NetSuite

NetSuite Takes Omni-Channel Commerce to the Great Outdoors

What do camping gear, nutrition bars, portable ultraviolet water purification systems and surfboards have in common?

  1. All are consumer products, consumed by outdoor enthusiasts
  2. All are sold by national retailers like REI, Bass Pro Shops and Eastern Mountain sports
  3. All are also sold online
  4. All are manufactured by companies that once ran QuickBooks but today use NetSuite to manage their businesses

These companies were among 33 exhibitors at the Outdoor Retailer Summer Market 2013 show in Salt Lake City, Utah that run NetSuite cloud-based solutions. NetSuite of course capitalized on this event to highlight its recent wins in the outdoor industry. Featured prominently in NetSuite’s press release was the concept of omni-channel commerce. Omni-channel is all the rage amongst retailers, but if you don’t follow retail closely, you might be asking, “what’s that?” In short, omni-channel retailing “is a seamless approach to the consumer experience through all available shopping channels.” And what are these different channels? Stores you visit in person, catalogues you get in the mail, 800 numbers you call after seeing an advertisement on television, websites you visit from your computer or your mobile device.

Have you ever bought something online and wanted to expedite delivery by picking it up at a nearby store? Or maybe when it arrived it didn’t fit and you wanted to save the shipping cost and just bring it back to the store? How about when you go to the store to make a purchase and the item is out of stock? Maybe you’d like it shipped directly to you from a regional warehouse or directly from the manufacturer. As a consumer, these all sound like logical alternatives and perhaps you get annoyed when you can’t “mix and match” your channels. If you can’t, then it is probably because manufacturing, distribution and each of those retail outlets are all running separate systems that don’t (or can’t) “talk” to each other.

So if you think omni-channel commerce is just a retail issue, think again. It also impacts wholesale distribution and even manufacturing. While many struggle with this even today, others have made the leap to fully integrated solutions that support the omni-channel experience.

NEMO Equipment, for example, is a designer of innovative tents, sleeping bags and pads and other camping gear. Its products are sold both online through its own custom-built web storefront, as well as through about 300 retailers including REI and Eastern Mountain Sports in North America, and internationally in Europe and Asia. Up until recently (January 2013) it was trying to piece all this together with QuickBooks, but today uses NetSuite for financials, inventory and order management, CRM and PCI-compliant credit-card processing. Consolidated inventory management allows NEMO to also compartmentalize inventory, virtually segmenting direct-to-consumer, B2B and US military sales channels while cutting pick, pack and ship time in half.

Liberty Bottleworks is another example. The company prides itself in making the only metal bottle on the market that is entirely made in America. Therefore it can’t rely on off-shoring or other low-cost country means of reducing costs. It relies instead on operational efficiencies to create a strong bottom line. It uses NetSuite financials, manufacturing, inventory, order management, CRM and eCommerce, with a direct-to-consumer website powered by NetSuite SuiteCommerce to manage its business end-to-end while also expanding its retail network to about 1,400 including REI, Whole Foods and L.L. Bean. But its omni-channel commerce has a bit of a unique twist.

In addition to its B2C online sale of standard metal bottles and its distribution through regular retail outlets, Liberty Bottleworks also offers custom bottles. Want your logo and company name on a bottle? No problem. Liberty Bottleworks can do that for you. In fact it does just that for corporate customers like Coca-Cola, the Seattle Seahawks and even NetSuite itself. While the company expected this to be about 10% of sales, this part of the business has recently exploded, which has added a level of complexity that would be unmanageable without an integrated solution to support it. NetSuite supports Liberty Bottleworks in managing up to one million components (who would have thought?), including recycled materials.

These are just a couple examples of companies manufacturing consumer products that face a level of complexity added to a business that once might have been relatively simple. As consumers expect and demand more choice, merchants, distributors and manufacturers require an added level of seamless integration that is impossible to achieve with spreadsheets and desktop-bound solutions.  In order to manage the relationships between consumers, retailers, distributors and manufacturers, you need seamless integration of financials, ERP, CRM and eCommerce. Yes, it’s a tall order, but consumers demand it. And with the right solutions, the opportunity for companies like Liberty Bottleworks and NEMO Equipment is as big as the great outdoors.

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Oracle, NetSuite, And Deloitte Partner To Deliver Integrated HCM And ERP Cloud Services

Last week NetSuite, in conjunction with Oracle and Deloitte, announced a partnership to deliver integrated human capital management (HCM) and enterprise resource planning (ERP) cloud services for the mid-market. Each of the three companies will throw something into the pot: NetSuite brings ERP, Oracle contributes HCM and of course both will be delivered via the cloud as software as a service (SaaS).  Deloitte plans to work with the two companies to develop a practice with “highly skilled practitioners specializing in tools and implementation services to help customers adopt the soon to be integrated SaaS technologies faster and more seamlessly.” The “soon to be” qualifier implies a future deliverable, so Oracle and NetSuite will also have to work together on this integration.

