I worked on), Apple was generally considered an outsider in the enterprise IT business, and Apple products a novelty in the office. In broad brushstrokes, Macs tended to show up at media and advertising companies, and in the creative and marketing departments of other companies. The iPhone, and later the iPad, changed all that.

Here’s about as good an indication of that trend as I’ve ever seen: Intermedia, a company that operated a hosted Microsoft Exchange service for small and mid-sized businesses, said earlier this month that among its 41,000 customers, 78 percent are using Apple devices to get their mail, contact lists and calendars.

Meanwhile, look at all the companies that have developed enterprise applications for iOS: Salesforce.com, NetSuite and Citrix immediately come to mind. And Tidemark — the business intelligence start-up I wrote about yesterday — is iPad-ready from the start. There are probably hundreds, if not thousands, of examples I’m missing.

Apple has cumulatively sold 40 million iPads since the device launched last year. The company doesn’t offer much in the way of a data breakdown of how many of those are sold to businesses, but it almost doesn’t matter, because in so many cases, people buy one and just take it to the office. When you hear the phrase “consumerization of IT,” which already feels pretty worn out to me, it refers mostly to people who want to use iOS devices at work, and to a lesser extent, Google’s Android. A recent survey of 750 IT managers found that the iPhone led the pack of personal devices used at work, followed by Android Phones and the iPad.

I probably shouldn’t be surprised by all this, but when I heard Tim Cook list all those big companies using iThings to get things done, it finally dawned on me: Apple is as much an enterprise story as it is a consumer story.

How else to explain the weird kerfuffle that exploded like a firecracker last night at Oracle’s OpenWorld conference in San Francisco? Benioff has delivered keynotes at OpenWorld before, in 2009 and 2010 and probably earlier than that, though I didn’t conduct an exhaustive search.

As we all know, Ellison ordered Benioff yanked from the OpenWorld speaker’s roster yesterday. Officially, his talk was moved from 10:30 am today to 8:30 am Thursday, the final day of the conference, when no one but the stragglers are likely to be in attendance.

“At 3:30 today [Tuesday] we were notified we were cancelled,” Benioff told me by email last night. “Then we were told we were moved to Thursday morning when there are no other presentations. We view this as a cancellation.”

His response was to schedule a speech at an alternative venue, the Ame restaurant inside San Francisco’s St. Regis hotel, for the same time slot. (See the press release here.)

So what’s the wrangle really about? On the surface, it’s a difference of vision, a geeky technical debate. What exactly is cloud computing? To Benioff, the cloud is something that can’t be delivered to the customer on a forklift because it’s a service delivered via the pipes of the Internet. Everything that makes it go lives in one or more remote data centers that the customer never touches and rarely, if ever, thinks about. Just like Salesforce.com, where the customer needs nothing more than a browser running on an Internet-connected computer or iPad or smartphone to get started. Or Amazon Web Services. Or Google Apps. Customers pay for what they use, have nothing to manage, install, maintain or upgrade, and stop using it when they no longer need it. Easy, economical, cheap and accessible to everyone.

To Ellison, the cloud can be a hybrid. Certain customers — like the many large companies that are Oracle’s stock in trade — fundamentally distrust the notion of handing their data off to a third party. They run software applications on hardware that’s installed on their own property, or in combination with hardware that Oracle runs for them. On this side of the debate you’ll find not only Oracle, but also other companies with established IT hardware businesses, IBM and Hewlett-Packard among them. Expensive and time-consuming it may be, but real companies doing real things traditionally own their own assets, the argument goes.

As Benioff tells it, this is the “false cloud.” He’s been using that phrase incessantly for some time, and he seems in recent weeks to have deliberately stoked the controversy. At a follow-up panel to his OpenWorld keynote in 2010, he was more direct. Hardware of the type that Oracle sells can be eliminated entirely in the age of the cloud. Fighting word for Oracle, especially when uttered in front of Oracle customers.

And Benioff isn’t the only one throwing punches. In 2009, Ellison described Salesforce as an “itty bitty application” that happens to run on Oracle databases.

