The last few days I’ve been engaged in a fire storm with NetSuite. I asserted that its customer numbers don’t add up, or at the very least don’t make sense. Almost immediately I incurred the wrath of the corporate PR department. Instead of answering the questions raised, they chose to go in the offensive, making the classic knee jerk reaction mistake of not reading my disclosure page as carefully as they could have and ascribing affiliations to me that do not exist. It was a fiery few hours to say the least. In the cold light of day however it’s interesting to dissect what’s happening.

NetSuite has provided customer figures over the years. 6,000 in 2003, 5,300 in its pre-IPO S1 statement quoting figures at March 2007, 5,400 at a presentation in December, 2007 and 5,600 in its most recent earnings statement. During the most recent analyst call, CEO Zach Nelson said they had added 432 customers in the last quarter and expected to continue adding at a rate of 300-500 per quarter in successive quarters. The impression created therefore is that customer additions are proceeding at a consistent and steady clip. But even a cursory examination suggests the numbers are not quite as suggested. To its credit, NetSuite’s PR pointed out that the most recently quoted numbers are ‘active customers.’ But then I have heard from one NetSuite implementer that it takes 30-60 days to get a customer up and running.

During one call, Craig Sullivan, VP International said to me there was bound to be a certain level of dropout from 2003 because at that time the company was serving a different type of customer, one that might not need everything the company offers. He also conceded that prices had increased. By implication, that might deter some customers from renewing their contracts. Net-net, I still can’t make sense of the figures and as I said elsewhere, at the time of writing, the company has not furnished an explanation of what I see as a disconnect between fiscal growth and the absolute number of customers it is serving.

What does this have to do with transparency? Netsuite is not obliged to give out customer numbers but has chosen to do so. That’s very much to its credit. But, it opens the door to further questions when apparent inconsistencies arise. That’s even more germaine for this company because the CEO likes to take public pops at the competition, implying that competitors are losing business to its offering. Anyone familiar with the software industry knows this is par for the course and such remarks are often rendered in jocular tones. Nevertheless, they are an integral part of the overall ‘character’ of a company as perceived by outsiders.

James Farrar, who runs CSR for SAP recently wrote about the value of transparency. Quoting Frank Buytendijk of Oracle (and previously Hyperion), he said:

Transparency is a competitive weapon to differentiate from the competition in attracting capital, informing customers about the value proposition (not only price) and in cost efficiencies by driving down the transaction costs in the value chain.

James then goes on to point out concerns about this kind of behavior, noting Nick Carr’s lament that:

You have to wonder whether, as what was once opaque is made transparent, the bolder among us will lose the incentive to strike out for undiscovered territory. What