NetSuite and NetSuite Consulting
Our take on buying, selling, implementing and supporting NetSuite
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Sightings in SaaS
Life of a SaaS Consultant
NetSuite OneWorld Implementation Released!
The NetSuite Implementation Book is Published
Nearly 400 pages of NetSuite, from basic questions of what you need to know about NetSuite's place in the ERP/CRM market, to how to get started with the account setup, and details about how to setup specific business models work in OneWorld; I packed a lot into these 400 pages. I'm glad I wrote it and, frankly, I'm glad it's done. I think it will add some value to the NetSuite 'Economy', at least that's my hope. As the first integrated SaaS suite, or actually the only integrated SaaS suite, NetSuite deserves a wide audience. What Evan Goldberg and his development crew have accomplished is truly amazing in my view, and I hope my 400 pages help to tell the story to prospective clients and move the ball down the field a bit. Couple of first downs – I'd be happy.
I'll say this: My nights and weekends are free again. Time for family, house projects – the list is longer than normal, my old hobbies. What were those again? If you're interested in seeing the TOC and learning more about the book, there are several pages devoted to the book at the publisher's, Packt Publishing, website. Start here: http://www.packtpub.com/netsuite-oneworld-implementation-2011-r2/book. There is also a sample chapter.
I have also setup a website for the book – http://www.owimplementation.com. If you have questions or comments about the book I welcome them and will do my best to stay on top of your queries. If anything in the book confuses please let me know and I will do my best to make a better explanation.
The book is also available now on Amazon: http://www.amazon.com/NetSuite-OneWorld-Implementation-2011-R2/dp/1849681325/ref=sr_1_2?ie=UTF8&qid=1325128417&sr=8-2. An electronic version is also available for you kindle or i-pad.
The audience for the book includes any business person currently thinking about NetSuite as their business management system, anyone currently implementing or using NetSuite who wants to exploit all of its functionality, and anyone who is going to be part of a NetSuite project, whether you are an in-house resource or a third party consultant.
Interested in NetSuite to run your business?
It makes sense to take a deep dive on NetSuite or NetSuite OneWorld before you sign a contract. It's a big commitment and and it's hard to find a resource that provides both the detail and the broad overview that you need. This book has both. It explains NetSuite in the context of both software as a service and the integrated suite for business management. It also provides a lot of important details about setting up your account and configuring the modules you need, by business model.
Running a NetSuite Implementation? Planning to Join One?
If a NetSuite implementation is in your future then you really should take a look at this book. How do you structure a software as a service implementation? What's the best way to analyze the business, fit it to NetSuite, configure and prototype, test, convert and customize. The detail to help you understand matters small and large is here, focused by our experience with over 60 full life cycle implementations.
Do you already have NetSuite?
And want to exploit more of its functionality for your business? Or are you an IT pro who wants to make the switch to the cloud and is need a detailed book on NetSuite? This book will help to focus your account and give you a lot of ideas about how to use the NetSuite system to help the business.
Google Adwords and SEO: Beware of the Fraudsters
Most of you probably already know this, but I thought it worth mentioning here that SEO fraud appears to be increasing rapidly, along with Google Adwords fraud.
Businesses across the spectrum are anxious, to say the least, to increase business. This might be one reason that the amount of daily calls, emails and other detritus of SEO fraud that crosses my desk everyday increases exponentially. Also, someone must be making money off this scam to have it explode in popularity so quickly. Essentially, all these SEO pitches say that the fraudsters have found the secret formula and can help you improve your page rankings on Google search.
First, the ‘success’ of SEO fraud speaks directly to the fact that a lot of people think that improving your rank on Google search pages is a black and mysterious art. It’s not. You must simply work hard at creating content that other people find interesting and link to. But when you tell people that content is the key, they look at you like you’re a high school English teacher asking for a three page essay due the day after prom. Believe me, it’s worse than that. Content is a three page essay once or twice a week if you really care about search rankings. It also means spending time reading and understanding the subject matter. You have to make yourself part of a larger discussion, and you have to add something meaningful to the discussion.