The partnership between Oracle and NetSuite is not new, but until now was pretty much limited to the technology stack. However, as far back as June 26, 2001, Oracle announced its “small business suite”, which was in fact NetSuite. But applications from NetSuite and Oracle never came together in any kind of substantive way. After all, in some ways NetSuite’s solution competes against Oracle’s Business Suite, as well as the ERP solutions acquired along with JD Edwards.

But NetSuite never really built out HCM functionality, choosing instead to partner. In fact, it already has several HCM partners, but they tend to have different solutions for different parts of the world. One of the biggest challenges for HCM solutions has always been the different regulations around the world, both in terms of payroll and other compliance requirements. Laws in the United States are very different from those in Europe, and even from one country in Europe to the next – and on and on around the world. Most HCM solutions start out as country-specific and never make it into the big leagues to compete on an international basis. But Oracle’s HCM solution can.

There are also quite a few different sub-segments within HCM ranging from the traditional human resource information system (HRIS) to talent management (including recruiting) to benefits and compensation, etc. It is more common to find individual point solutions for each segment than to find a full, comprehensive suite covering all of them. Hence the market is quite fragmented. Oracle is one of the few solutions that has the breadth of functionality and also serves a global market. It not only acquired expertise early in the game from its acquisition of Peoplesoft, but also more recently acquired Taleo for talent management.

The Taleo product, which is also SaaS only (like NetSuite) fits right in. But because this is a “cloud only” solution, global HR will have to come from Oracle Fusion, not the Oracle Business Suite. Fusion is still a work in progress.

The nature of the relationship between NetSuite and Oracle could best be categorized as a “referral” agreement. Oracle doesn’t sell NetSuite products and NetSuite doesn’t sell Oracle products. However Oracle has a dedicated HCM team, which will engage with the NetSuite sales team to jointly sell into NetSuite customers. This makes sense because a NetSuite ERP customer is more likely to buy Oracle HCM. That’s not to say an existing Taleo customer might not be interested in NetSuite, but I am sure the Oracle sales team would prefer to sell them an Oracle ERP. An Oracle HR customer running Oracle Business Suite or JD Edwards is less likely to buy NetSuite. Even if they were willing to consider this, the Oracle sales team isn’t going to bring the NetSuite team in for a possible replacement.

While referral arrangements are quite easy to create, there is one inherent weakness. They are also easy to walk away from. As mentioned above, right now Oracle Fusion is a work in progress. When it is a complete ERP, will Oracle still be as interested in partnering with NetSuite? Probably. NetSuite has an installed based of over 14,000 customers, so it is quite a large field of opportunity.

But what about the role of Deloitte? According to Jim Moffatt, CEO of Deloitte Consulting LLP, “Mid-sized companies are looking for solutions that allow them to be nimble and respond quickly to market opportunities. This newly integrated solution will help these organizations deliver better service at a lower cost, ultimately giving them an edge in the war for talent and a true competitive edge.”

I agree that mid-size companies are primed and ready for low-cost solutions. HCM functions have historically been under-served by enterprise applications and therefore there is a great deal of pent-up demand, particularly in the mid-market. I’m just not sure mid-size companies are ready to pay the price of a consulting firm like Deloitte. I suspect many mid-size companies will prefer the “do it yourself” approach, whether they are capable or not. Those that recognize their own weaknesses might turn to consultants, but the mind-set of a mid-size company expects a consultant to get in quickly and out just as quickly. Consultants such as Deloitte tend to like long engagements. We’ll have to wait and see how many times they get invited to the party and how long they stay.

All told though, this seems like a smart move for NetSuite. Its footprint expands without a huge development effort. Processes and functions managed by HCM solutions are quite easily integrated into ERP since they are not too deeply embedded in transactional activity. That is, unless time and attendance transactions are collected through workforce management in HCM. Even in this case, the integration is quite clean and simple. The HCM solutions market has been heating up, and this means the NetSuite team, in conjunction with its Oracle counterpart can provide a more complete and competitive solution.

Oracle also benefits from that wide open market of NetSuite customers, which get a more complete, integrated solution. As to Deloitte… we’ll see.

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NetSuite and Autodesk Partner for Complete End-to-End Product Life Cycle Management

Earlier this week NetSuite announced its latest strategic partnership with Autodesk to provide seamless integration between its ERP solution for manufacturing and Autodesk PLM 360. As NetSuite dives deeper into manufacturing, it is a logical move since the link between design engineering and manufacturing is a necessary one, although often a contentious one.

