NetSuite ERP Review

Carries a broad range of applications, specifically in the field services area


What is our primary use case?

NetSuite ERP has been exploding in all kinds of young and up-and-coming businesses using manufacturing. We pioneered some use in pharmaceutical manufacturing; we've seen it in general business. A lot of our e-commerce companies are using the NetSuite platform — a lot of startups. Five of every eight companies that went out for IPO two years ago were NetSuite customers. It's very big in the startup community in California. A lot of newer tech companies are using it, but a lot of standard older traditional companies have begun using it, too. Over the last year, we've done some furniture distributors, we've done nutraceutical manufacturing, we've done companies that import and build electric scooters and leisure products like bicycles, etc. We've seen it in financial groups, as well.  

In short, it carries a broad range of applications, specifically in the field services area. We've seen some construction companies move into it. We've got a group that does large AV installations. They will do a theater or an auditorium or a stadium; they handle all of the server-based audio-visual signal processing and large screens and large speaker systems for public consumption, etc. They'll have these million-dollar projects that they put together in their facilities, in a manufacturing type environment test, and then do all of the engineering there, and then they will send crews all over the world to implement these. That's kind of the field service part.

I worked with some of the largest NetSuite resellers in the world — they're partners of mine. We're affiliated and we use each other's services, but we're not financially tied. We see everything, including startups, that maybe pre-revenue, started to use NetSuite. They know when they go out to raise funds that the investors look at that and say, "Hey, these guys have really got their financial house in order. We feel good trusting you guys". What Oracle does, is they say that, from zero to $250 million a year, we approach them with NetSuite over $250 million a year. We'd like them to be looking at Oracle fusion.

However, with our partners, we go into $500 million and $700 million companies. We put in NetSuite plus. We may be doing a variety of products in that type of setting, but NetSuite is the core product there, and they're very successful with it. The thing about made-for-cloud software is that NetSuite was released in 1992, and a lot of the development took place in the '92 to '96 era. We were beginning to change the way we did software. This is when iPhone started coming out, etc. The name NetSuite refers to the fact that you have a network suite of products that you can use. There are apps in the NetSuite Suite cloud app store that companies can buy. This is very difficult to explain to new users because using multiple pieces of software has always been a nightmare.

It's been problematic. You have different products giving you different versions of the truth. You've got problems keeping them tied in together and integrated. You've got different release schedules, you've got customization. It's just been a nightmare and everybody has a bad view of that. What I tell my clients is, "How many of you guys have a phone in your pocket?" I'll say, "Do you like the customizations on your phone?" They'll reply, "What are you talking about? There's no customization on my phone". I'll respond, "Every one of those apps is a customization". They'll fire back, "No, it's not, it's on the phone". That's exactly how NetSuite approaches the suites of products. They open their technology app, they allow outside developers to develop functionality. They test, approve, and do quality control before release. When you buy one of these apps and there's an app for field services that fits in, plus services, it's so different. It's really hard for any product to fit everything in.

You look at this particular app and if it fits, you licensed the app, and it's just another tab inside your NetSuite system. You can't tell that you're in another product. The screens look the same, the integration is already taken care of on the backend. You don't have to deal with any of that. One time, Adaptive Insights was sold as a NetSuite advanced financials package. People did not know it was not NetSuite advanced financials. All they knew was, that their FPNA reports were on one tab, and their regular basic reports are in another reporting area. That being the case, we have gone into situations where people were (this was before the merger) paying $1,000,000 a year in maintenance charges to a tier-one software group. We were able to duplicate the functionality and improve it in several areas.

I'm not saying it was as good and in every area, but in several areas, key areas, it worked much better. We were able to implement NetSuite and the apps and the integrations for under $500,000 for the entire new system. That was a net savings of $500,000 a year. It was more modern technology, it was working better for them. Plus, they didn't need a team of three, tier-one experts on staff to manage the system. There were some huge losses there for a large organization. What I'm talking about is one of the more difficult concepts for today's IT groups to understand, because frankly, they've been through nightmares of software modification and customization. It's been a bad idea and it hasn't worked out well, but those were products that were created back in the '80s and the early '90s.

