The fast, comprehensive SuiteWorld 17 recap

Let’s compare NetSuite of a year ago with the NetSuite at SuiteWorld 17 last week. Last year, NetSuite was competing with a variety of cloud accounting and ERP solutions from firms like Intacct, FinancialForce and more. NetSuite was a firm continuing to expand beyond its core North America base and was adding data centers and functionality to do so.

In some cases, NetSuite was expanding beyond its two-tier ERP strategy and moving upmarket into enterprise class firms. Long a proponent of e-tailing and omni-channel commerce, the company was continuing to enhance those solutions. And, we even heard them describe material upgrades to their Revenue Recognition functionality. That was a year ago.

Since then, NetSuite was acquired by Oracle – a company whose CTO, Larry Ellison, has been a major investor and guide to NetSuite’s founder and former Oracle employee Evan Goldberg. Larry, it’s been said, even sold an old Bentley of his to NetSuite’s former CEO Zach Nelson. To say these two companies and executive teams were well acquainted with each other would be an understatement.

At SuiteWorld 17, we heard from both Oracle and NetSuite executives. In typical Oracle fashion, we were given the unambiguous Oracle messaging:

• NetSuite’s product line is a multi-tenant, cloud solution that will serve mid-market software buyers. This is key as Oracle believes multi-tenant cloud ERP is the future.
• Moreover, Oracle has a massive data center infrastructure globally that will help speed the deployment of NetSuite solutions to new customers everywhere.
• Oracle also has a massive sales force in far more countries than NetSuite. This sales force will help NetSuite deeply penetrate more markets than ever and do so far faster than most smaller competitors could dream.

Let’s examine some of this more closely.

As to growth:

• Listening to top Oracle and NetSuite executives, they believe the current ERP market shift is one of those once in a couple of decade opportunities to capture lots of market share fast. While much of the verbiage used to describe this shift was of the “to move companies off of old, expensive, non-scalable on-premises software to newer cloud solutions” dialogue, the reality is actually more nuanced.

There is a sea change underway as customers do want a scalable, subscription-based, multi-tenant solution as its value proposition is superior to many of the predecessor products. However, what customers also want are solutions that run on super-cheap utility computing infrastructures (e.g., Amazon AWS) and are built on powerful, open platforms.

Of course, Oracle is also touting its IaaS and PaaS solutions, too, but Oracle really said little about these at SuiteWorld. Why? I suspect this is because NetSuite already has a PaaS called NS-BOS and they will need a bit of time to rationalize the NetSuite and Oracle computing data centers, security protocols, country locales, etc. Regardless, Oracle/NetSuite will be bringing a lot more to the table than just application software.

Oracle competitors should be concerned – especially SAP and Infor. Management isn’t focused on smaller competitors with limited geographic coverage. NetSuite/Oracle executives are clearly looking to empty the customer rolls of its biggest competitors while these competitors figure out their IaaS, PaaS, IoT, digital, multi-tenant application software and other strategies.

How SAP positions itself and explains its strategy in a couple of weeks at its annual Sapphire confab should be interesting. Hint to SAP: Saying words like “HANA” and “Simple” won’t be sufficient.

• Growing NetSuite fast won’t be without its own challenges – Oracle apparently has opened up its checkbook to NetSuite and many NetSuite executives expressed pleasure with larger budgets. But, if NetSuite is to hire more people in 2017 “than we had in total for 2012”, then they will need to work hard to find, on-board and make productive this quantity (and needed quality) of new hires.

• Growth will trigger changes in the partner ecosystem – Any generalist partners NetSuite had have got to get a deep specialization now to remain relevant

Beyond growth, one also should look at what becomes of NetSuite’s application software partners. I learned:

• NetSuite announced a new HCM offering that appears to conflict with an older relationship – Ultimate Software and NetSuite have had a long and mutually beneficial relationship selling to the mid-market. But this show had a lot of fanfare focused on NetSuite’s new SuitePeople HCM solution. SuitePeople was principally developed by the folks NetSuite got with the TribeHR acquisition. The solution is not being sold standalone and is, according to multiple NetSuite executives, tightly integrated in many aspects/functions of the broader NetSuite solution suite. That said, some NetSuite executives described how NetSuite would use its sales people and possibly Oracle sales professionals to push SuitePeople in new deals. For some larger or more complex customers, they may even propose the use of Oracle’s Taleo software. Other executives took the view that the SuitePeople solution wasn’t going to be appropriate for all businesses and that NetSuite would continue to work with other HCM solutions. These executives are clearly focused in doing whatever it takes to get any net-new prospect into becoming a NetSuite customer.