While MRP and its successor ERP have been regarded as necessary tools for manufacturing for decades, the truth is, early MRP and ERP solutions didn’t support the needs of the engineers very well. That set the stage for engineers to go off and do their own thing, often and very successfully avoiding any connection to other applications. If there was a connection, it was arm’s length. Engineers sent paper drawings and electronic bills of material (BOMs) over to manufacturing where they tended to take on a life of their own.

That might work well enough from a pure product design point of view. Yet in reality there is much more to a product life cycle than just design and manufacture… as well there should be. For example:

  • Do you co-develop with customers or partners?
  • Does marketing coordinate and collaborate with engineering on new product introductions?
  • What about the list of suppliers of raw materials and/or components?
  • What about the cost and impact of engineering change orders?
  • Do changes made in manufacturing ever make their way back to the engineering design?
  • Do you service and repair your products?
  • Does customer feedback influence product innovation and design?
  • How about feedback from service technicians or sales?

Of course it will take some discipline on the part of the NetSuite/Autodesk customers, but tight integration between ERP and PLM will remove many of the reasons engineers have struck out on their own to purchase and implement solutions. With this integration, product concept, design and engineering data are developed in Autodesk. Once released, bills of material (BOMs) are fed to ERP.  Engineering can also suggest vendors from which to source component parts. But these need to be approved by purchasing within the ERP and confirmed back to PLM with a handshake.

Engineering change orders (ECOs) can also be managed with the same level of automation and control and gives the engineers added visibility to the impact on cost and profitability as well as capacity.

But probably more important in terms of change control is the bi-directional aspect of the integration. How often does manufacturing feel the need to tweak a design for manufacturing? Do those “tweaks” ever get communicated back to engineering?  If not, the next change order from the engineers could be a nightmare. Integration ensures that changes are properly documented, propagated and managed in both PLM and downstream manufacturing.

The bi-directional integration can also have an impact on both quality and innovation. Without that closed loop from manufacturing back to engineering, there is an increased the risk the engineers can operate from an ivory tower. Quality issues are hidden without feedback from manufacturing operations and including suppliers in this feedback loop makes it that much more effective.

But NetSuite is also proposing the seamless integration will enable a cycle of innovation. In many industries, most notably in (but not limited to) consumer electronics, the expected life spans of products are shrinking. It’s not enough just to close the loop between manufacturing and engineering. It is equally important to capture feedback from customers and partners to understand customer acceptance. NetSuite is positioned to capture that feedback from CRM, service and PSA modules.

This is strictly a marketing agreement. NetSuite and Autodesk do not sell each other’s products. They will however work together on a deal. Expect them to work cooperatively and collaboratively.

And of course, it wouldn’t be an announcement from NetSuite without a reference to cloud. This partnership is unique in that both solutions were born in the cloud, designed specifically to be multi-tenant solutions deployed as Software as a Service (SaaS). So while it might be stretching it to say this was a marriage made in heaven, at least it is up there in the clouds.

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NetSuite Acquires OrderMotion: Bringing Omni-Channel Products and Expertise

Earlier this week NetSuite announced its latest acquisition: OrderMotion, Inc., a provider of cloud-based Direct-to-Consumer (D2C) order management solutions. The acquired company is located in Burlington, MA. NetSuite’s go-to-market strategy is to take a suite-based approach, providing an end-to-end solution, which addresses the full quote-to-cash life cycle. The customer order is at the very core of this process and therefore the SaaS ERP company has always carefully guarded any function that touches the order. No alliances or marketing partners here. When it comes to customer orders, NetSuite wants to own the functionality.  In this regard, an acquisition makes perfect sense. But given OrderMotion is not embedded in the suite and NetSuite already fancies itself as having an industry-leading order management system, what value does it hope to gain from this addition?

NetSuite is buying OrderMotion for its expertise as well as its products. OrderMotion’s products are typically sold stand-alone and that will continue. The target is not current NetSuite customers. So this is more a market share play than it is one that goes after an increased share of the customer’s wallet. NetSuite intends to continue selling the OrderMotion product but it also hopes to apply some very specific expertise to further strengthen its own current order management capabilities. The OrderMotion engineering team will continue to innovate the acquired product but NetSuite also hopes to have them contribute to the order management modules of its ERP suite.

NetSuite already has a strong order management solution with capabilities that include distributed order management, fulfillment from multiple locations and return merchandise authorization (RMA) as well as strong back-office integration with billing and cash collection. It provides standard integration to major carriers like United Parcel Service (UPS), Federal Expres (FedEx) and the United States Postal Service (USPS). It can deal with multiple currencies and multiple sales and use tax structures. OrderMotion will add more depth of functionality in orders “direct” from the consumer and trends in the industry towards omni-channel commerce.

Omni-channel refers to the ability to use different channels simultaneously. Consumers might purchase online, but pick up, or return merchandise at a physical store. Retailers may use retail stores as distribution hubs. As consumers make online purchases, it may be advantageous to ship from a store location where the item may be overstocked, thereby drawing down surplus inventory. Or the choice of ship from location may be made to minimize cost and lead-time. Combining all these options requires a level of expertise and feature functionality not typically included in your traditional ERP software suite.

