Zach Attack
Of course California software firms love to go on the attack against each other — Oracle vs. Salesforce or in this case NetSuite vs. SAP. Beyond the humorous role plays of on premise cultures vs. cloud (or SAP vs. NetSuite), there are some profound reasons NetSuite is riding on a cloud in the ERP market these days, Zach Nelson, CEO of NetSuite, told us at the kickoff of SuiteWorld.
NetSuite’s financial position will allow them to fly much higher over the next decade. With rapidly growing sales and lots of cash in the bank, NetSuite has been accelerating their hiring and developing and building out their applications and markets. Naturally that has to be done with some care to avoid others’ mistakes and avoid recreating the old ERP market. NetSuite appears to understand the modern world. They are not dredging up the old ways of looking at things, trying to shoehorn them into our modern world. Thus, the Zach attack on big ERPs.
Zach stated that three themes for NetSuite are big drivers for this growth:
Omni-Channel:
Part of NetSuite’s strategy here is their recognition that Omni isn’t just for retailers. (You can find that report in this issue of the brief). As we noted in our recent Business Priorities research, many B2B customers are revamping their channel technology to incorporate multi- and Omni-channel. With a large portion of NetSuite’s business in Wholesale Distribution (which is now often B2B and B2C), NetSuite released a B2B Customer Center Suite to support commerce for B2B companies.1 B2B commerce generally has much more complex self-service, pricing, and billing elements than B2C in addition to channel complexities.
Omni-channel, interestingly, is also for government. One of the great case studies presented was the state of Texas’s TxSmartBuy. (We will highlight this super example in the next issue of the brief.)
The Zach attack here was a broader thinking of what CRM is. We quite agree. CRM is not salesperson-centric. It’s centered on the customer and how the value creating processes support the customer. Zach attack, therefore, averred that CRM is not Salesforce.
Product and Professional Service Business Models:
NetSuite has been strong in professional services. Since they purchased OpenAir a few years back they have been not only enhancing that standalone product, but working to migrate that into the Suite. (See “Serving the Service Providers,” below.)
Future Proofing the Business:
Since cloud ERP gained acceptance, there have been few choices for buyers. Often for younger companies, NetSuite has become the preferred choice. SMB to ME was a theme Zach talked about. Even smaller companies have complexity that requires a stronger enterprise solution (vs. spreadsheet+ semi-enterprise offerings). They also want a foundation to grow without disruption. Zach mentioned a list of NetSuite customers who started out with NetSuite as startups and have now gone public or in other ways have significantly grown.
New World at SuiteWorld
Four-week ERP implementations including integrating with third-party applications? Running a $200M company with one IT guy? Managing a wholesaler with thousands of customers with no IT? Few ERPs can boast this kind of customer/total cost of ownership performance. After having spoken with dozens of NetSuite customers, we found that this new world reality is exciting.
When we think about competitive differentiation of the enterprise, transformation speed to change — agility — may be critical. If the enterprise is in a dynamic, fast-moving market, keeping up with market changes is critical to success. Agility does not come from implementations that take 6-months or more. In this “tweeting attention-span” society, short, fast, but with depth of information is essential.
Another key competitive factor is operating cash/working capital and plain ole cash in the bank. Capital investments of hardware, data centers and software yield to less-expensive overall and zero-footprint infrastructure, not just due to cloud, but the overall ease of use of the system.
One other aspect to this new world order is the implementation services model. The old world saw the school bus full (or army) of expensive consultants arrive and camp out at your company.NetSuite told us about ERP consultants who basically don’t travel and can work, often, on multiple rollouts at once. That reduced cost gets passed onto the customer. It also allows the cloud companies to be so much more productive and attract workers who may not like to travel much.
It’s about the Suite
Critical to NetSuite is the suite. Commerce today is an extremely complex issue: multi-channel-selling direct, through channels; or having your channel sell through other channels; Omni — mobile, web, catalogue, and all that jazz; fulfillment through your warehouse, third parties, resellers, and agents. You have to do it all. So the underpinning of the architecture is to make all that work seamlessly.
In addition, no ERP company can provide all the functionality required by each and every company. That is a race no one wins. Thus even SAP has become a component seller and firms such as Epicor and Infor have focused a great deal on their middleware and services layers.
Although the middleware and integration of NetSuite to partners may be a bit light, the partners themselves represent a rich and positive suite from which NetSuite customers may choose. One size does not fit all, so, for example, users can use NetSuite Demand Planner or grow into Valogix for midmarket or JustEnough for a larger enterprise. For EDI the path is similar with EDI for small to mid-size enterprises; DiCentral, SPS Commerce for midmarket; or larger, more complex B2B that includes workflow, with Liaison.