For now, I believe a co-existence détente will be the new norm. Longer-term, this could change as SuitePeople functionality matures. SuitePeople is targeted for firms with 1300 or fewer employee equivalents. Some verticals and pay complexities (e.g., shift work) are not supported today – that’s understandable given the newness of the solution. 

(Note: SuitePeople Payroll is for U.S. firms. NetSuite has a relationship with Celergo for non-US payroll processing. Interestingly, Ultimate also partners with Celergo for non-North American payroll processing.)

• NetSuite announced a new CPM offering that appears to conflict with an older relationship-
  Corporate Performance Management (CPM) or Enterprise Performance Management (EPM) is a space that includes budgeting, planning, forecasting and analytic capabilities. Many of these tools also possess support for complex financial consolidation, too. Adaptive Insights has had a long-term relationship with NetSuite that even included the incorporation of Adaptive’s solution as a tab in the NetSuite software. Post-merger, I and others wondered whether this relationship would continue especially since Oracle has its own CPM solution: As with HCM, I suspect the relationships will continue for now and individual sales teams will pitch either NetSuite’s or a partner’s solution based on the preferences or guidance that prospects provide. Longer-term, I remember what Geoffrey Moore once told me: all alliances eventually lead to either the wedding chapel (a merger) or the divorce court. Time will tell.

As to platforms, NetSuite isn’t changing anything with NS-BOS for now. I specifically asked this of Evan and he assured me nothing is changing. I’m inclined to believe this especially given the historical relationship and shared tech usage between NetSuite and Oracle. NetSuite has been a long time user of Oracle’s RDBMS, for example.

NetSuite is going to utilize Oracle’s data visualization technology in its solutions though. If I heard right, that won’t cost users extra.

Infrastructure of Oracle’s will definitely get utilized as Oracle’s data centers and high-performance cloud utility computing infrastructure is likely form factors larger than NetSuite’s.

NetSuite was talking up its SuiteSuccess approach to implementations. SuiteSuccess is a bundling of KPIs, dashboards, micro-vertical industry knowledge, implementation capabilities and more to speed up the implementation and, hopefully, the success of new installations/instantiations of NetSuite. Twelve  micro-verticals in eight industries are already available for customers.

NetSuite announced an enhanced Billing module: SuiteBilling. This module was announced last year and is now being deployed at select customers. This module is especially well suited for as-a-service or subscription economy firms. Interestingly, this module and the enhanced Revenue Management functionality were designed to work together. This is especially helpful for firms worried about how they’ll meet new revenue recognition standards. Those standards go into effect for public companies starting January 2018.

NetSuite’s international functionality will get a major upgrade post-acquisition. NetSuite can now leverage everything Oracle’s other application groups (e.g., PeopleSoft, EBS, JDEdwards, etc.) have learned in creating global application software solutions.

This rapid rounding out of international capabilities also involves help from Oracle partners in the Accounting, integrator, information (e.g., tax rate data) and other disciplines.  What does this mean? It means that NetSuite will rapidly accelerate from being a vendor with lots of North American customers and some deals in specific countries to a vendor with a major global presence. This should perturb many of the old NetSuite competitors materially.

My take

This was more than a transition show for NetSuite. The company, many times lightheartedly, sought to allay concerns any customers or prospects would have re: the future of the company, its people or its products. They did that very well. In short, they demonstrated that:

• Products, R&D, globalization and other aspects of NetSuite are going to get exceptionally large amounts of capital. The product line will morph, competitively and functionality, in ways that will vex older competitors (and some big ones, too!). Investment in the product line is continuing.
• New products were rolled out (e.g., CPM and SuitePeople) proving that the product line is continuing to be relevant and getting attention. This solution set will not go away.
• Most of the NetSuite management team is still there. No wholesale changes in leadership as continuity reigns.
• Oracle brings lots of international expertise, cloud infrastructure, sales capability and global expansion capability to the party. Growth will be a priority for the foreseeable future.
• SAP and Infor will now be key NetSuite competitive targets. NetSuite’s days of competing heavily in a limited number of specific geographies are ending as it becomes more of a global threat. The competitive landscape has changed.

Some things still remain open:

• Will NetSuite develop migration strategies/solutions to help customers of older on-premises Oracle products move to the multi-tenant, cloud-based NetSuite solutions?
• When will the payroll component of the new SuitePeople solution expand beyond the U.S./North America boundary?

Growth and market share acquisition will be the order of the day for the foreseeable future. This should be an interesting journey.