Those are pre-internet era technologies that were proprietary. ERP vendors used to want to be proprietary because that way, nobody could copy their software. It was considered a security measure against somebody duplicating the discs and reselling them. Today, the Internet is the integration tool that you're using — what could be more open than that? Now, the idea is, let's open this up to everybody. Let's let everybody develop on it. That's, what's made Salesforce so strong, and that's what has made NetSuite so strong. 

Through all of this, you have to remember that there were no cloud-based ERP systems. Everybody was terrified to put their financial data into this cloud thing everybody was talking about until NetSuite came along. Now, NetSuite has roughly 22,000 companies using it. Every single ERP vendor in the world now has a cloud version to try and compete with NetSuite. The problem is, if I call Salesforce today or NetSuite tomorrow and say, "Hey, I want to license this, here's my credit card". In 20 minutes, if there's a system provision for me ready to use, I'm ready to go. 

How has it helped my organization?

We do a very in-depth financial analysis before we let our customers look at software. We had a smallish client-company — a $14 million company. They were looking at NetSuite and a couple of other products. We put together what we call our cost revenue model that shows how they can cut costs and how they can increase revenue using the new software. They were very amazed to learn that we projected that over three years, they'd save or make $7 million. This opened their eyes to the possibility of ERP and things of that sort. They took a look at our findings in our spreadsheets and our models and everything like that and took it all in.

I circled back three years later to find out if they followed the model. Did they follow our recommendations? Did they achieve the projected savings and see their revenue increase? As a matter of fact, they had not, they did not follow the model. They said, however, that this really opened their eyes regarding how they could use this software and how they could make it pay for itself. In fact, they had doubled the size of the company in three years. They'd gone from a $14 million company to a $30 million company. They were also in negotiations to do a couple of acquisitions in Japan and Australia that would make them a $60 million company the following year. In doubling the size of the company, they had added one new person to the finance office to help with that. Two weeks later, I was in another company that was using QuickBooks and they were about the same complexity and they were a $30 million company.

They had 13 people in their finance office. I said, "Why are you doing this?". It was because they needed that many people to manage the spreadsheets, to manage and understand where their inventory was, and to understand the operations that were going on out in the field — that type of thing. So, they implemented and they were able to, by attrition, cut down to 10 people in the finance office, and they converted three of them to outside analysts or department managers to go work in other functions like that. That was a big deal.

We had a charter school that was running off a Sage 300 system. The way they handled purchasing at all of their schools, was the school principal would maintain a spreadsheet and he would fill out purchase orders for things that they needed. Then they would upload the purchase order file to a SharePoint server and at headquarters, an alert would say a new file has been uploaded to SharePoint. One of the accounting clerks would download the file and type it into the Sage 300 system. 

This created a dual purchasing system, where there was a purchase order number at the school. There was a purchase order number in the Sage system. They had to work around that and they had to reconcile that. We put them into cloud-based software. As we were going through the NetSuite implementation, I said, "Why are you maintaining two purchasing systems?" They said, "Well, we can't afford for every principal to become a user". So, I said, "There is a limited edition user license that allows you to do purchasing and you can buy them in blocks of five, for $99". So, they put all the principals on the system — many of them. They would later become full users because they were able to access data on their school's performance, etc. 

Within 90 days into implementation, they were rolling out. They had two areas: some international schools and some US schools. As they were rolling out the international schools, 90 days into the implementation, I asked, "How's it going? What's happening?" They said everything was fantastic. They said, "What we used to do, was every time we added a new school, we added a new person in the accounting office". They said, "Now, with the principals putting in all their purchasing information, we have more accountants than we need". They acquired three schools just before going live, and they didn't have to hire three people. I said, "What are you paying those people?". They say, "Well, roughly $60,000 to $65,000 a year". That was $180,000 in savings within the first 90 days of using the product.

What is most valuable?