We still run into people who think they can increase their page rank by hiding keywords in the white areas of their site. This does not work. At least not anymore. Back when we used Alta Vista search this was a common practice, judging by the weird search results we used to get. Google owes the value of their franchise to the fact that they eliminated this nonsense. They created algorithms that allowed us to find “relevant” search results. Relevant is obviously a very rare commodity on the web, judging by the money Google makes. They could also help their cause by making it more obvious how they are search your web pages. They have done some of this the last few years, but as long as legitimate marketing agencies can say, with some honesty, that they have figured out what the Google crawlers are looking for, SEO is going to have a fraudulent underbelly.
By the way, if you want to learn more about SEO fraud and what specifically to watch out for, just Google it.
If you have a NetSuite website, or are in the middle of implementing NetSuite, you should really take the time to understand the SEO attributes before you start setting up the hierarchy, or importing your items. There are several fields that are very important for SEO in the system and it makes sense to understand them well before you have too much setup. Take notice of URL components, page titles, meta tags and your sitemap.
Ultimately, the SEO fraud will spread to other areas of Google’s franchise. There now appears to be a fraudulent Adwords practice surfacing. These come in two flavors. First there are groups that pay people in the third world to click on Adsense and Adwords ads; or they may use a machine. So I guess there are people in internet cafes just clicking all day on ads on those dummy sites. The owner of the site gets a small cut when Google charges the ad owner.
The other fraud is similar to the SEO fraud, wherein the fraudster makes a pitch that they can increase your PPC traffic and conversions because they have the best copywriters, the best knowledge of Adwords, etc. Obviously, you must be very careful when giving someone access to your Adwords account, because once they are in it they can setup campaigns that cost you thousands while netting them hundreds, or even thousands. Since Adwords has your credit card, this can be a very dangerous situation.
Obviously we all need to be better buyers of services, but the marketing industry also bears some responsibility here. SEO should be part of your typical web design and development practice, not a black art that you pitch to prospects. As long as legitimate marketing agencies try to make a buck on the SEO, the marketplace will be full of the plain old fraudsters.
Breaking Under the Weight of Complexity
Does information technology need to be so complex?
To answer the first question we must ask another: What drives complexity?
Vendors tell you that they respond to customers, and it’s true that many customers demand that software meets their highly idiosyncratic requirements, that’s true, and requirements drive complexity. But is it also true that vendors for many reasons welcome their customer’s desire for more complexity, even encourage it. But why?
Would the question be easier to answer if we replace ‘vendor’ with ‘employees working under the same flag’? You probably see where I am going with this. The way many employees think about their employment reminds me of the story about economist Milton Friedman who was taken to see a government construction project in a third world country. Why, Friedman wondered, are the men digging a canal with shovels instead of earth moving equipment? He was told that using shovels created more jobs, to which Friedman replied, “Then why not use spoons?”
Many employees who work under the same flag understand that adding complexity is in fact the equivalent of digging a canal with spoons. But, you might ask, management exists to make sure that employees don’t put their own needs before the customer’s, right? Well, management also understands that complexity helps to increase their software’s economy. As complexity grows, professionals and experts show up to help manage it. The more professionals and experts who show up the more cachet the software wins in the marketplace.
Complexity is also a prime driver of customer tie in. After you spend 10 times the license fee to implement SAP or Oracle applications, the probability of your changing applications in the mid-term, or even long term, future approaches zero. Or consider desktop office applications. You not only purchased the licenses but then you trained several hundred or several thousand users. The probability you are going to move to free OpenOffice applications much less on-demand versions of spreadsheet or word processing apps is nearly nil. By the way, have you seen anyone providing training for the free OpenOffice apps? Some probably exist, but you don’t see them around very often.
Recently Microsoft started offering its office apps online, calling it Office 365. I’m not sure how many users they will find for their service, but they have provided plenty of material for the blogosphere. So far, commentators who have tried the service, or tried signing up for it, have a single word to describe the experience – ‘complexity’.
The thing that stood out to me as I read the articles is that the business thinking that motivates so much of what Microsoft does sits in the middle of Office 365. They tied in as many of their applications as possible, for example. Outlook you can understand, but Silverlight? They are also offering a complex pricing plan that encourages users to sign up now for as much of the service as they can afford, since if you decide to change later you cannot migrate your documents.
With the complexity of the interface and the difficulty of installing and using it, it’s only a matter of time before there are training courses devoted to Office 365. You can see legions of corporate users marching into training centers eventually.
