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SuiteWorld 23 - who co-pilots the co-pilot?

Brian Sommer Profile picture for user brianssommer October 23, 2023
Summary:
The growth in NetSuite – functionally, technically, globally, etc – has been significant. Its recent user conference highlighted big advancements in AI utilization, planning/forecasting and consolidation, and leveraging the assets of its parent, Oracle.

netsuite

The NetSuite AI (Artificial Intelligence) solutions discussed at the recent Oracle SuiteWorld event were, unquestionably, numerous and a bit more nuanced than those of competitors. Yes, NetSuite is making some new generative AI applications like job description generation tools but it’s also doing several other things too.  It’s these other things that may be more important than a quick generative AI app, especially for the large number of SMB customers that NetSuite possesses.

For example, NetSuite has put a lot of effort into using AI to improve the employee experience with its software. In some situations, the software can recommend or prompt the user to the next process step based on the data entered, past similar transactions, etc. 

Likewise, NetSuite can also flag whether the data being entered is inconsistent with prior entries (eg, is the amount an outlier, that is, is the amount significantly higher or lower than the usual entries?).

Finally, the software can even suggest values to be input based on prior entries (eg, it might suggest an accounting entry based on the dozens of prior entries submitted for this vendor).

These AI-powered capabilities – promised for forthcoming releases – can not only improve the employee experience but may also:

  • Make users more productive
  • Help users work on more value-added tasks (eg, investigating anomalies, exceptions or variances)
  • Speed up processes
  • Reduce errors/re-work
  • Etc.

As an example of the productivity boost potential of its first generative AI powered feature, the company noted:

Adding to the existing AI capabilities in NetSuite, NetSuite Text Enhance will help customers further increase productivity by streamlining processes and automating the generation of context-sensitive content across every area of the suite. For example, in the sales process, when a prospect reaches out to an organization using NetSuite and expresses interest in a particular product or service, NetSuite Text Enhance can make it quick and easy for a user to produce a contextual email response by using a combination of ERP, CRM, and supply chain data. The email can be aligned to the organization’s current campaigns and include details such as the latest product description, product images, pricing information, availability, and delivery details.

NetSuite also offered up a number of other examples of this capability in many parts of a customer’s business. These included:

  • Finance and Accounting: NetSuite Text Enhance can help finance and accounting teams to expedite collections, close the books faster, and focus on more strategic and fulfilling work by accelerating time-consuming writing tasks. Examples of assisted authoring use cases include writing targeted and personalized collection letters and generating summaries and narratives for financial reports.
  • Supply Chain and Operations: NetSuite Text Enhance can help supply chain and operations teams streamline purchasing and logistics and improve the quality of product-related communications. Examples of assisted authoring use cases include generating procurement orders and request letters; developing personalized vendor engagement letters and emails to chase delayed purchase orders; developing customer updates on delivery schedules; and creating product descriptions that are used by sales, support, and implementation teams for invoices, website, and point-of-sale systems. 
  • Sales and Marketing: NetSuite Text Enhance can help accelerate marketing and sales tasks to create more effective campaigns that drive revenue. Examples of assisted authoring use cases include developing personalized email content for marketing campaigns and sales pitches; generating contextual responses to leads and prospects; and drafting written quotes and proposals.  
  • Human Resources: NetSuite Text Enhance can help employees, managers, and HR leaders increase the speed and accuracy of important HR activities. Examples of assisted authoring use cases include writing job descriptions and requisitions; drafting goals, including detailed descriptions and measures for success; creating content for peer-to-peer kudos; providing a summary of the employee’s performance based on feedback gathered across the year from the employee, peers, or managers, and goal progress and achievements.
  • Customer Support: NetSuite Text Enhance can help increase customer support agent productivity and improve the customer experience. Examples of assisted authoring use cases include generating responses to online customer comments, such as reviews and commentary in forums and on social media; creating escalation notices for internal teams; and customer support case updates for both internal teams and customers.”

Collectively, the above-mentioned AI capabilities possess a lot of potential upside for customers and very little downside. Part of that assessment is due to the fact that users are always in control of what they do and can choose whether or not to accept, data inputs, etc, that an AI tool is suggesting.

AI-assisted forecasting – where’s the co-pilot?

