At a time when all the old-guard enterprise software giants are struggling to reinvent themselves for the new digital era, you'd think a brash young cloud-native vendor like NetSuite would be sitting pretty. Going into its annual SuiteWorld conference last week, new research from Forrester showed cloud ERP adoption surging forward. For NetSuite, this brave new world should be its oyster.
Yet the world is changing so fast that even NetSuite is hard pressed to keep pace. As CEO Zach Nelson pointed out to me when he met with the diginomica team during the week, the vendor has now been around long enough to have had legacy code of its own to deal with: "We were one of those systems designed 15 years ago."
NetSuite is now nearing the end of a multi-year project to refactor that code — a project that Nelson last year admitted ought to have been started earlier. One of the most telling charts presented in any of the five hours of executive keynotes during the week came in founder and CTO Evan Goldberg's technology presentation. He showed the head count NetSuite employs in R&D. What's striking is how much this has rocketed in recent years from a surprisingly low base previously. As Nelson put it:
"While we are continuing to be profitable, the only [expense] that's going up in a meaningful way in relation to revenue is R&D."
All that investment is now starting to bear fruit. Goldberg's keynote was a smorgasbord of promised features and functions that NetSuite customers can look forward to over the coming eighteen months. The reaction from delegates — measured in terms of both applause during the keynote and in individual conversations with attendees on the show floor and elsewhere — was overwhelmingly positive. These are needed advances that add much to the suite.
NetSuite CEO talks omni-channel challenge, CRM re-imagination and servicesCloud ERP player NetSuite is holding its annual conference in San Jose this week, where thousands of…May 13 2014diginomica.com
But with so much still in development, this year's SuiteWorld had a wait-and-see feel to it. All of the blockbuster announcements had their punches pulled: the coming-later-this-year UI because it's still not baked yet; the revamped services resource planning (SRP) offering because it serves an emerging need few understand; the custom GL because you have to be a finance wonk to get excited about what it enables.
All of this is compounded by a sense that NetSuite's USP — its unique selling point — addresses a pain point that many companies do not yet feel sorely enough. As Nelson launched into his keynote on the opening day, nearly an hour late due to an electrical fault, he set the tone:
"The bigger idea we have to share today is the idea that your company is no longer a distinct silo in what it is."
Citing trends such as omnichannel and the convergence of products with services, Nelson reiterated that NetSuite's USP is that its suite is a unified business system running on a single data store:
"Most companies have fragmented their data. What NetSuite has built is a system that enables them to put Humpty Dumpty back together again, bring your data back together."
Nelson's "bigger idea" is that this unified system is a necessary foundation for all of the increasingly joined-up things that a modern enterprise has to do — delivering services alongside products, through an omnichannel go-to-market strategy, with a variety of billing choices — while tracking its global performance in real-time.
Integration of everything
As an example of this more joined-up way of doing business, Nelson advances the proposition that, "more and more the machine is the CRM system. I think it's the next generation of CRM." What this means is that it's not merely the sales reps and service agents that handle the relationship with the customer, but the entire automated enterprise:
"It's the cloud being your sales rep. When it's machine-to-machine, it's machine as customer. 'I'm a toothbrush and I need more bristles' — it's the machine acting as a surrogate for me. I'm empowering my device to do things for me."
This scenario plays to NetSuite's integration of everything from omnichannel commerce to invoicing and financials, across both products and services. With digital commerce adding more variety in billing choices, such as subscription, pay-as-you-go and in-process purchases, NetSuite's integration of both front- and back-office processes opens up new opportunities to shine, he believes:
"The bigger change for NetSuite boils down to, you get into some very complex back office processes. What used to be very simple for a company — you shipped a product and sent out a bill — they've now got multiple methods of invoicing this, how they collect — and how the government wants you to account for this is completely different."
"That's the problem to solve — the 'game over' ... The fact that people keep all their data in NetSuite makes it a lot easier for us to solve those problems."