Meanwhile I have also caught up on reading some of my favorite online writers, and one of them, Brian Sommers wrote a great article about SAP and Workday; the old on premise ERP giant SAP vs the young SaaS Workday. The question Sommers asks is do legacy ERP vendors have what it takes to build applications for the future requirements of business? It’s one thing to address social, cloud and mobility; these are important notes Sommers. But perhaps even more important Sommers states:
The big changes that businesses are facing are centered around: extraordinarily rapid, curvilinear innovation and changes impacting regulation, competition, finance, etc. The speed of business is not just increasing; it is growing at a skyrocketing pace while the ability of ERP solutions to change is approaching an asymptotic path. The gap between the speed of business and the speed of ERP is expanding not contracting at many firms.
Our question here is do legacy ERP vendors have the ability to innovate in their core apps, or are they outmatched by the complexity they have built in over time. Go back to mobility for a moment. NetSuite order management module is fairly straightforward, and putting an app on a tablet or phone that allows for order entry is a challenge, but one that has already been met. Putting Oracle’s order management system on a phone and making it usable for a saleperson is an order of magnitude more difficult. It can be done, but it’s complex, and takes a lot of cash and time.
In another good read we came across Bob Warfield’s post on a new payment service for mobile called Square. They just raised 100 million in venture capital. This is where the economy is growing and going in many ways. How long will it take NetSuite to integrate Square? Will SAP or Oracle even bother?
We have heard more than once that SaaS software is not ready for the big leagues, that it cannot manage the complexity of real business. Our question is can complex legacy software meet the exigencies of their client’s marketplace today? Or is legacy code buried under a mass of complexity and tangled spaghetti that prevents the old on-premise ERP vendors from quickly adapting to the market’s requirements? The key to survival is not the rote hunting of the slowest mammals, but adaptation. Only those who are able to adapt to a changing environment are going to make it, and adaptation requires quickness, agility, flexibility – all attributes that are the antithesis of complexity.
Day One Of NetSuite Suiteworld 2011
Some of the most interesting things I heard from Suiteworld day 1:
- “Let’s face it, no one wants to do accounting in the cloud, they want to do business processes.” From Zach Nelson’s morning Keynote yesterday. He’s right. Selling accounting in the cloud is silly. Selling a business process that includes vendors, customers, partners and your employees acting through the cloud is the way to go. We are just starting to see the possibilities here. More NetSuite B2B customers should be using vendor and customer portals, another point that Nelson mentioned.
- Accenture comes on board as a partner. This is how NetSuite is going to sell to the Fortune 500, or 2500, divisions, like the recent sale they announced, Qualcomm. Accenture can handle the integration between OneWorld and SAP or Oracle as well, to marry the NetSuite results with the HQ CRM/ERP package. Qualcomm gets to keep its investment in SAP while leveraging the cloud for easier, faster, simpler division accounting and reporting. It’s a nice marriage.
- Zach Nelson CEO started his talk by mentioning some of the small companies that started with NS when it was still NetLedger and still with the company after all these years. Wow that is significant.
- Then there was a lot of talk about bringing the robust technology of large companies to the SME (small and medium enterprise) market, while giving the large companies the agility of the SME. NetSuite went out of its way, frankly, to let their current customers and prospects understand that they are not walking away from the SME even while they pursue the Qualcomms of the world, but let’s face it this is going to be really hard to serve both masters. Not saying it’s impossible, just that it’s very difficult. The big packages software vendors, SAP, Oracle, Peoplesoft, all tried to serve the SME market after the Y2K glory days ended and it was a mess. They had the wrong ideas from start to finish, from licensing to implementation and support services, nothing worked well. They all blamed it on the robustness of the software, but my experience was that the software was not a problem at all. It was software and consulting managers who saw small deals as a waste of their time. It’s going to be interesting to see over time if NetSuite continues to serve the 5 to 50 person company, or if they see a constant movement of their best talent from the SME space to answer the needs of VIP clients.
