The new, new NetSuite - it's all about your growth at SuiteConnect

Den Howlett Profile picture for user gonzodaddy October 18, 2018
The NetSuite of today is focused on customers' success and growth for customers. This is a smart strategy which the company demonstrated by bringing on enthusiastic customers.

Jim McGeever - EVP Oracle NetSuite

It is a few years since I covered NetSuite in any depth so the opportunity to catch up with the company's leadership while at SuiteConnect was an opportunity I didn't want to miss.

First some history and context. NetSuite was and is the only midmarket SaaS ERP vendor that covers a variety of vertical markets in any meaningful way across a good chunk of required functionality. However, getting there has not been easy. Now 20 years old, NetSuite has had its fair share of lumps and bumps.

The lumps and bumps

When Zach Nelson took the CEO reins in 2002, NetSuite was barely functional as a finance related product. By the time the company IPO'd in 2007, there was a lot more to the company's offering but it still had its share of growing pains. The same year as the IPO, I penned the first of NetSuite Nightmares, detailing how some customers were struggling. A few months later and in 2008, I penned NightSuite Nightmare Part Deux. By that stage, I was seeing a steady stream of unhappy customers and fellow analysts were finding it hard to get NetSuite onto shortlists. It's fair to say that in the period 2008-12, my relationship with NetSuite was 'difficult' since I wasn't prepared to be snowed by marketing when seeing customers struggling.

In fairness, Nelson and his team had a lot of backfilling to do while attempting to both rationalize their go-to-market and grow. It was tough work but along the way, they did some very interesting things. I well remember for example a deep dive conversation I had with Jim McGeever, then COO talking about revrec for subscription businesses. The idea was sound but as McGeever (now de facto CEO Oracle Netsuite but with the EVP title) acknowledged, that didn't go as well as they would have liked but has since been rectified.

Oracle acquires

Things have changed in the intervening years. To nobody's surprise, NetSuite was acquired by Oracle just shy of two years ago by which stage the company had reached a revenue run rate of $1 billion - a handy number for Oracle to add as cloud revenue at a time when it too was trying to make waves in the cloud ERP world but at the higher end of the market.

Nelson gave way to McGeever but important elements of the original team are still there including Evan Goldberg, the original coder, and co-founder, along with Craig Sullivan, now Group Vice President, Product Management at NetSuite and, of course, McGeever, employee number 15 when he joined NetSuite. Nicky Tozer heads NetSuite's EMEA operation having joined the company in 2012 following a five-year stint at Oracle. While we are not big on profiling personalities, this is important because continuity matters at software businesses. There's an old saying in the software business: 'When the founders leave, the business flounders' and while that's not universally true, the history and depth of experience folk like McGeever et al bring to the table has been vital to NetSuite's continued growth.

Growth and success

So where are we up to today? McGeever's keynote focused on two themes, growth and success. Over the last two years, NetSuite has developed a series of programs designed to support SMB growth while ensuring that customers are successful. According to McGeever, customers who opt to take OneWorld and SuiteCommerce are way more successful in growth terms than those who take bare ERP. See below:

netsuite oneworld

This is impressive but why is this happening and how is it supported?

Part of the answer comes from NetSuite's partner expansion. During a media Q&A there was much probing around the partner channel as a route to growth but also for support. My interest is in how NetSuite demonstrates customer support. Here, McGeever talked in broad terms about vertical market expansion while also fleshing out functionality.

In a side conversation, Sullivan told me that NetSuite is actively partnering with ISVs to backfill in white spaces and develop entirely new modules. This is very good news. In the past, many customers had to rely on NetSuite to develop scripts which were often flaky and the cause of much angst among customers. That's not a sustainable model and often leads to reinventing the proverbial wheel - an expensive and time-consuming exercise. Pushing that responsibility back to the channel makes more sense since those organizations often have the first line relationship with the customer. They have to make stuff work.

NetSuite is now therefore at the early stages of compiling a catalog of partner solutions. That should obviate the need for re-invention while ensuring that applications don't wither and die but have exposure to the global markets NetSuite now serves through access to Oracle Cloud Infrastructure. This is very much in line with the Salesforce model.