NetSuite is also using AI to assist users in forecasting and this may be where users need more help in learning how to be a good co-pilot for AI-enabled forecasting tools. The forecasting algorithms can identify hidden trends within historical data, project these into future time periods and highlight key inflection points for users. Advanced forecasting capabilities could be beneficial in projecting future sales, customer orders, annual business budgets, cash forecasts, timing of cash receipts from customers, cash requirements needed to pay suppliers, etc.

While these forecasting capabilities can be quite valuable, the technology behind the forecast may not be well understood by some users. A significant number of NetSuite customers are small businesses. They may lack the statistical, technical, data science and other skills to understand things such as bias in data sets. AI technologies are known to have potential issues. AI software can hallucinate (ie, generate absurd or illogical results). The software can amplify bias that is already present in the data it uses to create a forecast or suggest actions. And, small businesses may have another key challenge: they may not possess enough data to accurately train an AI model. In this situation, the data may be lacking because the company is small and has few transactions or the data itself is stored in a non-digital (ie, paper-based) manner.

To address the issue of limited training data for the AI tools, NetSuite is enlisting the help of its customers to share non-identifiable aggregated data to be used as benchmarks. NetSuite may also need to license or acquire third-party, external data sets for customer use. Those data sets (eg, weather forecasting information) might be very helpful to some customers, like retailers who need help in planning sales revenue and shift data that is heavily dependent on customers coming into stores. Should NetSuite acquire licenses to use this data on behalf of its customers, this could help the forecasting and uptake of these new AI-powered capabilities.

I asked several NetSuite customers if they had any data scientists on their staff. The answer universally was “no”. These customers might not have a large or meaningful IT staff either. In such an environment, the customer might see these AI forecasting capabilities as an opaque black box – something they can’t fully understand. In fact, a lack of customer skills in AI and AI-related disciplines (eg, integrating third party databases for use by the AI engine) could either slow adoption of these tools by NetSuite customers or expose them to potential risks that they will need to manage.

What kinds of risk? Suppose for example that a customer accepts the sales forecast recommended by the software but for whatever reason those sales do not materialize. Sure, sales numbers may not occur because the company lost a key salesperson or account but that may not stop a disaffected user from wanting to sue. They may believe that they were led to rely on something he or she didn’t fully understand. Similarly, the forecasting engine may hallucinate a result that is unrealistic. Who is responsible for these numbers: the vendor, the user or the software?

Large enterprises, because of their ability to acquire needed skills and at scale, may be able to mitigate much of this risk. But smaller firms may be far less capable of doing so. So, if NetSuite’s customers can’t fulfill the AI co-pilot role internally, they will need to get this provided to them by either NetSuite or one of its service partners. The alternative is for the customer not to use these advanced capabilities.

In other words, some of NetSuite’s customers cannot be an AI co-pilot for something they don’t fully understand. In that situation, NetSuite or another party must become the co-pilot and provide the controls, oversight and sanity checks needed for the company to achieve optimal results from these advanced technologies.

The risks here are real and they may not be limited to just smaller businesses. For example, I know of a college-educated individual who has relied on his Tesla’s co-pilot capability while he took a nap in his moving car. Of course, I abhor his decision because he abdicated his co-pilot responsibility without any regard for the mayhem that he might create for third parties who are also on the road. But I tell this anecdote so that we all realize that not everyone will be a good co-pilot. It’s not just enough to establish guardrails on the data that comes into AI enabled technologies. We must also insist that companies apply adequate guardrails of its users to ensure proper co-pilot behavior is occurring.

Enterprise Performance Management (EPM)

EPM is rarely a sexy topic but it addresses a number of activities that, if not automated, drive accounting personnel nuts. This software can dramatically reduce the time needed to close the books, automate the creation of journal entries (eg, accruals and reversals), facilitate financial statement preparation, aid in budgeting, consolidate business results across numerous legal entities and more.

Even smaller firms have issues in EPM areas as they may have multiple legal entities, conduct business in different currencies, have different calendars for accounting and payroll, etc. The more these EPM activities can be made automated, fast and error-free, the happier NetSuite customers will be.