- Rapid Deployment: Groupon’s ability to go live with 10 subsidiaries within 8 weeks of signing their contract is an awesome accomplishment. They will have all 26 live in 6 months or so. Yes, more awesome. So what does this tell you about the implementation? Did they document a lot of their work? Spend endless hours trying to get every manager on board with change? Let the consulting team take all the risk? No, what it means is that Groupon took the reins early on, as only a willing young startup can, and figures to lead pole to pole. Formality, risk aversion and stupid politics kills large company IT projects more than anything else. Makes me glad that Accenture has volunteered for that duty.
- The NetSuite economy grows in many different ways. There are more partners, both implementation and development and software. This is a good thing and really bodes well for the company. When you have mass like this it starts to create its own energy.
- Baker Tilly and RSM McGladrey are two of the largest midmarket accounting firms in the country, and now they are also NetSuite partners. Interesting that when you visit their websites, as well as Accenture’s, they each have two mentions of NetSuite. Baker Tilly has a page devoted to the relationship, and it’s probably just early days for the others, but it does give you pause. Are these folks all in on NetSuite, or are they just toe in the water and waiting to see what happens? NetSuite has had their fair share of toe in the water partners over time with little effect on results. Would be nice to see one of their all in partners brought up on stage once, like Explore Consulting in Seattle. Nelson gave Explore a shout out, but really where’s the love?
- “When you are a NetSuite customer, you are an Oracle customer,” so said Oracle rainmaker Mark Hurd. Well truism or not, some people don’t like to be reminded. Dennis Howlett remarks:
There was a sharp intake of breath among media and analysts at that one. My take? Be afraid, be very afraid. -;)
I don’t think we have to be afraid, we simply have to reasonable. If you want the quality of software, the tools, the security and robustness of the big players you are going to pay the toll. Larry is not about to apologize for creating the best database in the world and give you a break. Oracle, and by default NetSuite, will have its pound of flesh.
A Common Vocabulary
Writing the OneWorld Implementation book has helped me to remember so many instances of client interactions where we talked past each other that I thought the subject worthy of a blog post. Actually, understanding each other’s language is often as difficult for an American implementation professional and business person as it is for two people who have completely different tongues. Take the simple example of how NetSuite treats individual 1099 contractors who need to use the Employee Center for time and expense entry. NetSuite sets these up as Employees, with the Type set to Contractor. But without this further explanation, the client often thinks you are suggesting that they change 1099s to employees. If they don’t mention the confusion immediately, it can cause some confusion. How can it be so hard and how do we make it easier?
The difficulty comes from our deep immersion in the software. We tend to adopt the language of the software and as a result we stop seeing the forest for the trees. And the implementation consultant is just as guilty as the client of this, though they often portray themselves as innocent since they represent the new software. Lack of clear understanding is however the fault of all in the conversation, so implementers need to get off of their high horse and make just as much effort to bridge the gap as the client.
But the need for a common vocabulary, while real, also points to a larger problem. You might be skimming the surface. At the outset of the project this is understandable since we must necessarily start at the top and work our way into the business model step by step. As our discussion goes deeper we should be discussing the business model at a more fundamental level. There should be less need for a common vocabulary if we are hitting the key processes/tasks of the business properly. In fact, it is sometimes the lack of a common vocabulary that leads the discussion further until both sides, client and implementer, have a clear idea of how the organization operates today and how it might operate in the future.
Eventually, the discussion must settle on a common vocabulary. It’s important that the implementation consultant take the time to explain their terminology, and thereby start the client toward a full understanding of the system. But getting to this point takes some patience and the understanding that while the client may not know the new terminology, that does not mean they do not understand their business. After you sort out the incongruities in the discussion you see very soon that the client easily adapts to the new vocabulary and you move forward together.
The main point is that when you run into the proverbial ‘blank stare’ take a moment to explain the terms of the discussion to each other. You can save a lot of time and energy by simply knowing and expecting up front that there is not a single business language that everyone understands.
Accidental Agility
Beginner’s luck. That’s the normal, time honored name for the phenomenon that I have now renamed ‘accidental agility’. You have experienced this in your own life, I’m sure. You try something brand new for the first time and you do not just do it well, but phenomenally well. Your friends are shocked. “Where did you learn ?”
But you didn’t learn. You simply picked up something new and you didn’t master it necessarily but you took a big bite out of it. You showed something extraordinary in how you handled it. If it was an athletic exercise, your muscles seemed to have had the memory of doing this a thousand other times, on your first try.