That's not to say that NetSuite won't deliver customer-specific functionality. Said McGeever:

There is a NetSuite for Google. Google creates numerous companies around the world; they're doing it all the time. They need localization but they also want a common software model that can be almost instantly deployed. We can do that and so it makes sense for us and them to have this arrangement.

If that sounds familiar then you might have read me say much the same thing about SAP and Business ByDesign where SAP ECC customers with numerous subsidiaries will mandate ByDesign for those subs.

On growing with customers, NetSuite has adopted what the company describes as a 'stairway' approach. This means that customers can both consume and expand their NetSuite deployments at a pace that works for them rather than dumping everything over the proverbial IT wall and leaving them to get on with it. It also means taking a templated approach in a live demo system.

Customers can gain access to a demo system and then when they're ready to implement, they get that exact same system. Yes, there will be tweaks but we're finding that most customers can go live with the templates very quickly - 90 days is not uncommon,

said McGeever.

According to the company, the stairway method is working for 95% of net new customers with 70% of customers on the stairway. Importantly, these represent 53 editions across 10 industries.(See image left and above.)

Implementation advances

As a proof point, NetSuite brought Georges-Henri Mongereau, VP Solar Service & Digitalization Schneider Electric on stage to discuss their implementation methodology. Schneider Electric has implemented a peer-to-peer approach which allows new units to learn from peers who have been through a NetSuite implementation and can answer (mosT) questions while allaying fears around business transformation impact. This, in turn, allows Schneider Electric to operate a globally managed model.

In a later conversation, I discussed a similar model with Nick Dugdale, Head of Finance, Compassion in World Farming International of which I have more to say in a following article. Speaking of non-profits, NetSuite used the event to showcase its 'giving' chops, something with which we are concerned. Again, I have more to say about this in a following article. Suffice to say that NetSuite's track record in this regard is getting better by the year and a testament to co-founder Goldberg's interest and commitment to making the world a better place.

Later I asked McGeever to expand on this given the emphasis on growth as a shared experience. My question was based on conversations where boards are mandating back to management that they need to grow but then the question comes - how do we grow when we also need to change to a more service-centric approach to business? McGeever was coy on that, saying that their professional services were not really in that business.

Sullivan pointed me to Growwire, where customers share their success stories. He posited that customers could go to Growwire for both inspiration and examples of how others have progressed.


What about development? NetSuite made few specific roadmap commitments although as an ex-CFO McGeever is clearly proud of the work the ocmpany has done in delivering easily used dahsboards and reporting tools. More broadly, it is obvious Oracle has been really smart in its handling of NetSuite.

According to McGeever, Oracle has given McGeever the equivalent of a blank cheque to develop as it sees fit - with the proviso that growth expectations are met. Interstingly, he revealed that Goldberg wants to keep the pace of development limited because he believes that once you pass a certain spend threshold, you lose control of what is bringing value.

My interest was in learning where NetSuite is developing and where it is leaning on Oracle. I was thinking about some of the more advanced machine learning capabilities on offer. McGeever answered in the following way:

Anything we want that Oracle has is available to us for free. As you know, some of this stuff is really hard and I don't see any point in delivering hard things to our customers - they won't use it and it doesn't match how we want customers to consume our products. So we leave that hard work to Oracle and then when we think we can make it easily available then that's what we do.

My take

NetSuite is maturing well as the de facto mid-market cloud ERP solution of choice. The fact it is free to expand and build partner capabilities, has a firm customer success program in place, is focusing customers on less customization as it fleshes out the solution offering while also expanding its vertical market footprint are all solid points in its favor.

But then I want to know what customers really feel and was given the opportunity to both hear them on stage - always welcome even when 'directed' by the company - but also in the free-flowing conversations I had later in the day. In those conversations, it is clear that in the time since I last had a deep dive with the company much has been accomplished and customers are seeing clear value from their investments.

The NetSuite of today is much softer in approach to the one I experienced in the past with a clear focus on removing friction from the implementation cycle. The one nit I have is the manner in which it prices. It's not a topic on which I spent any time this time around but the company reiterated its per-user licensing model. We don't believe that makes sense across all domains.

Oracle's largely hands-off approach is working well. While there are no Chinese walls, the two businesses are largely separated and that means NetSuite customers are handled in a manner that's appropriate to mid-market customers.

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