NetSuite buys IQity for manufacturing data smarts

SUMMARY:

NetSuite’s acquisition of its ecosystem partner IQity strengthens its hand in the cloud manufacturing ERP market with shop floor data integration, analytics

NetSuite IQity screenshotNot for the first time, cloud ERP vendor NetSuite has dug into its partner network and scooped up functionality to round out its core offering. Last week’s acquisition of IQity (pronounced I-Q-ity, to rhyme with acuity) brings data integration, analytics and performance management capabilities designed for the manufacturing industry, an important market for NetSuite.

IQity’s main product is an analytics platform that aggregates real-time data from across a manufacturing business, crucially including data from the shop floor. Nowadays this would be called an Internet of Things play — if it were not for the fact that much of the machinery installed in factories knows nothing of the Internet. Machine-to-machine (M2M) communication has been a fixture on manufacturing plant floors for several decades, and IQity specializes in collecting that data in real-time and matching it up with the data held in business systems such as ERP, production planning, and even spreadsheets.

IQity’s software provides both analytics for performance management purposes as well as real-time monitoring of operational metrics. Founded in 2007 and based in Pittsburgh, Pennsylvania, the company originally developed its cloud-based product to work with all brands of ERP software, not just NetSuite.

Shop floor integration

The founding team at IQity have extensive experience as consultants working with manufacturing systems. From the start they focused on building secure, reliable integration to shop floor equipment and manufacturing systems. The product also includes support for mobile devices, both for data collection, using RFID or barcode scanning, and for shop floor use of the application for administration, monitoring and analytics.

According to NetSuite’s press release announcing the acquisition, the move extends its reach into batch process manufacturing — typical in industries such as food, beverage, chemical, pharmaceutical and biotechnology — in addition to discrete manufacturing, where products are assembled from components, and where NetSuite has already built up some strength.

IQity is one of a select ecosystem of vendors who have chosen to build a product natively on the SuiteCloud application platform, NetSuite’s equivalent of the Salesforce App Cloud platform. It shares 40 customers with NetSuite.

Last year at its SuiteWorld conference, NetSuite named IQity its Partner of the Year while IQity’s product was named SuiteApp of the Year, making this a high-profile acquisition from within the NetSuite ecosystem. It’s not the first time the vendor has mined its own ecosystem for needed functionality. In 2013, NetSuite acquired point-of-sale specialist and long-term partner Retail Anywhere to round out its re-architected e-commerce offering, which also grew out of an earlier acquisition.

My take

This is a highly significant acquisition for NetSuite and one that marks a substantial ramping-up of its assault on the manufacturing ERP market, which has already been a strategic target.

Two aspects are particularly important. The first is the addition of highly specialized integration capabilities that will enable NetSuite to offer a comprehensive data aggregation and analytics capability to manufacturers. With the emergence of the Industrial Internet, that’s a very useful asset.

In buzzword terms, it’s certainly a big data play, but it’s no common-or-garden Internet of Things play. The special expertise required to collect data from industrial shopfloor equipment and safely export it into a cloud data store is a different order of magnitude from the typical IoT proposition.

This is a capability that few cloud ERP vendors currently offer. Only Plex Systems has built up the necessary assets and as a result of this acquisition, it should now expect to come up against NetSuite more frequently in the market — but the larger opportunity for both vendors is among manufacturers that are currently struggling with older, less flexible systems, or who are just starting out and have no systems at all.

The second aspect is the capabilities IQity brings to better serve the batch process market. People often lump the manufacturing sector together as a single market, but in truth it’s made up of a number of distinct verticals. Most cloud ERP vendors have gone after the discrete manufacturing sector not only because this has the largest number of small and midmarket businesses, but also because its needs are less specialized than those of the process industries. Being able to offer a proposition tailored to this market opens up new opportunities where there are fewer competitors, especially in the cloud.

Overall then, this looks to be a very astute move by NetSuite that will considerably strengthen its standing as a cloud ERP vendor to the manufacturing sector.

Image credit - Screengrab from IQity product video.

Disclosure - At time of writing, NetSuite, Plex Systems and Salesforce are diginomica premier partners.