It’s hard to quantify something like beginner’s luck and I hope I never have to debate someone about it, that would be a killer. I’d have no chance, beginner’s luck or no. But it’s a common enough phenomenon that we can discuss it and ask how it happens, under what circumstances?
In the muscular example, beginner’s luck is probably simply a case of accidental agility. You may have never thrown a ball before, and in moving to throw one with no memory of previous attempts your muscles simply respond to your brain’s commands and you throw. You not only have no memory of past exploits, but none of failure either. Your muscles move forward, and snap the ball takes off like you been throwing forever.
This came to mind a few weeks back when I read an article in the Wall Street Journal about SAP’s attempt at a SaaS system, called Business By Design, or ByD. I was not going to write about it because, you know frankly, the article was kind of reheated leftovers, not the normal, crack reporting that one expects of WSJ. But then I saw another article about a tech startup that started me thinking again about what’s happening with ByD. Is this is case of a sclerotic, older company with too much at stake to fail, trying to do something that, in the end, it’s muscles simply cannot perform?
This explanation comes to mind when you look at the number of SaaS startups that have done so well over the past 5 years. There are now more than just a few of them. Startups have a ton of issues to manage, least of which is cash. But somehow, many of them have struggled and they have succeeded, where a huge, well established older company could not. Accidental agility answers this paradox.
As startups the SaaS companies had neither success nor failure memories. Theirs was a clean slate, a tabula rasa upon which they were free to write. They started small and little by little learned their craft. There was no need for braggadocio; no one had experience writing a multi-tenant business application served real time over the cloud. There was no need to make big promises and under deliver. As first movers in the market, they could start small, with low expectation and little promises and over deliver. They probably had to go forward and take a step back from time to time, reiterate their steps and start over; take several passes at something before they could say they got it right. And you know, this works. Building anything the first time is a prototype. To get something right takes time and practice.
In some of my spare time I work on wood, building furniture, mirror frames, you name it. For the larger pieces, I know where all the little mistakes are and there’s always a little part of me that wishes I had another crack at it (but with the price of wood forget it) and this makes my wife angry at me. She thinks I am being negative. But actually I am just expressing the realistic point of view that a prototype is never as good as a finished product. Trying to create a finished product in your first attempt at something is useless; it’s not going to happen. Practice really does make perfect.
The young guns in SaaS had the advantage not of beginner’s luck, but of accidental agility. Their muscles were not acclimated to success or failure so they remained agile as they went about building the service and the business model and the business. This is the startups greatest asset, this ability to do something the first time and do it not just well, but phenomenally well. My hat’s off to all of them. When I look around the software landscape I see people with walkers, a lot of coughing and phlegm, a lot of sclerosis and other ailments. It’s not pretty. SaaS is the one bright spot.
Keep this in mind if you are implementing a SaaS product, this idea of agility. Don’t try one of those ‘big bang’ projects where you spend months or years building the perfect test system on paper and then when you turn it on the whole thing comes to a screeching halt. Try the agile approach. Understand that each piece is a small prototype, be willing to bend it and bend with it. Ask a lot of questions and experiment. You won’t get everything right the first pass, but that’s ok. You’re agile now and you can change, reiterate, revisit. One small step at a time. This works.
Avoid Talking to the Lamp Post
In my last post I talked about how the Small and Medium enterprise IT market was fractured based on experience. There are the Newly Born who see opportunity in IT systems, the Reincarnated who have extensive experience with systems and keep bringing their knowledge to the startups they work for, and the Buried, who have buried costs in current systems and have never understood the need for better systems.
NetSuite, I maintain, has an excellent opportunity with the Newly Born and the Reincarnated, and I believe this shows in the client list, both ours and the larger NetSuite customer base. So is there any chance to talk to the Buried, to get them excited about NetSuite, to bring them on board? And who do we talk to over there? The owner, the office manager, the IT guy?
One way to tackle the problem is to take a look at how the competition does it. Want a great example of business system marketing, read this article about Microsoft’s latest edition of Great Plains, from Mary-jo Foley of ZDNet :
(A quick PowerPivot refresher: Codenamed “Gemini,” PowerPivot is integrated with SharePoint Server 2010 and SQL Server 2008 R2. Microsoft is touting PowerPivot’s benefits as integrating “massive amounts of data on the desktop from virtually any source”: and the performance fast calculations and analysis on large data volumes.)
