NetSuite is always keen to remind us that switching out the ‘beating heart’ of your company, the ERP system, is never going to be an easy decision for a company to make. That’s particularly true if the system has been being used for over a decade, is highly customised and is on-premise.
However, developer and manufacturer of commercial video and audio products tvONE has had a very different experience. It has placed the replacement of its “antiquated” on-premise ERP system for cloud-based NetSuite in its top-five business priorities going forward, claiming it is just as important as developing new features for its products and selling to customers.
This give you an idea of how constraining a terrible ERP implementation can be, especially when operating within a multi-team, global environment.
I got the chance to sit down with David Van Horn, CFO at tvONE this week at SuiteWorld in San Jose, where he told me about the angst the company has experienced with its current, creaking system. He said:
We are a multi-company, multi-national organisation. We have operations in Ohio, we have operations in England, but we also have a salesforce in China, we have a salesforce in Argentina, we have multiple salesforces across the US. So we have a broad footprint.
Our current ERP system that we have, it’s very constrictive. It’s server based, so it’s very, very hard for people to get on to that at a time that is convenient to them. Speed-wise, because it’s located in England, if you’re in the States it just crawls and is really bad.
The software was originally installed in 2005, it has only been upgraded once in 12 years and doesn’t allow us to do what we needed it to do anymore. We are a manufacturer of products as well, so it didn’t have any kind of MRP, it didn’t give us any demand planning, it didn’t give us any of the tools we need now versus twelve years ago.
So for us to grow and expand we needed the ability to make decisions on the fly, from multiple sources of information. The current system gave us none of that.
An easy decision
tvONE began the selection process for a new system back in November, where it came up with a list of around 10 different companies, which got narrowed down to five, and then down to two - based on the competencies and features of each of them. NetSuite and one of its competitors.
Both companies were brought into the tvONE offices for a full day demo. But based on the information, the strength of the support team behind the product and the ability to grow, expand and continue to add features and capabilities as and when needed, tvONE selected NetSuite.
Van Horn said that for him, it was important that the final product was a cloud-based solution. He said:
My number one option was that we needed it to be cloud-based. The other vendor that reached the final two was premise based, but gave you the option of bursting out to Amazon. We saw that as an additional cost, additional support needs, it didn’t fit exactly what we wanted.
I wanted that true cloud-based, same speed no matter where you are in the world, the ability to log in from any device, that flexibility of making sure that if we needed information we could get it anytime. The upgrades was another issue we had. The other software we were looking at, if we did a yearly upgrade, we were down for a week. We lose productivity for that week just to do that upgrade.
NetSuite you leave on Friday, you come back on the Monday and it’s done. And everyone is running the same software, everywhere.
Van Horn said that it was “absolutely not” a difficult decision to make, with regard to needing to switch out the company’s ERP - or beating heart. He said that the current system was “so antiquated” and that for years people working with it had had to develop workarounds and were actually doubling their workload in Excel.
He added that it was not a tool to help them, but constrained them within their job.
They’re willing to take the short term pain for the long-term gain. They’re seeing their job as so difficult right now.
Putting this system in is one of the top five goals of the company. I’m one of the owners of the company, we sat down and said that this is number three or four on that goal list, of the entire company. So it’s a very high priority. It’s just as important as talking to the customer, or getting a product done, it’s going to create as much value and save as much money.
The decision to go with NetSuite was also based on the fact that NetSuite has all of these apps, and all of these partners, that instead of waiting for NetSuite to come around with a configuration tool, there is someone else that can do it. They can create it and integrate it with NetSuite. Right now we are doing that all through mindshare - we are looking to double our sales volume in five years and after another five years double it again. So for us to go from a $20 million company to an $80 million, we can’t have people with just the knowledge in their heads.
tvONE made the final decision to go with NetSuite back in February and it hopes to go live at the end of
August. At the moment the company is going through and looking at all of its processes to establish the best way of doing things, so as to avoid the workarounds that have been used in the past.
Van Horn is particularly pleased that NetSuite doesn’t require a vanilla implementation and that the platform lets his team work in customisations that are necessary to tvONE. He said:
What NetSuite allows us to do, is that we can change our process not to fit the software, but we can take the software and fit our new process. So we are not constrained by the software. We can look at the best way to do a process, find the best way to eliminate the waste in the whole stream, then we can build the software in to do it how we want it to be done.
But this also won’t affect upgrades (as was made difficult with the on-premise system). Van Horn said:
Whatever you do inside the guts of the system, NetSuite is smart enough to not let it affect the upgrade path. If you want to make a customisation, you don’t have to remember what you did and then replicate it again in the next version, it just moves along.
However, tvONE’s main challenge at the moment is getting staff to recognise the importance of getting this right first time round, so that the system can grow with the company and that the data is fit for purpose.
The biggest challenge right now is going to be getting people to understand the importance. I think everyone understands the importance of needing the new system, but our current data is in such disrepair and in a scattered state, it’s going through and cleaning that data and moving it over so that we don’t bring all that [mess] in. It’s getting people to understand that they need to spend as much time on this task, of cleaning the data, as their real job.
And what about the return on investment? As CFO, Van Horn said that “cost is always his number one concern”, but that NetSuite will more than pay for itself given what it will free the company up to do. He said:
When we looked at the total cost and looked at it as a return on investment, just in our inventory alone, the cost to return is dramatic. We are going to pay for this system just in reduced inventory, immediately. Additional savings in productivity are just going to be gravy and take us going forward. NetSuite isn’t a bargain, compared to some of the off-the-shelf systems we could have purchased, but we looked at this as a long term solution [to support us] as we grow.