That's as may be, but the vast majority of enterprises aren't yet facing those problems (or at least can get by without solving them just yet). NetSuite does particularly well among a coterie of early digital adopters — Nelson's keynote highlighted successes with software companies, online distributors, retailers and online publishers (he later told us diginomica is now a prospect!). These are businesses that already thrive on their versatile mastery of the digital medium.
But to sustain its 34-percent-a-year growth as it pushes through the half-billion-dollar-a-year mark, NetSuite must reach a broader constituency of more mainstream businesses. While its ability to solve potential problems of the future may reassure its prospective customers, what they really want is a reliable, cost-effective business platform that satisfies their core needs for financials, order processing and ecommerce, with competitive functionality in areas such as analytics and mobile.
The ongoing makeover is designed to improve NetSuite's ability to satisfy those needs. Other cloud-native SaaS vendors are under similar pressures — Workday refactored its underlying infrastructure in the run-up to introducing a new UI earlier this year, while Salesforce launched its mobile-friendly Salesforce1 platform last September.
So this is not unique to NetSuite — but its refresh is arriving later in the day than these others. At the same time, the vendor continues to extend its core ERP functionality to address new verticals in search of extra growth. That puts a lot of pressure on those R&D resources.
There were a wide range of new developments highlighted at SuiteWorld:
- The new HTML5 user interface, which will be rolled out in NetSuite's 2014.2 release during Q3 this year. The fruit of a three-year development program, it brings a crisper look, progressive disclosure of functionality, a tablet-friendly responsive dashboard and many other enhancements, some of which will follow in future releases. Customers will get a first look in a series of webinars next month followed by a six-week preview period before the UI comes into effect. Those who have modified the application by writing to the existing HTML will have to refactor those customizations. NetSuite executives seemed confident the changeover will go smoothly but financial controllers are not renowned for their tolerance for change. Although the changes are needed, it may be a tense six weeks.
- The extension of the SuiteCommerce platform, announced last year, into the B2B sphere with the launch of the new B2B Customer Center.
- An all-new release of the NetSuite SRP (Service Resource Planning) application. This adds many of the features previously only available in the separate Open Air product, including project accounting, project management, resource management, and time and expense management. Nelson emphasized the importance of having this functionality running on NetSuite's core codebase.
- SuiteGL, which allows enterprises to add customizations to the NetSuite general ledger that will carry over during twice-yearly updates without the need for recoding. NetSuite's upcoming 2014.2 release will include a configurable SuiteScript plug-in to add custom GL impact lines to transactions such as invoices or vendor bills, as an alternative to manual journal entries. This is seen as useful for global enterprises where the GL impact of a transaction may differ from one country to another, and for non-profit and government sectors that use concepts such as fund accounting. Later releases in 2015 will include the ability to add custom transaction types and custom GL segments.
- An updated SuiteScript with much faster data access and consolidation performance. Other performance enhancements include a big uplift for limiters on search and report operations, faster web services operations and faster refresh times for sandbox testing. Meanwhile, the SuiteApp Development Framework enables more team collaboration on development projects.
- A new release of its native iOS application and a first Android version planned for early next year, with platform-specific functionality. A mobile app was also announced for TribeHR, its recently acquired HCM solution.
- A promise of more built-in business intelligence functionality in future versions. In the meantime, NetSuite customers can opt to embed a free 'Express' version of partner Birst's BI functionality.
- A commitment to introduce three sets of APIs for tax, payments and shipping, to simplify integration with the hundreds of third party providers of these services around the world.
- NetSuite likes to align itself with future trends such as omnichannel and product-as-a-service, but this represents a small percentage of its total market.
- Most of NetSuite's customers just want a reliable business system that stays up-to-date without any fuss. The UI refresh is designed to do exactly that.
- The pace of technology change is forcing even cloud-native SaaS vendors like NetSuite to thoroughly refactor their software to keep up. The UI is just the visible tip of the iceberg — much more is happening under the surface.
- The prospect of customizing the general ledger or harnessing a tax API may leave most of us cold, but for NetSuite's core customer base, these are the SuiteWorld announcements that mattered most.
Disclosure: Salesforce.com and Workday are diginomica premier partners. NetSuite paid travel and expenses for diginomica writers to attend SuiteWorld.