Like previous GP releases, the 2010 version will include a built-in connector allowing two-way information sharing between GP 2010 and Microsoft’s on-premises Dynamics CRM and its cloud-based and/or partner-hosted CRM Online offerings. In addition, by taking advantage of the presence functionality in Office Communications Server 2007 and its Office Communicator client, GP 2010 gives users the ability to right-click on a contact to send that person information with fewer steps.
Now, these two paragraphs may not seem interesting to you, and that would make you normal; however, if you are an IT guy at an SME, these are marketing gems. They are subtle and press all the right buttons. They don’t blare “look, long term job security!” but they make the point very well, indeed. In just those two little paragraphs there are 7 different products mentioned: PowerPivot, Sharepoint, SQL Server, GP, CRM Online, Office Communicator Server and Client. If you could get your boss to invest in this, you could buy that little cabin on the lake. May not have a lot of time to hang there, but you could own it.
The upshot is that it is useless to talk to the IT guy. He has no interest in hearing about a single, integrated system with no infrastructure. And the office manager, well that’s also probably a waste of time. They hate learning new systems, unless the current system starts creating unwanted overtime. That really leaves the owner. In some cases whenever the ownership hands over to a new person, son or daughter or buyer, there is an opportunity to talk to someone with some energy for the business who can see the difficulty of running an organization with a 100 data silos. The message?
The message has to be that NetSuite gets you out from under the thumb of your staff. Everyone who has ever been the new manager at an existing business knows what I mean. The current employees try to run you. They attempt, with all their wits, to box you in, to make you accept the current state of affairs as the only, the necessary state of affairs. “We don’t do it that way because it can’t be done that way.” They despise change. NetSuite generates change, and not just for the sake of change, but for the sake of better business practices, more measurable input and output, greater visibility and better decisions, including which employees to keep.
Every year, there are tens of thousands of SME’s that change hands. This is the secret passage into the market of the buried. There is a narrow window of hope for these companies. With some subtle marketing NetSuite ought to be able to talk directly to the new managers and let them know that there is a system that, together with their iron will, enables them to take back their business, get it on better footing, and grow it like they know it can grow.
Finding customers among the Buried is not easy. It requires the right message to the right audience. It also requires acknowledgement that a lot of the Buried are really lamp posts. But when they change hands, it’s a whole new opportunity.
The Newly Born, The Buried and The Reincarnated
I just finished reading an interesting article by fellow EI Mike Krigsman in his IT Projects Failure blog. There is also an interesting video interview with NetSuite CEO Zach Nelson about the value of NetSuite, cloud computing and NetSuite implementation.
One thing came to mind for me as I listened to Zach and read Mike’s analysis; that is, the SME, small and medium enterprise, market is really substantially different from the large enterprise market in one very important aspect: Experience.
In the SME market there are the Newly Born. These are companies that have gotten started within the last 10 years and have grown substantially. They have managed to achieve this growth, in many cases, without the benefit of a well thought out IT plan. They probably have an off the shelf accounting package, email, possibly a small crm system and a lot of spreadsheets. Someone hosts their website. A service bureau does their payroll. Regardless, they have grown and now number 50 employees or so.
At the next level there are the buried. This is a company, sometimes of considerable size, that is now on the second or even third generation of ownership. They have systems, somewhere, and the systems are capable of reporting month end results. Again, they look to third parties for a lot of their needs, like payroll, website, etc. But for the most part, their systems and the costs associated with them are buried.
Finally, there are the reincarnated. These are organizations led by people who have done this several times. They have worked for large companies, and led new startups. They often have venture or angel capital and have as much business savvy as large organizations. They may begin with a limited set of applications, but over time they formulate an IT plan that enables their revenue growth and keeps costs in check. They understand the value of systems. They have been there before and they personally know the costs of on-premise software.
Now which of these three companies is a good candidate for NetSuite? Well, I can take a quick gander at our own client list and tell you that about 1/3 of our clients are the Newly Born looking to upgrade to something better and the other 2/3s are the Reincarnated. The Buried show up here and there, but very rarely. From time to time a new owner takes the reins of one of the Buried and they start down a new path, but by and large the Buried are a very difficult market to sell anything into. Even in the best of times it’s hard to make inroads in this market. Why is that?