This is definitely an issue for retailers today. But more and more manufacturers and distributors find themselves also selling direct now, so it is just a matter of time before they need to deal with omni-channel supply chain issues as well.

In continuing to sell OrderMotion stand-alone, I would expect the acquisition to be accretive. But behind the scenes I would also expect to see the OrderMotion team lending a hand to further extend distributed order management and omni-channel supply chain capabilities in NetSuite’s ERP suite. Both solutions have a strong technical architecture that supports multi-tenant SaaS, so business models are consistent. But they are different architectures. While I don’t expect them to be sharing code, I would expect them to share designs.

NetSuite ERP will benefit from the expertise of a team dedicated exclusively to order management, one that has specific omni-channel expertise. OrderMotion engineers should also benefit from having to blend this functionality into an integrated suite, something they have only done at arm’s length previously.

Overall NetSuite winds up with a new product and a better way to attack the retail market that is already forced to deal with this omni-channel phenomenon. And it has the opportunity to further strengthen its existing product as the omni-channel commerce begins to invade the world of manufacturing and distribution.

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NetSuite 2013 for Manufacturing: At an Evolutionary Crossroad

NetSuite is taking an important step in its evolution. Founded in 1998, with an exclusively SaaS-based offering, it has long been a contender in the ERP market for service providers and distributors. In its early days it primarily served small companies, but as SaaS became more well-accepted and as its solution footprint broadened and deepened, the average customer has grown in size. But compared to some other ERP solution providers, those that evolved from the world of more traditional MRP, it is a relative newcomer to manufacturing. Can NetSuite “catch up” or even pull ahead in the game?

When NetSuite began its foray into manufacturing, it started out by describing its target market as “light manufacturing.” To those steeped in manufacturing tradition, this implied a simplistic assembly process. But over time, NetSuite refined its target to be “contract manufacturing,” defined as “you design, others manufacture.” As more and more actual manufacturing became outsourced and moved off-shore, this class of manufacturers became more common. Many manufacturers turned to low-cost country sourcing for not only components and subassemblies, but for the entire manufacturing process.

This transition removed some of the complexities that first MRP and then ERP needed to contend with. Manufacturing can be a delicate and complicated juggling act: having the right amount of inventory (enough but not too much) at the right time, effectively utilizing labor and machine resources while scheduling potentially long and complex processes. If a contract manufacturer didn’t actually manage the production, much of the complexity of managing this delicate balance is removed, eliminating the need for some of the feature functions at the very core of traditional MRP solutions. However, the trade-off was to introduce more supply chain complexity as multiple companies, often with conflicting goals, needed to effectively interoperate to optimize the process from raw materials to finished product.

The need for this elevated level of interoperability is something I have been writing about since before NetSuite was even in business. Back in the mid-90’s I talked about the concept of virtually vertical manufacturing (VVM): Multiple companies working cooperatively and collaboratively to produce and distribute a product as if it were a single, vertically integrated enterprise. But back in the 90’s the concept of virtual integration was still ahead of its time. The Internet was still relatively “new.” While folks could appreciate collaboration, interoperability between companies still required more traditional buy/sell instruments like purchase orders, sales orders, shipment notices and payments. Paper documents were being replaced by electronic documents, but very, very slowly and often at an arm’s length.

Today the need for technology-enabled integrated business networks is something that any progressive manufacturer understands. But many are still running older legacy solutions without the technological infrastructure to support this level of interoperability. Hence they are not well equipped to participate effectively.

This puts NetSuite at an interesting juncture. As many manufacturers are re-evaluating their previous outsourcing and off-shoring decisions, NetSuite in its latest release is now adding functionality that older manufacturing solutions have supported for decades: features like effectivity dates on bills of materials, component where-used visibility, detailed operational routings and capacity requirements planning. But those older solutions were developed on legacy architectures that limit the solutions’ ability to support the level of interoperability, collaboration and coordination required today… interoperability that is built into NetSuite. So while many of those solutions are busy “modernizing” for secure web-based access and adding functionality such as integration with CRM and sales forecasts, building web-based store-fronts, those features are already supported through NetSuite’s native core.

Meanwhile NetSuite is playing “catch-up,” adding these as fully integrated, technology-enabled features and has the potential of leap-frogging the established solutions. At the same time NetSuite, is extending the Suite, adding many complementary capabilities such as payment gateways, support for electronic tax preparation and electronic filing in eight new countries, and adding even more features for collaboration and visibility that many today refer to as “social.” And it is continuing to develop the underlying platform and development environment, which helps it grow its ecosystem. It is through this ecosystem that it is able to extend the footprint of its solution much faster than if it were to rely exclusively on its own development efforts… think manufacturing execution systems (MES), quality, product lifecycle management (PLM) and asset maintenance.