The most valuable feature is that it works according to how the Internet works. Companies are also able to use it for a variety of workflows and to get people that normally weren't involved in financials into using the system to coordinate all areas of the business. I know that sounds like a mouthful, but what we realized with NetSuite is that a lot of times, when we would be in situations where clients are looking at demos, they'll say, "Okay, we want to see how this works, show us a journal entry". Well, the journal entry is very similar to every other traditional ERP journal entry because they're accounting journals. But when it comes down to logging on and seeing the things that I need to take care of today, and when I improve something, it appears on somebody else's desktop. Being able to report, not only on financial matters but on business issues as well, opens up the product to a whole new level of people.

The statistics that Oracle likes to put out, show that NetSuite companies grow at five times the rate of the S&P 500. This is misleading because the types of companies that are interested in being efficient, moving forward, and being dynamic, are the types of companies that will select NetSuite in the first place. Yes, they have a much higher rate of growth than the average company out there, but I don't know that that's because they're using NetSuite or because that's the kind of company that would be attracted by something like NetSuite. 

What needs improvement?

Evan Goldberg, the gentleman that created NetSuite, had worked at Oracle. Larry Ellison, the CEO of Oracle had provided seed money to start out and Larry actually owned a large part of the stock. NetSuite pioneered this whole system and two years ago, Oracle said we want to acquire you guys. Oracle was a little bit late to cloud computing and NetSuite offered them the ability to have a large cloud presence.

Oracle realized that NetSuite has been a huge success in The United States — it's been wonderful. But Oracle is a worldwide company. So they decided to take their development teams and development budgets and pushed into new countries and created new country versions and multicurrency versions. They also decided to move into new industries. So they started doing lots of development for NetSuite.

In the two years since Oracle re-acquired NetSuite, they took on Hyperion, which is one of the leading FP&A Solutions in the world. They created a NetSuite version of it. So, what needs to be improved? There's a lot of development in a lot of areas and a lot of markets that haven't been served.

One of the things that I did, was I had all of my clients going into NetSuite and they were loving it. Still, I also had a lot of pharmaceutical clients, pharmaceutical manufacturers that could not use cloud-based software because it was hard to validate. Not to mention, NetSuite puts out a new version every six months. What we thought were the validation protocols, would not allow us to do that.

For years and years, Pharma has been version-locked into the old system because they don't want to revalidate. Well, we found a way around that and we started moving into the pharmaceutical industry, aerospace, and defense. The security issues related to national security have stated that we can't use cloud software unless it's encrypted. But now the Department of Defense has started saying, "Hey, NetSuite is. We're not seeing security breaches into the data or anything like that".

There's a lot of areas like that, that NetSuite has to mature and grow into. What needs to be improved is the development in the other areas and other businesses that can use NetSuite, but it's rapidly coming about. Five years ago, certain companies, like Pharma specifically, would come and tell us they would like to use NetSuite. We'd have to tell them that we don't do that. Please search elsewhere. They would say, "But our CFO used to work in a company that has NetSuite. He thinks he can do it. He wants to do it". By pushing the market like that, NetSuite got into a lot of areas that they wouldn't have broken into previously, but people had used NetSuite before and they loved it. A lot of it's been driven by the market itself and the development is catching up.

For how long have I used the solution?

I have been working in ERP since 1995. We saw NetSuite come on the scene around 2002. We did not see our clients adopting cloud-based software until after Salesforce was predominant around 2009 to 2010. We really saw the product begin to be used by many of our clients around 2014. Now, pretty much all we do is cloud-based software or ERP. We focus on the made-for-cloud products, but NetSuite accounts for probably 50% to 60% of those deals.

What do I think about the stability of the solution?

The growth is phenomenal. Pre-pandemic, they were advertising that they had 18,000 companies using it. The latest figure I saw was 22,000. They had a down year comparatively last year because NetSuite has been growing year over year at a rate of 30%. When I say a down year, that means I think they'd only grown by roughly 14%. So, the stability is there. The product is such a category killer. I mean, Oracle paid 9 billion to re-acquire NetSuite and one of its close competitors, Sage Intacct. Sage spent 700 million to acquire that company.

With Oracle standing behind it, it's very, very strong financially with the user groups — the user base that's now using it. It's very strong. One of the things that we're dealing with right now is that we get calls like, "I'm a new CFO at a company and I've used NetSuite before. I already know how to use it, just turn it on and let me use it".