But as is always the case with public grudges, it’s more complicated than it seems. There is a personal element to it all. Before starting Salesforce in 1999, Benioff was Oracle’s star employee. He spent 13 years at Oracle. At 23 he was named the company’s Rookie of the Year, and at 26 was the youngest person promoted into the VP ranks. He was in many ways Ellison’s star student. Charles Babcock, writing in Information Week, remembers an Oracle event where Ellison tapped Benioff to address a customer question, and he commanded the stage in a manner one could describe as Ellison-esque.

When Benioff left to start Salesforce, Ellison was an early investor and sat on the Salesforce board until a falling out — spurred largely by Ellison’s backing of Netsuite, another cloud outfit started by two other Oracle alums, Evan Goldberg and Zach Nelson, whose offerings overlap competitively with those of Salesforce.

Obviously Benioff learned well from the master. A classic tactic from the Ellison business playbook is to prod or cajole your quarry into a public PR fight. Look at all the times where Ellison has been brazenly outspoken: Defending, then hiring Mark Hurd after his sudden resignation from HP last year; publicly chasing Hurd’s replacement Léo Apotheker out of his office on his first official day on the job by attempting to serve him with a subpoena; squabbling with Autonomy CEO Mike Lynch.

So who won this round? The conventional wisdom has to give this one to Benioff. With the cancellation of his speaking gig, he’s attracted more attention than he would have otherwise saying whatever he wanted from Oracle’s stage, a fact about which Benioff crowed to the New York Times last night, calling it the “best possible outcome.” It does look like Benioff planned for this result.

However, this long-simmering feud, now that it has boiled over so publicly, is far from over.

For years, companies resisted the idea of putting their most precious corporate data online and relied instead on more traditional software to run their business from the likes of Oracle, SAP, Microsoft and others. NetSuite survived for years selling its cloud-based business software–a suite combining enterprise resource planning, financial management, e-commerce and other functions–to small companies.

The something good happened. The economy cratered in late 2008 and into 2009. That nudged companies eager to squeeze every bit of efficiency they could from every penny of their IT budgets to embrace the cloud. Having once turned up their noses at the idea moving critical business data onto the Internet, NetSuite was suddenly among software’s cool kids in school. Sales have surged from $152 million at the end of 2008 to $193 million last year, and are on track to do $230 million in 2011. And it has recently started landing large customers like the wireless chipmaker Qualcomm, the German industrial giant Siemens, and the super-fast growing deal site Groupon.

I recently caught up with Nelson to talk about where NetSuite is going next.

All Things D: So, Zach, let’s start at the top. Suppose you were explaining what NetSuite does to my 89-year-old grandmother. What would you say?

Zach Nelson: If your grandmother runs a business she’ll get it very quickly. The big idea behind NetSuite was to bring the power of large enterprise business systems to the masses. So there were sort of two ideas to do that. One was to build a software application designed to run a business. Most applications are designed to run departments. There’s accounting applications, sales force automation applications and so on. The idea was to build a single system that could run most of a business instead of on cobbled together systems that run different parts of it. The second big idea–which was in 1998 considered radical but which today is considered the future of software–was to deliver that application over the Internet. The strategy hasn’t changed in more than a decade; the only thing that’s changed is the maturity of the application. It’s a very complex application to build and so at first you can really only serve the needs of the world’s smallest companies, because you only have the functionality to address that level of complexity. Today we’re more about serving larger companies and over the last decade we’ve built out a very rich application. That’s really been the idea, the business has just grown and grown, and the business just came off its best quarter ever.

So here’s a fundamental question. Larry Ellison was one of your earliest investors. Doesn’t NetSuite represent a long-term threat to Oracle?

Where Oracle really plays–and SAP, too–is in the corporate system of the world’s largest companies, the Fortune 50 companies. Where we’re starting to have success in those companies is not in supplanting those large $100 million implementations, but in the subsidiaries around that. While in some cases SAP may think they may be running that subsidiary, it’s really not designed for something of that size. For example, we just did an announcement with Qualcomm, where we’re starting to roll out in their subsidiaries, and the first one we’re going run for them is Mexico. And you’re also starting to see it in larger organizations, particularly in the Asia-Pacific region, because in that region they’re growing so fast. They’re saying that it’s going to take 36 months to install SAP in a new Asian subsidiary and they can’t wait that long. We can do it in three months. So those are two forces that are driving traction for us.