This is an opportune time for NetSuite to be at this crossroad, not only in order to expand its addressable market, but also because we are seeing new dynamics in terms of globalization. While for several decades we have seen manufacturing moving off-shore, with the instability of oil prices, currency fluctuations, and the rising cost of transportation, rising costs in previously low-cost source countries and continued concern over quality and compliance from emerging markets, we are now seeing an increasing trend back to near-shoring or even on-shoring. This could easily cause those contract manufacturers to bring some of that manufacturing complexity back in house. If so, they will require more of these traditional features. But it is unlikely their supply chains and global operations will be simplified.

This puts NetSuite in a competitive position because it is far easier to build new features and functions on a technology-enabled infrastructure than to try to modernize outdated technology. In answer to our initial question, it is looking more and more likely NetSuite can indeed catch up and maybe even pull ahead of those “mature” solutions for manufacturing.

 

 

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Mint Jutras Launches Annual ERP Survey

Participate to Receive Research Results on ERP Status and Performance

We have recently launched a comprehensive survey to support our annual Enterprise Resource Planning (ERP) Solution Study. As of this morning we have collected 337 responses, but we intend to get that number up to about 1000 over the next few weeks. The study investigates goals and challenges, preferences and trends of ERP. If you are using ERP today or contemplating a purchase, please participate in our survey to help us benchmark performance of the average implementation today, as well as World Class implementations. We will share the results to help you determine if you are getting the most value out of your investment.

Many believe the ERP market to be saturated today, but Mint Jutras puts adoption rate somewhere between 60% and 80%, depending on the industry and size of company. Based on preliminary survey results we expect buying activity to increase for both new and replacement purchases. And we’re also seeing some interesting trends in ERP selection priority. While fit and function have topped the list for years, early respondents ranked it #4 after ease of use, the flexibility to adapt to changing business needs and integration technology and capabilities.

Here at Mint Jutras we feel there is too much focus today on ERP failures. Yes ERP is a significant undertaking and not without risk, but those who do it right realize even more significant benefits, measured as cost savings and performance improvements. ERP has become a necessary infrastructure for doing business today. In order to achieve a competitive advantage you need to be taking full advantage of a broad range of features and functions, supported by enabling technology. Don’t put your head in the sand and ignore the possibilities available through web-enablement, cloud deployments and mobile devices. Don’t allow yourself to be buried by ‘big data’.

All knowledgeable participants are welcome to take the survey.

ERP solution providers interested in survey results contact Lisa Lincoln (lisa@mintjutras.com).

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NetSuite eCommerce: To Suite or Not to Suite: That is the question

Earlier in the year at SuiteWorld 2012, NetSuite announced “Commerce as a Service” (CaaS), the latest in the growing number of “as a Service” acronyms. At the very core of this new offering is NetSuite SuiteCommerce, which combines an eCommerce platform with a customer experience management system that is uniform regardless of customer touchpoint. Unlike bolt-on eCommerce systems, the integration with back office fulfillment, billing and support services is seamless and transparent, because all are built and designed as an integrated suite. Yet even though built and delivered as a fully integrated suite, the eCommerce capabilities can also stand on their own merit. NetSuite customers have the choice of implementing a full end-to-end solution, or just the pieces they need.

When is a Suite not a Suite?

eCommerce is not new for NetSuite. With its roots buried deeply in the cloud, it has always been about delivering Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and eCommerce as a single platform. While developed as an integrated end-to-end solution, the suite can be implemented all at once or modularly and incrementally. NetSuite reports that 98% of its 12,000 customers take the full suite approach (although many implement in a modular fashion) while only 2% go the route of what it calls CRM+. The “+” refers to order management capabilities added to traditional CRM.

NetSuite views the customer order as the heart and soul of a business. While it provides an application development platform and encourages its channel partners to develop incremental solutions around its data model, NetSuite takes ownership of any piece of the suite that directly manages the customer order.

From ERP to Commerce Engine

So how does Commerce as a Service impact this suite approach? NetSuite’s Commerce as a Service essentially transforms its business management application into a commerce-aware platform that can flexibly, yet uniformly manage the interaction with any and all customers regardless of channel, whether through traditional transactions, a website, a smart phone, social media site or in a store. NetSuite’s business management application essentially combines ERP with CRM, therefore addressing and integrating both front office and back office needs. Yet commerce is the engine that drives business, and customer orders provide the fuel that powers the engine. Hence NetSuite’s insistence on “owning” the part of the application that directly manages customer interaction and orders.