Some of the solution providers in the Suite World have lite (SMB) and larger enterprise offerings so they span across all-sized companies. Descartes System, in transportation, is such as example where a small shipper can begin to manage complex transportation or large enterprises can manage their global operations.
Order complexity — from configuration to pricing — is a constant issue for all-sized companies, so the presence of Configure One and Experlogix representing this sector is important to many in the NetSuite community. These modern configurators have a very simple (trust me, simple, like I can figure this out simple) rule-based approach that allows companies to set up pretty complex configuration and pricing methods. These types of systems have come a long way since the configurators of the last decade and can be used by midmarket companies.
Services are becoming a growing revenue component of NetSuite. They have their solution plus an interesting partner network (discussed below).
Serving the Service Providers
One of NetSuite’s core areas is Services. Their message was that, to them, service is product and people.
Professional Services has been primarily served by the OpenAir product they acquired in 2008. Since then, NetSuite’s platforms have been used to manage over a million projects with over $10B of project revenue and 19 million timesheets entered. OpenAir is a separate platform from NetSuite. At SuiteWorld, Zach announced their next generation Service Requirements Planning (SRP) which is a part of the NetSuite platform. (However, they will continue to support OpenAir as a separate product.) The new SRP includes Project Accounting, Project Management, Resource Management, Time & Expense Management, Billing, Analytics, and Client Management functionality. It targets segments within the services industry such as advertising, law firms, management consulting, healthcare, hardware manufacturers with service offerings, softwarecompanies — essentially anyone that bills their people’s time.
Merging services requirements planning onto the NetSuite Platform will allow the functions of service, such as project management, to be used in other industries; and manufacturing and field service customers to then leverage the Time/Expense and Billing (of people) in the services functions.
Intuitive Project Management
We got a demo of various capabilities of the solution including the the management dashboard through the mobile workforce/work assignment, worker expense reporting from the mobile device, and other elements that demonstrate integration and productivity enhancements for the organization.
They also role-played “Andre,” the consultant, on the road using the iPhone app to track time and expense. The app had a work timer and a list of tasks for time tracking, as well as an expense tracking system for taking pictures of receipts, assigning to each project and category, etc. It looked like a well-designed interface. This new SRP capability, included within NetSuite, should be especially useful for companies that sell both products and services. These days, that includes an increasingly large portion of all product manufacturers and wholesale distributors.
The World of Field Service
To fulfill the product service area, NetSuite has partnered2 with several field service and transportation software providers who can deliver various levels of capabilities — from lite to advanced — to meet the diverse and growing needs of the NetSuite customer base. Several company examples rise to the level of discussion for this article.
ClickSoftware has a version for NetSuite customers called Direct to Consumer which leverages the NetSuite CRM database to manage customer information and contracts. They manage the service call from initial customer contact through work order creation, resource scheduling, dispatch.
FieldAware is an up and coming Field Service solution that has been on an amazing growth path, leveraging the latest architectural capabilities such as mobile, location aware, modern UI, and of course leveraging the back-end ERP. (See image below.)
From scheduling and dispatch through invoicing, FieldAware has gone global with their direct and partner sales.
In this limited space we can only mention that one of the many interesting aspects of FieldAware is the pricing model for service companies. Rather than using the outmoded license approach, FieldAware pricing meets the customer where they are. For example, if you have a seasonal business (a fleet of snow removal vehicles, or construction) why would you pay all year for software you are not using? There is more to this model worthy of a future discussion in our Field Service report that will come out later this year.
Observations —
At a conference of this size it is hard to capture all you learn (and we missed so much with so many tracks). However, NetSuite customers were in abundance telling their stories of why they chose NetSuite and the implementation journey they experienced. One thing was clear from so many — that cloud enterprise is critical to their future. Many customers felt that if they had not mastered this new market reality, five to ten years from now the game would have been over for them. This was especially emphasized by wholesalers and retailers. Though NetSuite did not have everything (who does), these customers wanted to begin their transformation now with a solution provider who was wholly committed to cloud — not just one of the product lines, where all the investments went into the cloud. There just aren’t many of those around, in spite of all the buzz about cloud. Thus NetSuite probably stands among the few.
Customers tell it best, so we will include some NetSuite customer stories in an upcoming issue.
________________________
1 You can see more partners at this developer/partner page:
Built for NetSuite Partner Solution: http://www.netsuite.com/portal/developers/bfn/partners.shtml — Return to article text above
2 This surely competes against Epicor’s Profit21 and the B2B Seller compatibilities there. — Return to article text above
To view other articles from this issue of the brief, click here.