Where are your headwinds?

That’s what’s really changed in the last few years. We spent a decade pushing this cloud rock up a hill, and now its really starting to roll downhill for us. You look at the growth rate for billings. The downturn in the economy helped NetSuite in the sense that in 2008 and 2009 IT budgets shrank, but because of the cost reduction that the cloud offers, more money went to the cloud in that time. Now that people are coming out of the downturn, they’re seeing the cloud is really faster and cheaper and better, and they want more of it. The downturn accelerated cloud adoption and the move away from traditional client-server applications.

Generally speaking, and I know it’s going to vary, what kinds of savings do you typically see when someone moves off a traditional application to NetSuite?

They’re really massive. And it’s not just in the cost of the license up front, which is typically a third of what you pay for a traditional implementation. The more important elements are the implementation cycle. Groupon is a new client we’ve announced. They’re in the process of deploying 26 international subsidiaries on NetSuite and they are going to do it in three months. That would take five or 10 years on any other platform. You can’t even calculate the savings from something like that. That’s one of the reasons I think that NetSuite is going to win. We’re bringing the power of large businesses to small businesses, but we’re also bringing the agility of small businesses to large businesses. I have never seen a customer who hasn’t saved a lot of money after moving to NetSuite.

You announced a push into services recently. Tell me a little about that.

We announced some new service partner relationships recently. The services industry is going to change radically when you look at how the economics of the cloud. We’re now seeing some large service providers embrace it. We just announced a relationship with RSM McGladrey, which is the fifth largest mid-market accounting firm, but it’s also one of the largest mid-market technology consulting firms. Their first cloud practice is on NetSuite. And the largest technology consulting firm, Accenture, announced they were putting NetSuite into their software-as-a-service business. So what you’re going to be seeing is some of the large service organizations re-tooling their business for the cloud realities.

One thing I’ve been covering recently has been the social enterprise. Where is NetSuite on that?

You look at NetSuite, where companies run their business on it, there is a lot of social activity that takes place on a NetSuite record. We just announced something called Suite Social where we’re effectively socializing all the activity in a NetSuite record, and push it to the appropriate users within the enterprise to track it. So we announced a partnership with Yammer, basically to combine our system of record with their system of engagement around corporate ERP data.

How would you think it compares to, say, Chatter from Salesforce.com or Jive or some of the other social enterprise applications out there?

We took a long hard look at this, and in a large business there are many businesss applications. And so we asked ourselves if one business application’s proprietary social media extension is going to be the corporate-wide tool for managing social media. That’s sort of the Chatter strategy, and we concluded that is not going to happen. We’re not going to pick the winner. It could be Jive, it could be Yammer. We decided not to build that social media tool, but to effectively socialize the data and the activity happening within the NetSuite ERP system and provide that data to whatever tool the company happens to be using. For us it was a better strategy. We can socialize our feed to Jive as well, or we could socialize it to Chatter if Salesforce would open up the API.

But there’s another use of the phrase social enterprise that predates that. It refers to various non-profits that use market principles to social good, and to for-profit businesses whose raison d’etre is to do some social good.

You might expect a cloud computing company like NetSuite to be making a lot of noise about the first definition, but today it’s making some news about the second. NetSuite sells cloud-based financial and enterprise resource planning software. Today its philanthropic arm, NetSuite.org, announced it is donating or offering big discounts to five organizations.

Non-profits and social enterprises, they generally rely upon the kindness of donors, have the same urgent need to stretch their operational budgets that businesses do, and so the efficiency gains from cloud-based software is appealing for its efficiency gain, especially when it’s donated or heavily discounted. The base donation includes NetSuite’s complete software suite, five user licenses and ongoing support just like any customer. Discounts are tied to the applicant’s size by revenue with small organizations who bring in $2 million or less per year receiving outright donations, while larger ones get discounts ranging from 50 percent to 80 percent.

Non-profits have a lot of the same needs that businesses do, because they rely on the kindness of donors, just as urgent a need to stretch their operational dollars as far as they can. “When we looked at what good we could do in the world, we found that there were a lot of organizations in the world that look like companies, but which exist to make the world a better place,” David Geilhufe, program manager for NetSuite.org told me.