While many industry observers today talk about moving from transactional systems of record to systems of engagement, “from” and “to” is the wrong way of looking at this. You need both. You need to manage and maintain all the transactions that power your business, and at the same time you need to better manage interaction (engagement) with your customer. This used to be relatively simple because business-to-business (B2B) was managed through business documents (often paper-based) reflected as purchase orders and sales orders while business-to-consumer (B2C) transactions happened in stores.

Over the past two decades, this rather simplistic approach slowly evolved to the diversity we see today. Along the way came first generation eCommerce solutions that were largely bolted on to existing business management applications. After all, the customers and products were already stored in these enterprise applications, along with the transactions that formed the system of record of the business. So either these bolt-on applications needed to be integrated into the existing business applications, or (just as likely) they stood apart with their own customer and product masters. Integration, if it existed at all, was usually characterized as an arm’s length interface.  This interface was often manual and resulted in redundancy of data. NetSuite took a different and rather unique approach in building eCommerce right into the business management system.

Taking a suite approach to design and development to address these new modes of commerce insures that both front and back offices are in sync and are not introducing a new layer of data redundancy, requiring off-line synchronization. Taking a modular approach to installation and implementation allows customers to implement new features as needs evolve.

What’s new in the Platform?

The platform consists of three new technologies:

  • SuiteCommerce Experience: the underlying tool that allows NetSuite to deliver rich user interfaces quickly regardless of touchpoint (website, smart phone, social media site, etc.)
  • SuiteCommerce Services: these new services expose NetSuite’s back-end commerce functionality and data as services to the SuiteCommerce Experience and any other commerce front-end application. For the businessperson, this enables customers to apply business logic across multiple touch points. For example, promotions (and also credit limits) can be managed across on-line, telephone and in-store transactions. Think about a customer that orders product across a variety of different channels. Does the system recognize the same customer and apply logic universally?
  • NetSuite Commerce Platform: The commerce platform provides all the business processing capabilities including order management, inventory management and payment processing, as well as personalized promotions, merchandising, account management and support. This combines traditional business processes (transactions) with built-in sales and marketing tools (engagement).

Key Takeaways

NetSuite views commerce, and therefore the customer orders, as the very lifeblood of a business. As a result it closely guards the development of applications that directly manage those customer orders. But it also recognizes the diversity of sources of customer orders. Long gone are the days when only traditional paper-based purchase orders were converted to sales orders and long gone are the days when consumer purchases were only transacted in a physical store. The world of commerce today is much more diverse.

And yet the key to handling this diversity is in simplifying both the customer experience as well as the back end business processes. Instead of merging different pieces together in the hope they will one day all fit together, it has taken the approach of designing an integrated end-to-end process that recognizes diversity but introduces a level of uniformity.

Recognizing that many companies can’t handle a big-bang approach to changing their business and some are intimidated by the breadth and scope of an end-to-end ERP solution, NetSuite is toning down its “suite message.” However it continues to develop an end-to-end integrated solution that supports both front office and back office enterprise activity, along with the commerce that fuels the business. Whether you implement all of it or pieces, all at once or in modular stages, NetSuite has taken on the challenge of making sure it all works together seamlessly.

 

To read more please visit:

https://forms.netsuite.com/app/site/crm/externalleadpage.nl?compid=NLCORP&formid=2425&h=f4ab4d3ed91a39e870ee  (registration required)

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How are you paying for ERP? Here’s how others are.

Back in May I posted some commentary and a warning not to confuse how you buy ERP with how you deploy it. There is much written today about deployment options in general and cloud computing in particular. Although how you pay for ERP is different from the way it is deployed, the two are definitely intertwined because you will either be paying for software or you will be paying for a service or both. This service is not to be confused with the consulting and implementation services you may contract for. This is either software as a service (SaaS) or hosting services, which may also be combined with Application Managed Services (AMS), where the company hosting the software also manages the applications and perhaps even the business processes the software is used to model (e.g. Accounts Payable or Accounts Receivable). But how are companies generally paying for ERP these days?

Just to recap:

Enterprise application software is typically not bought and sold; it is instead licensed for use. It may be licensed to be used by a company, on a particular computer or by other criteria such as number of users. This is similar to consumer software. Buying it once doesn’t mean you can duplicate it and share it with all your friends, or even sometimes use it on all your own computers. For enterprise application software how you pay for that license and the term of the license can vary tremendously.

A software license can be perpetual. Early findings from our Mint Jutras 2011 ERP survey indicate that 76% of responding companies have perpetual licenses. That means you pay for it once and can use the enterprise application forever. Maybe. This used to be the case, but more and more often today a perpetual license agreement might have a stipulation that you have the right to use that software only for as long as you continue to pay maintenance to the software vendor that provides the product. In fact, if you are buying ERP today, expect this requirement to pay a recurring maintenance fee in order to continue to use the software. In our survey 62% of those with perpetual licenses have this requirement.