Well, the largest cost of on-premise systems, by far, is the enormous distraction they create to what should be normal business operations. Yes, I agree with Nelson that there is huge value to one system, huge value to not having to ‘spin up a server’ and even huge value to cloud implementations over on-premise. In the end, however, it is avoiding the cost of distraction that provides, to me, the real value of NetSuite and other cloud computing applications. At the Buried, the distraction has now become the normal. People don’t even notice it anymore.
My wife and I saw this firsthand recently when we stopped by a local establishment for dinner and, while waiting for a table, had a drink at the bar. While standing there and placing our order, the system went down. The bartenders made a simple announcement to the rest of the staff and they all started to manually take orders. It became paper based in a matter of minutes. I remarked about it to our server and her reply was “Oh, we’re used to it, it happens all the time.”
This is what the Buried live with every day. They have simply acclimated themselves to the fact that their systems are what they are. It may take a week to produce an inventory report in Excel but once it’s created it’s only a couple of little tweaks every month to fix it up and off we go. Multiply that effort by 200 or 300 and there you are, an information system built on the desktop, ready to go! The Sales Manager(s) may spend hours approving written commission and expense reports, but they’ve worked it into the schedule, no worries. The costs of creating, running and maintaining this ‘system’ are buried, and will remain ever so. The auditors might grumble, but they tend to grumble a bit anyway.
The difficulty for NetSuite is telling a story that helps the listener understand how the world changes when you have a integrated system that relies on real, and real time, data. The key is “Who is the listener?” I’ll talk more about that tomorrow. Right now, I must honestly get back to work helping one of the Reincarnated implement NetSuite.
Good News for NetSuite
This came across the wire earlier today, pretty good news for NetSuite:
I don’t have access to the whole survey but they did say this in the article:
Nucleus polled NetSuite customers to gauge their success and satisfaction with their decision to entrust mission-critical business functionality to cloud computing. Ninety percent of the customers surveyed rated their satisfaction as four or five out of five — satisfied or very satisfied, and no company rated their satisfaction below three. When asked to elaborate on the reasons for their satisfaction, NetSuite’s ability to drive cost reduction was mentioned as a key driver. By offering tremendous scalability and breadth of functionality, with little to no IT expertise required to install and manage, NetSuite has earned long-term satisfaction and loyalty. “Because the application has been validated by users as an effective tool in cost reduction, deployment footprints at existing customers are more likely to increase rather than decrease,” wrote Nucleus in the report.
I’ve long said that running a system, or especially, many systems, has a huge hidden cost. Some might get away with it by putting the brother-in-law in IT, but believe me there is no way that the systems you maintain do not have a cost, I don’t care who runs them. And there is also a cost to the systems that you do not run, mainly in the time and effort people expend manipulating data on spreadsheets.
6,600 customers, that’s pretty good, too!
Chicken Around the World
Every once in a while I write a post that’s crazier than most. These normally happen late at night when my internal defenses have given way to a glass of wine. This post is along those lines. The basic question that I’ll try to answer is “Will the Cloud and SaaS save the current roster of Enterprise Software from the Dinosaur like extinction of its forebears?”
I’ll start by asking what can you expect if you travel around the world looking for a tasty chicken dinner?
In Vietnam you can buy a live chicken, rest is up to you.
In China you can buy a chicken that’s been killed, you pluck and eviscerate and cook.
In Paris your chicken has been plucked, you eviscerate and cook.
In Des Moines the chicken has been plucked and eviscerated, you cook.
In New York the chicken arrives on your table plated, garnished and sauced
Now it may not seem like the world of software and the world of chickens have a lot in common, dear reader, but don’t give up yet. There is a point that I want to make here. A recent conversation with the Enterprise Irregulars around the difficulty of moving ERP systems forward with the business brought some interesting ideas to the fore. It all got started with an article by the now famous, in these parts, Thomas Wailgum in CIO about a study partly commissioned by CIO and Enterprise analyst IDC concerning this very question. Wailgum’s title says it all “ERP’s Paralysis Problem and the Repercussions for Businesses Everywhere.” The repercussions, as you might have guessed, are not good.