The five lucky organizations are: Easy Office which offers accounting and bookeeping services to non-profit organizations; United Prosperity, a micro-lending organization EdTec, which helps charter schools manage their accounting and IT; and Envirofit, which sells clean-burning cook stoves in 40 countries.

NetSuite also said it it has donated software to micro-lending site Kiva.org, which has helped arrange more than $175 million worth of loans to 450,000 small businesses owners in 57 countries. Kiva needed help managing the expenses of employees who are constantly traveling the world, a task complicated by all the currencies involved.

His latest effort is SnapLogic, which last week landed a $10 million round of funding led by Andreessen Horowitz, with Floodgate Ventures participating.

SnapLogic’s approach to making applications work together is simple. The company has created a common interchange format that gets two or more applications–say, for example, Salesforce.com and ExactTarget–to work together. In both cases, a company can buy “snaps” that get those applications running in the SnapLogic server. Snaps are SnapLogic-ready applications that are available in the company’s own SnapStore.

Before SnapLogic, you could certainly integrate these applications yourself, but not without a lot of heavy programming work. “It can be hard but not impossible,” Dhillon told me. “People often inadvertently paint themselves into a corner. They say, let’s connect these two, and then six months later they want to add NetSuite, and then later they buy another company that runs its own set of applications.”

Dhillon compares the SnapLogic server to a common shipping container. “The shipping industry uses the same container on ships, trains and trucks, and it makes transportation very efficient.” (Investor Ben Horowitz has called Dhillon “the Metaphor King.”) Using the SnapLogic approach allows different applications to fit together inside the same container and share information. So far there are 63 supported apps and some 2,000 supported combinations.

And if that’s not enough, there’s also has an API, so if you have custom applications for which a “snap” isn’t already built, you can roll your own. “Most companies are going to have some element of homegrown software,” he said.

Customers so far include Pandora, Canonical–the company behind Ubuntu Linux–and OSI Restaurant Partners, which owns Outback Steakhouse. ING, the Dutch financial services company, is also running a small installation, Dhillon said.

He thinks of integration as his life’s work, which was only partially started at Informatica. “I have a feeling like there’s this unfinished business I want to tend to.”

Excluding special items, NetSuite (N) said earnings for the quarter were one cent a share. Said NetSuite CEO Zach Nelson: “We are very pleased to report record revenue and record cash flow.”

Okay? Okay. Ben Leventhal, co-founder of the influential Eater blog, is headed to GE’s (GE) NBC Universal, where he’ll oversee “lifestyle content” for NBC’s growing local Web unit. More details here from Leventhal himself.

Eater is noteworthy because it’s a great read if you’re the kind of person who’s interested in an exit interview with former New York Times food critic Frank Bruni, conducted over a meal at Mario Batali’s Babbo. And also because it’s part of a larger network of blogs that Leventhal helped build up along with Lockhart Steele, one of the early architects of Nick Denton’s Gawker Media empire.

Steele says his sites, which encompass two other brands beyond Eater (real estate at Curbed, retail at Racked) and local sites in New York, Los Angeles and San Francisco, pull in a million uniques a month. Two years ago, he raised $1.5 million from a group of investors, including Denton, Spark Capital’s Mo Koyfman, real estate publisher Brad Inman and NetSuite (N) CEO Zach Nelson.

NBC, meanwhile, has been busily staffing up its network of local sites, which it overhauled earlier this year. The idea is to replace the lame extensions of its local stations’ lame newscasts with sites designed for people who actually use the Web–and to help the company break into the local Internet ad market that everyone wants a piece of but that no one has cracked yet.

“The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do,” Ellison said. “I can’t think of anything that isn’t cloud computing with all of these announcements….These people who are writing this crap are out there. They are insane. I mean it is the stupidest. Is it ‘Oh, I am going to access data on a server on the Internet.’ That is cloud computing?…Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?”

In conversation with former Sun (JAVA) CEO Ed Zander at a Churchill Club event a little over a year later, Ellison expanded on those remarks, suggesting that if the cloud is anything, it’s a cloud of BS.