There's more to the setup than that. It's not that quick. It's not that instant. You have to sit down and go over it with these guys and say, "Look, here's what went into using that system that you liked and you loved. There was a lot more behind the scenes that you didn't see in the last place you worked". Still, people move around from job to job and they remember how well NetSuite worked in a previous situation and that's what they want to go with in the future. I think that says more about it than anything else.

I believe in the forward-moving state of it. I worked in ERP for 20 some odd years. I've worked with Sage, Microsoft, Lawson, Infor, and Loharts, and many other companies — they're good products. Companies can be very successful using those products but it's just old-school technology. 

I was always waiting for somebody to come out with ERP 2.0. I don't know if NetSuite is fully an ERP 2.0, but I do know that they've come closer to it than anybody else has. Everybody's trying to reach this level — it's just very stalled. People want cloud software, but the fact that it's on the cloud doesn't mean anything. What matters is, was this developed in 1995, or was it developed back in 1982 in a DOS version, which we then ported to a Windows version, which we then ported to a client-server version, which we then ported to another version? Now, we've taken this whole spaghetti mess of code and thrown it up onto the cloud.

So many of these products, you look at them and they look like windows XP. People are no longer willing to use a system that has such old clunky technology because they're used to everything else in their life working easily on their computer and having it integrated. They're used to the iPhone being able to do things that it was never designed to do because it's got an app on it. It's just so much different. So, will NetSuite have actual competitors? I think there will be companies that do develop new technology and stuff like that. It takes years to catch up in the ERP world, but there will be people that do modern development and that will eventually emerge as competitors to NetSuite. Intacct and Acumatica are two of the ones that are closer than anybody else, and those are good products. We'll use those guys in a lot of different ways. A lot of our clients like those.

What do I think about the scalability of the solution?

There are situations where a company will move out of NetSuite into tier-one when they're a $2 billion company or something. The fact that you can afford tier-one products at $2 billion is a completely different situation than trying to afford that when you're a $400 million symphony. The product scales well into hundreds of users. There are situations where you're going to find you need this tier-one customization, etc. Still, that's not for years and by that time, you'll be able to afford that. 

How are customer service and technical support?

One of the things I like is that when I get a new client, there are so many videos and training opportunities. I try to have my clients trained before the consultants show up. I like the way that they support that. Some people like the direct implementation teams. Some are really good, some are average. We really focus on getting the right implementation partner for our clients; somebody that has industry-specific, experience. But that aside, the support is really good. It's 24/7 and people like that. We don't hear our clients complaining about that.

Which solution did I use previously and why did I switch?

There are thousands of differences between NetSuite and other ERP solutions. With NetSuite, anytime you see a page of data, you can export it to Excel. Not only can you export it to Excel, but what comes across are the values and the formulas. If you have a column that's adding up for example, what you sold the product for minus the cost of goods sold, this equals your net value. What you get in the spreadsheet is that same formula referring to those same figures right there and it's a huge time saver for people.

Now, traditional ERP has gotten better at some of their tables; you're now able to export to Excel with some of them. But when you come across it, it's just a flat value and things like that. These accountants that work in spreadsheets all day long love this. You can change your spreadsheet and you can create it so it uploads into NetSuite and you can have a spreadsheet-type system that feeds in and puts data into your system, as well as taking it out. That's a huge difference.

There are things like being able to create very simple screens, being able to have a customer. We're sharing a warehouse with one of our providers or we've got a product at a co-packer or someplace where we're taking our product for labeling and putting it in cases — we put them on the NetSuite system. They only see the things that they need to see. But now I know when my partner is running out of labels to put on my bottles and I can put that information into my MRP and I can have a purchase order and drop-ship to them in time for them to have labels for the next manufacturing run.

All of these things tie in together in customer portals. It's great to be able to call a company and try to get somebody on the phone, but if I can look up which invoices I've paid for and understand which ones they've applied it to and everything like that, I'm so much closer to the answer than if I am trying to get somebody on the phone. That's just another way customer service improves everything — when I can give you a portal of exactly what's going on between the two of us.