First,the premise, more exactly, is that ERP systems can prevent companies from seizing business opportunities because the systems are lumbering giants not given to flexibility, agility, growth and change. This leads us to conclude that the deeper the functionality of the ERP system the greater the difficulty of meeting business opportunity challenges. ERP in other words suffers from the New York Chicken problem: Once it’s served there is no turning back. You can’t change the recipe or cooking method at that point.
It’s an interesting thought. I am not sure that it is 100% on the mark, but having worked with Oracle ERP software for nine years I can attest from personal experience that there is more than a grain of truth here. Brain Sommer has a good post about some of the real sticking points in ERP systems that make changes and additions so difficult. This one stuck out:
5) Code block insanity – Just because your accounting modules can support a 30 segment code block doesn’t mean most companies should use this. Moreover, what views a company will want in its code block will change over time. Unfortunately, most financial software products (and all the feeder systems that supply accounting transactions to them) make changes to the code block akin to a complete re-install of the software. Nothing brings rigidity to ERP like the code block.
I’ll take the thought one step further – why do we have a code block, this huge accounting nightmare that attempts to pump all possible corporate knowledge about what the company sold and purchased into the general ledger from the subledgers where the transactions take place? When they began to create software for financial transactions they had only a general ledger, so to see as much data as they possibly could they tagged all the transactions in ht GL. Business software became accounting centric, and remains so even after real time relational systems came on board with multiple subledgers that can report out vast quantities of detailed information. Why do you have to update the GL with sales data when it exists in such fabulous detail in your CRM/Order Management system?
So what does a large enterprise do? They run Oracle, SAP, or something similar. Does the enterprise just forgoe new opportunities? I can’t imagine that , especially since the people who run large enterprises normally come out of sales and sales is where most of the new opportunities get their start. These folks are not going to be patient for long. Eventually the line of business, lob, will go ahead and start to do whatever they have to to tackle new business, even, in many cases, if that means writing custom software.
Now, developing custom software may not seem like such an odd pursuit to you and you would be correct – if it was the 1980s or earlier. But when so many large enterprises went to systems like SAP and Oracle they lost their development teams. That was the cost justification of the new ERPs. In the bad old days all large companies employed large teams of developers who built their custom business apps from the ground up on what came to be know derisively as legacy platforms, from IBM, Burroughs, etc. Coding custom software is like the chicken in Vietnam or China. Well, at least now you have more refined tools and platforms, so we will say it is more like China.
Well, apparently the wheel has turned again. Large Enterprises are again back to the custom software job enthusiastically and doing it with the aid of all the modern IT tools, platforms and business models – outsourcing, offshoring, onshoring, LAMP stack, Cloud, Free Open Source Software, you name it. They are coding software at a pretty good clip evidently, again in an effort to meet business opportunities.
Being on the cloud and developed in the SaaS, software as a service, model may help some of the newer entrants to the Enterprise software market avoid the New York chicken problem because the cloud can give a company greater access to partner software add-ons. But that is not a given. They must still walk a tightrope between offering a robust application that includes most basic needs while giving the Enterprise with more complex requirements a path to customize those requirements using the applications itself. Every NetSuite implementation, to be perfectly honest about it, requires a fair amount of explanation of what is not possible. You can run a lot of business processes in the system with no further customization and coding should be rare, but to have a system that truly represents your business today and your meets future opportunities, you will need to customize a quite a bit and code a little. It’s not an easy tightrope to walk obviously, and the balance struck is a subjective proposition.
However, I would also submit that every buyer contemplating the decision to move to one of these new enterprise systems should have a hard discussion about how much they want to customize and code, and how to do it in a way that prevents them from falling into the New York chicken problem themselves. For my part, I suggest that clients hold off on any customization except the most absolutely vital, and wait to add code completely, until you are live for six months. You will be surprised by how much your requirements will change once you know and understand the system.
The myth, not sure if it is still current, that SaaS prevented customization, has largely been itself eviscerated by Netsuite’s Business Operating System and Salesforce.com’s Force.com development platforms. These systems are not only open and customizable, they also encourage customers to make the applications meet business opportunity challenges.
Only time will tell if SaaS Enterprise vendors avoid the same fate as their older brothers like SAP and Oracle, but it is a good time to ask the question. Who would have thought 10 years ago that ERP would end up costing you money?
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