NetSuite announced a new NetSuite EPM solution that is utilizing the guts of the Oracle Fusion Cloud EPM product. That product is a very strong and functionally robust solution of Oracle’s and bringing those capabilities to the NetSuite solution set should make many of NetSuite’s larger customers happy.

According to Oracle, the new module contains functionality for:

  • Planning and Budgeting: Automates labor-intensive planning and budgeting processes, so finance teams can quickly and easily budget and forecast, scenario plan, and report — all within one collaborative, scalable solution. New AI capabilities in NetSuite Planning and Budgeting further enhance data analysis to improve and accelerate decision-making by using predictive algorithms to continually monitor and analyze plans, forecasts, and variances. This allows them to uncover and highlight trends, anomalies, and correlations.
  • Account Reconciliation: Streamlines and automates the reconciliation process for accounts payable, accounts receivable, bank and credit card transactions, prepaid accounts, accruals and fixed asset accounts, intercompany transactions, and other balance sheet accounts. Launched in July 2023, it helps accounting teams increase the accuracy and speed of the entire close process by automating the complex and time-consuming tasks involved in aggregating financial data from various sources.  NetSuite Account Reconciliation helps standardize and automate any reconciliation process, strengthen internal financial controls, produce more accurate financial statements, and close the books faster.
  • Narrative Reporting: Helps contextualize financial data by aligning narrative writing with financial statements and data in a single report. With this new solution, finance teams can easily collaborate in a central space to define, author, review, and publish management and regulatory reports.
  • Profitability and Cost Management: Helps organizations gain a deeper understanding of which customers, products, and other segments of a business are performing profitably. With this new solution, finance leaders can make more informed decisions about where to take their business and allocate resources more effectively with a deeper understanding of profitability.
  • Corporate Tax Reporting: Helps automate tax reporting processes and enables organizations with multinational operations to efficiently comply with new OECD country by country reporting (CbCR) obligations. With this new range of workflow, task management, and transfer pricing capabilities, finance teams can improve the speed and accuracy of tax reporting.

There is another reason to notice this new module. Products like EPM (enterprise performance management), ERM (enterprise risk management) and ESG (environmental social and governance) may be coalescing into a single application solution. ESG reporting and EPM technology have incredible synergy opportunities. Both applications need the ability to integrate data from diverse systems, place it in a warehouse, perform some calculations on the data and then map the information to a variety of different formats, regulatory reports and dashboards. ESG also triggers a number of potential risks which a company must document, manage and mitigate. Given that NetSuite is utilizing such a robust product as Oracle Fusion Cloud EPM as the basis for its solution, could indicate strong ERM and ESG functionality may not be far off within this suite.

The big picture

For decades, the application software market has been trifurcated with vendors serving either enterprise, midmarket or small business companies. As a result, there wasn’t much crossover technology from one category of solutions to another. And even if the application software vendor had products in more than one space, they rarely were able to utilize much across market segments. The products may have had different technology platforms, they were written in different programming languages, they worked on different end-user devices, etc. Simply put, the opportunity for vendors to achieve synergies across their product lines was negligible. That was then.

That is not the case today.  Today’s NetSuite is able to utilize Oracle’s global reach, scale, capital and technology infrastructure. It takes advantage of Oracle’s OCI (Oracle Cloud Infrastructure). It is sharing AI capabilities and knowledge with Oracle and Oracle’s partner Cohere. NetSuite is using Oracle’s Autonomous Database technology and its Redwood UX technologies. Its software is running on Oracle’s hardware. All of this cooperation between NetSuite and Oracle is great for NetSuite but should be discouraging to smaller or SMB-only vendors. How can these firms compete with NetSuite when it has the backing of a giant firm like Oracle?

This NetSuite (née NetLedger) is nothing like the company of years past. It has built a significant catalog of applications that greatly surpass its original financial accounting focus and has empowered each with an array of advanced technologies. It is going deeper into verticals – a move that provides it and its partners with additional competitive advantage.

My take

NetSuite competitors should be concerned that NetSuite will surpass (or has already surpassed) them. Technically, it is hard to imagine a competitor than can match their reach and resources. Now, the challenge for NetSuite is one of execution and execution at scale. Can NetSuite grow smartly, efficiently, and in a customer-friendly way?

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