NetSuite's cloud-based ERP solutions are more than up to the job of handling complex business models.
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There is a myth that most cloud providers are ‘lightweight’ or they can’t handle complex business models.1
Cloud ERP providers are defying that myth with significant development updates as well as great customer successes.
To wit, NetSuite has been investing heavily and building out their solutions and market reach at both ends of the spectrum—from customer to supplier. Why? Because today’s companies have complex business models. Many are no longer strictly defined, as a retailer, manufacturer or wholesaler, for example. Complexity is not just the domain of large companies. Mid-sized and small companies can have complex businesses and therefore, if you are going to be the ERP of choice, you need to support the customer’s end-to-end business model. Another aspect of dealing with complexity is having the ability to ‘double click’ on an industry to provide deep industry segmentation or micro-vertical capabilities. Part of the power of the mid-market ERPs is their capability to specialize in these micro-verticals in order to meet customer needs.
The Great Outdoors
If you are a backpacker, climber, or camper, you know you count on the reliability of your gear. Shopping for gear for your next expedition is an intensive, analytical process. The great outdoors is a brand world all unto to itself, awash with categories. These companies live in a world of branded product design, global sourcing, manufacturing, and distribution through to the consumer. If you want to capture and keep this market, you’ll need a compass to navigate your market.
Many of these brand companies, of course, sell through channels. But many have their own retail outlets, as well. NetSuite first broke into the wholesale, then manufacturing, and now retail markets and continues to gain momentum as they tackle these functions with broader and deeper functionality, organically developed or through partners who use their platform.
Great outdoors customers include La Sportiva USA, a maker of high-quality outdoor footwear, based in Boulder, CO; Liberty Bottleworks, a Union Gap, a manufacturer of drinking bottles for athletes and outdoor enthusiasts, based in WA; NEMO Equipment, a designer of innovative camping gear, based in Dover, NH; Hydro-Photon, a maker of portable, ultra violet water purification systems, based in Blue Hill, Maine; and Surftech, a leading innovator, designer and developer of high-performance surf and stand-up paddle boards, based in Santa Cruz, CA.
Going Omni is a complex challenge. Who says mid-market companies don’t have all the complexities that arise from social, mobile, brick, and clicks, whether direct or through channel partners? And it all has to fit into the enterprise framework. (See Figure 1.)
So whether you are a retailer, a wholesaler who may be a retailer with ecommerce to consumers, or a manufacturer, making all this work seamlessly is not just a walk in the park.
NetSuite is helping fast-growing outdoor retailers and manufacturers improve performance by:
Providing a real-time, single database view of the business by seamlessly integrating the internal functions as well as connecting to trading partners to manage collaborative interactions
Providing transparency, responsiveness and visibility to customers through the front-end ecommerce solution
Improving supply chain operations with integrated inventory and order management
Sharing item-level and shipment-level data about container and pallet location with stakeholders, while collaborating on a common cloud platform
Managing all transactions and associated customer interactions regardless of the “Omni-touch,” i.e., mobile, catalogue, web, or store.
Make It or Manage It (Outsource)
Today’s complex business models extend to manufacturing your own brand products or outsourcing to third parties. For example, La Sportiva North America (www.sportiva.com), a wholly-owned subsidiary of La Sportiva, an Italian manufacturer of high quality outdoor footwear, apparel, and ski hard goods has realized double-digit growth since implementing NetSuite in June 2012, according to Jonathan Degenhardt, Marketing Operations Manager at La Sportiva USA. With real-time visibility into inventory and sales data, and operational and financial reporting, La Sportiva has eliminated the manual work and double data entry that was required by its legacy system. That has allowed them to better focus on growing the business and aligning production in overseas facilities to meet demand at numerous retail locations in the U.S. and Canada.
La Sportiva now experiences a single view of B2B and B2C customers. “NetSuite gives us visibility into customer demand in a timely manner so we can get that information to our global production facilities,” said Mr. Degenhardt. “Having control over inventory is critical, and NetSuite has given us better forecasting and order management capabilities. We can get better information faster, which means superior customer service and improved quality across the board.”
Another customer is NEMO Equipment (www.nemoequipment.com), a designer of innovative tents, sleeping bags and pads, and other camping gear sold online and through about 300 North American retailers including REI and Eastern Mountain Sports, and internationally, as well as to the U.S. military. NEMO has dramatically improved its efficiency and data-driven decision making since upgrading from QuickBooks to NetSuite in January 2013. The 11-year-old company uses NetSuite for financials, inventory and order management, CRM, PCI-compliant credit card processing, and as the back-end for its custom-built web storefront. NetSuite has given financial managers, internal sales, and other key stakeholders easy access to data and analytics, compared to the delays and manual work required with QuickBooks. Inventory management enables “virtual compartmentalization” of stock by direct-to-consumer, B2B, and U.S. military sales channels; pick, pack and ship times have been cut in half, the company said.
NEMO selected NetSuite based on the experience of NEMO CFO Tina Bourgeois, who worked for Ibex when the outdoor clothing retailer implemented NetSuite in 2011. That experience gave her the confidence to move forward with NetSuite. “One of the key reasons we chose NetSuite was its ability to grow with us, and the breadth of complementary partner solutions,” Bourgeois said. “We now have the ability to slice and dice data in a number of different ways—the time savings in how fast information is available to everyone is astounding.” This discredits the ‘rap’ NetSuite has taken as an ecommerce-only company.2
Conclusion—Complexity and Scale
Business model complexity in these types of businesses is supported by the cloud ERPs today in the mid-market. Cloud enables enterprise cohesion and extends the reach over the web to customers and trading partners.
Cloud is also a benefit in international business models. Rather than having servers scattered all over the world with separate instances of the corporate data (that is bound to get out of sync), Cloud ERP provides worldwide access. We hear this benefit over and over from companies using the multi-tenant single instance ERPs.
Larger firms have bypassed the cloud ERP due to their inability to adopt single instance since they have ‘deep divides’ in the divisions of the company. That is, each business unit is unique. And surely, depth in all functions will not be found in the ERP. Specialized domain expertise is often still—and will be—required for many business challenges.
So, scale requirements must be assessed. As companies consider cloud implementation they need to evaluate their company’s real-time, user-base access requirements and transaction process requirements. Performance is a shared responsibility between the tech provider and the end-user. Site-level network/telco performance and integration into the cloud is generally an end-user responsibility. But the technology provider can advise and often provide a managed service.
Aggressive development, and acquisitions and partnering, especially within the context of interoperable and open platforms have given some bragging rights today for companies such as NetSuite that provide complex integration across channels. Often, the cloud ERP may not have ultra-sophistication in areas such as supply chain—demand planning, transportation, etc.—but for organizations like NetSuite with open platform, partners may be able to provide some of these deeper capabilities. That said, many mid- to small businesses may still feel their needs are met with some of the existing modules.3
Users do have power, though, and tech providers are responding to the market, especially in these micro-verticals, to dig deep and provide a greater level of depth of functionality as time goes on.
We will continue with our ERP stories about other micro-verticals in our next issue.