A maintenance agreement, which is a recurring cost, typically provides both technical support and certain innovations. Some of those innovations will be included in your maintenance fee and others may still need to be purchased. Maintenance is typically priced as a percentage of the software license and the going rate at list price today is around 22% for ERP. While anecdotal evidence tells us that most companies actually pay less than this (closer to 16%-18%) this is largely due to specially negotiated rates and older rates that have not necessarily escalated at the same pace of increased list prices. But if you are purchasing a new ERP solution, expect this to be the starting point for negotiation.

But perpetual licenses are not the only type offered. Instead your license might be for a specific period of time.  This is generally referred to as a “term” license. At the end of the term, you must either renew the license or discontinue use of the software. In fact the application might have the equivalent of a kill switch in it that will disable it and prevent you from continuing to use it at the end of the term.  This type of license is less common and in fact only 7% of our survey respondents indicated this was how they paid for their ERP. Effectively managing this type of license requires some license management code to be embedded in the solution and this was not always done, particularly in older legacy software. If it was not, and you don’t renew, you are in breach of contract and you might find some software auditors on your doorstep.

Subscription-based pricing is another alternative, particularly for those who are looking to expense their investment as an operating expense rather than a capital expense. About 15% of survey respondents pay by subscription. You might pay a nominal startup fee, but you avoid the big front-loaded expense of a software license. Unless this is coupled with a SaaS deployment, this does not necessarily address the up-front cost or the on-going expense of the hardware. Only 28% of the subscriptions paid by our survey respondents were SaaS-based.  Running in a hosted environment where the supporting hardware costs are embedded in the subscription fees may indeed address these capital costs and allow you to account for payment completely as an operating expense.

The findings noted come from the 2011 Mint Jutras ERP Solution study. Look for more data to be shared in the upcoming weeks. If you are in any way involved in the selection, management, maintenance or use of ERP in your company, please participate in our survey. By doing so, you will receive the full executive summary and also have access for inquiry to Mint Jutras for a 6 month period. Your contact info is entirely optional but we will need your email address to deliver your report and an access code for inquiry. Mint Jutras makes it a policy to never share contact info under any circumstances.

To participate click here: 2011 Mint Jutras ERP Solution Study Survey.

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NetSuite ERP+CRM+Demand Planning=Better Inventory Management

Earlier this week NetSuite announced a new module for its cloud-based business management suite. Targeting wholesalers, manufacturers, retailers, and distributors NetSuite Demand Planning enables companies to forecast demand, create a supply plan and manage inventory in order to minimize stocking levels yet effectively and efficiently meet customer demand. NetSuite Enterprise Resource Planning (ERP) provides a solid foundation for inventory management. The new module extends the functionality with statistical forecasting based on historical usage, recognizing seasonal trends and suggesting optimal order points. But the module doesn’t stop there. Drawing on its strong heritage in sales force automation (SFA) and customer relationship management (CRM), NetSuite also takes into consideration sales data, pipeline and forecast.

Right now, this is an either-or proposition. You either let historical demand drive the demand plan (which then drives the supply plan), or you look to the sales forecast. Different environments will dictate which is more appropriate. For a consumer product, perhaps commodity-driven business, history is probably provides the best guidance. But in launching a new product or in the case where demand is volatile, the current pipeline is a better indicator. Of course, being able to do both brings the best of both worlds. And NetSuite Demand Planning allows you to do either, but not both at the same time, for side-by-side comparisons. While these comparisons would be nice to have, in fact companies seldom operate this way. Even today NetSuite customers could occasionally run two separate scenarios and manually compare the results in order to determine which provides a more accurate prediction of future demand. After all, we all know the only thing for certain about a forecast is that it will be wrong. It is the degree of “wrong-ness” that you need to measure and manage.

Incorporating demand planning into the mix of enterprise applications is not unique today and it is not unheard of to have this functionality embedded in ERP. However, when it is an embedded module of ERP, it is not as likely to include the ability to use the sales forecast, since the sales pipeline is not typically something that ERP manages. Also this functionality is just as often provided through separate extensions to ERP. Therefore the fully integrated nature of NetSuite Demand Planning is a plus. The input can come from ERP transactions or SFA pipelines and forecasts (both native to NetSuite) and the output is automatically generated purchase orders and work orders.

NetSuite has taken a workflow approach to the process, including five steps:

  1. Calculate demand (based on inventory transactions or sales forecast)
  2. Review and edit the demand plan (manual adjustments can be made)
  3. Calculate Supply
  4. Review and edit the supply plan (manual adjustments can be made)
  5. Generate work orders and purchase orders (POs) to meet the demand

In creating the demand plan, users are able to select a single item or groups of items to create the demand plan for, and in doing so can choose Linear Regression, Moving Average, Seasonal Average, or Sales Forecast. So indeed, different items can be treated differently. The system also allows you to select how much history, and how much to project into the future. Similar options are available in creating the supply plan.