Cloud’s water vapor….Cloud computing is not only the future of computing, it is the present and the entire past of computing.

…Salesforce.com has been around for a decade. And so has NetSuite…and people are saying, “Well, that’s cloud computing.” Google is cloud computing. Everyone is cloud computing….Everything is in the cloud now….It’s this nonsense.

…But it’s not water vapor. All it is is a computer attached to a network. What are you talking about? I mean, what do you think Google runs on?…Water vapor? It’s databases and operating systems and memory and microprocessors and the Internet!

…And the VCs, I love the VCs. [They ask their start-ups] “Oh…is that cloud?” [And the start-ups go] “Oh! Oh! Microsoft Word! Change ‘Internet’ to ‘cloud’! Mass change. Give it back to these nitwits on Sand Hill Road.”

…What do you mean by “cloud computing”?…All the cloud is is computers on a network.

Our industry is so bizarre. They just change a term and they think they’ve invented technology….You can’t just come up with a [slogan] like “Let’s call that ‘cloud.” [But] it sure beats innovation.”

Below, the full video. Ellison’s rant begins around the 45:54 mark.

BoomTown has been lagging in getting up this lovely video I did from a dinner party last Thursday, thrown for NetSuite’s tenth anniversary, which was held at one of billionaire Oracle founder Larry Ellison’s many houses–this one in the tony Pacific Heights section of San Francisco.

NetSuite (N) is one of the pioneers in the broadly termed software-as-a-service space, selling an “integrated web-based business software suite, including Accounting software/ERP software, CRM software, and Ecommerce software.” Essentially, that’s hosted software solutions for medium-sized businesses or divisions of larger companies.

Zzzzzzzzzz, right?

Actually, it is an important topic, as businesses actually do begin to embrace the idea of putting themselves increasingly in the so-called cloud, which is Silicon Valley’s trendiest term du jour.

It is a topic, in fact, that Microsoft is going to be blabbing about all week, starting today. The SaaS space, including its cloud computing efforts, will be Topic A at its Professional Developers Conference in Los Angeles.

In any case, after a lovely tour of Ellison’s house–Ellison co-founded the company with former Oracle (ORCL) exec Evan Goldberg and has been a major NetSuite investor–by NetSuite’s PR guru Brooke Hammerling, and some dinner chatter, I did an interesting video interview with NetSuite CEO Zach Nelson about the direction of the sector.

Here’s the video:

With all the Yahoo (YHOO) reorganization noise this past week–full of sound and fury, signifying nothing, if you want to go all literary!–BoomTown had little time to post our video on GigaOm‘s Om Malik’s Structure 08 conference on Wednesday.

Held at the spanking new Mission Bay Conference Center in San Francisco, it was high-wonk, packed with CTOs and those involved in building the guts of the Internet and its infrastructure, whose jobs are becoming more complicated than ever as Internet usage booms.

Malik thinks this unprecedented growth is putting a lot of stress on the system, akin to the physical wear-and-tear our nation’s roads and bridges are under.

As he wrote: “The platforms on which we have done business for over a decade are starting to provide diminishing returns; the smart money, meanwhile, is seeking new platform structures.”

Thus, lots of talk about how to manage the potential crisis, such as the move toward cloud computing, databases in the sky and other stuff that is way, way over BoomTown’s head.

Nonetheless, we press on, because it is our solemn duty to understand dark fiber someday soon.

Here’s the video, including interviews with Malik, WordPress’s Raanan Bar-Cohen and NetSuite CEO Zach Nelson:

NetSuite sold about 6.2 million shares in its modified Dutch auction IPO, raising$161.2 million. That makes the company worth more than $1.5 billion and the stake of its mercurial investor–who’s already No. 11 on Forbes list of billionaires–worth about $1 billion.

Assuming the IPO goes off as planned–and given the healthy market for tech IPOs, there’s every reason to believe it will–NetSuite shares will price out in the range of $13 to $16, raising the company some $99 million with which to pay off some debt, make new investments and further enrich Ellison, who controls about 60% of NetSuite’s outstanding stock.

To be fair, though, he does plan to set aside some 31.9 million shares for charitable purposes–perhaps another $115 million pledge to make and then withdraw from Harvard University?