Overall, the benefits to NetSuite customers, and what might make this attractive to manufacturers, distributors and retailers evaluating the solution provider include:

  • Efficiency: the implementation of a Demand Planning solution can significantly reduce the amount of time spent planning inventories. Without such a solution, companies often resort to the ubiquitous spreadsheet. While familiar and easy to work with, even if data is directly exported from ERP or CRM/SFA, once it becomes embedded in a spreadsheet and starts to travel through the process, it tends to take on a life of its own. The further away from the source and the application which will eventually execute the supply plan, the more danger in it not reflecting reality. And remember the plan does need to eventually be reflected back in ERP in order to cut PO’s and release work orders.
  • A better plan: The goal is to reduce stocking levels while improving delivery. Often these two goals appear to be conflicting. But remember, increased inventory levels, may not indeed insure better performance. Having the right inventory at the right time, in the right place is the goal.

This module, while fully integrated, does need to be purchased separately. If you are a distributor, retailer, wholesaler or manufacturer currently running NetSuite and looking for a way to better manage inventory, improve efficiencies and increase on-time and complete shipments, NetSuite Demand Planning is certainly worth a look. For those prospects considering NetSuite, this module adds functionality, broadening the NetSuite footprint and should be part of the evaluation.

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NetSuite has arrived on the scene of ERP in Manufacturing

When I first “met” NetSuite about 5 years ago I have to admit I didn’t really consider it an ERP vendor. Of course that was back when I had a more narrow view of ERP and thought that if a vendor didn’t have MRP then it didn’t have ERP. I’ve since gotten over that and for several years now I have defined ERP as an integrated suite of modules that provide the transactional system of record for a business. Not every type of business needs MRP to form that basis. Of course most ERP solutions offer much more than that, so this is really my base line definition.
Back in 2006 I viewed CRM and eCommerce as NetSuite’s strengths even though it did provide a suite that extended beyond these modules.  But since then it has officially entered the realm of ERP in my book. Its Home page on its website (www.netsuite.com) labels it as “The #1 Cloud ERP / Financials Software Suite” and further describes its solution as “full-featured financials / accounting, CRM, inventory, and ecommerce software—all in a single system.” So in a way, it is still down-playing the ERP moniker in favour of “suite” and its historically strong suit: CRM and eCommerce, packaged with financials.
Also back in 2006, NetSuite did not target manufacturers. Without a true Bill of Material and MRP all it could address was some level of assembly or very light manufacturing. That has now changed, although not all as a result of organic development. Some of the manufacturing functionality NetSuite offers now comes from a partner, Rootstock. Rootstock Software is a certified NetSuite Solution Provider specializing in the manufacturing industry with heavy focus on the NetSuite Manufacturing Edition solution. While its website claims, “NetSuite Manufacturing Edition is the only cloud-based integrated business suite for manufacturing”, I think they are missing a few other players, with Plex Systems being at the top of that list. Plex has been offering a complete SaaS ERP solution for manufacturing for more than 10 years. Other more traditional ERP players (Epicor, Infor, QAD, SAP) also have cloud based offerings for manufacturers and even more have arrived on the scene with hosted cloud models.
But what I find very interesting is that some of NetSuite’s key customer successes were achieved without the use of Rootstock functionality.  I just listened in to a webcast sponsored by NetSuite and featuring 2 manufacturers using NetSuite and both purchases pre-date the partnership with Rootstock.
Schaeffer Oil prides itself on being “the oldest oil company you never heard of.” With 30,000 customers, it processes 90,000 orders a year using NetSuite and has achieved the following results:
·         Reduced its IT spend by $100,000 in the first 6 months
·         Reduced cycle time of order processing from 3 days to 1.5
·         Reduced backorders by 25%
·         Processed 25% more orders with 15% less staff
·         Improved communication and visibility
GLI Pool Products is a manufacturer and distributor of custom and specialty products for the swimming pool industry. It was founded in 2006 with the purchase of assets from a much larger Canadian company and in doing so inherited an ERP solution, but none of the influence over its continued development.  Ultimately they replaced that inherited solution with NetSuite. GLI has bucked the downward trend in construction related businesses and attribute much of their success to the use of NetSuite. They achieved lower material and operational costs while improving flexibility – a key consideration as they no longer wanted to live in “used-ta-land.” They could no longer be productive and profitable doing things the way they used to do things.
So while the addition of Rootstock functionality really just took effect in mid-2010, NetSuite has been quietly amassing quite a collection of manufacturers in its installed base for quite some time. This is particularly notable since NetSuite is not known for its “quiet” marketing tactics. With the addition of a couple of relatively new names to the NetSuite roster (Roman Bukary and Ranga Bodla) charged with promoting NetSuite in Manufacturing and Distribution, perhaps this will change.
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