Those are the kinds of things that really seem to help. Most companies have never had that capability. They've never used it, they don't understand that this is great. Instead of having 50 people call me on the phone today, now I've got three phone calls. How much more work am I going to get done all day? My customers are much happier now. They like working with me because they can find this out rather than buying that from somebody else. Again, I'm sticking with these guys. They're so easy to use.

What about the implementation team?

When you contact a traditional ERP provider it takes them weeks and weeks to configure. We used to buy servers and have them sent to the ERP companies so that they could configure the servers. Then they would ship the servers to the client. This would take weeks. An ERP implementation would take nine months to a year. NetSuite is ready to go tomorrow and you can go through the configuration with your consultants and have it up and running in 90 days.

It's so much easier than it used to be; however, now you turn around and you look at Microsoft's Business Central. They've come out with a cloud version and NetSuite sells for so much less because you don't have a nine-month implementation process. Those implementations, the consultants are now charging $225 to $300 an hour for nine months. So Microsoft comes out with Business Central which they say is cloud-based.

They've only taken the old software and thrown it up onto the cloud. So you still need a nine-month implementation to be able to use Microsoft Business Central. You've still got that huge cost involved with it, and you still have that huge timeframe involved with it. NetSuite started this whole thing but they're doing it differently. You've got all these imitators, but they cannot quite keep up with what they're doing.

We're just scratching the surface of understanding the difference with this approach. We've got so many clients and so many companies that have moved on to this. Yes, we invite the other ERP companies to show their software, but when people get down to it, NetSuite wins nine out of 10 times against traditional software.

What's my experience with pricing, setup cost, and licensing?

NetSuite has developed new approaches to the market in the last few years. When people buy ERP, it's a competitive situation and the pricing is paramount. People don't want to spend a lot of money upfront on that type of thing — as if we blame them. What NetSuite has gone to, is something called the finances first approach. It says, let's come in. Let's have a small footprint in the organization. We can get a company up and running on the core financials and use it in the business office for about $50,000, which compared to a lot of ERP systems, is very low cost. 

From there, we start to stair-step the project up to increase the functionality that they're using and increase departments that are on the system. What happens is, when people start using the system, they start understanding the system. They began to learn how to roll out these other functions with their own internal people.

They learn to adopt the tool, they understand how it works. Now, you're not saying, "We need this new $30,000 module. It's going to be $100,000 in consulting hours to implement it". It's more like, "We need this $30,000 module, and we may spend $10,000 on outside consultants to help us do it ourselves". That type of thing. There are two things that happen. One, you get instant success because you've got the system up and running and people are beginning to adopt it. They like it, it's successful, it's a valuable tool. That's the first win. The second win is if you get to grow the system. Now that you're using it, you understand it. This is how it's going to be easier for these people to do their jobs. This is how we can put efficiency into our inventory area, or we can put efficiency into our supply chain group, or we can help out our field service reps with information on an iPad.

This is how we're going to do that — it helps people. Instead of this instant digital transformation, it's this continual rollout of better and better technology. When they see the results that a client likes, the service levels better, it makes a lot more sense. It's so much easier than this big, huge two-year implementation that some of these software providers come at the client with.

That's a hard decision for any company to make. "We're going to be doing this, and we're not totally sure that it's going to work for us. But what if our people don't like using it; aren't there are a lot of things that could go wrong?" Then they just sit there with paralysis by analysis. When they can sit there and say, "Okay, we can start this, this NetSuite rollout. We can get the accounting office on it. We'll be up and running in 90 days, we're going to have better reports. We're going to have better financials. We're going to have all this stuff, we're going to have all these instant wins. How do we get 10% more out of the sales this year? How do we get drive costs down next year?" You've got all of these projects that you can expand your company on moving forward. 

What other advice do I have?

Our number one piece of advice is to understand the business case and to understand what you're looking at. If you're looking at putting in an updated ERP system — that's good, that's new software. Everybody likes new technology. That's great. If you're looking at saving $7 million over three years, that's a completely different project. Now, if we know that this is what's possible, and we can see that we're going to get there, what makes up that $7 million? It's $30,000 in savings in this department, $70,000 in that department, all of that. If we, understand that on a deep level, we've got people, we can get them to buy-in. We don't want you to just look at this project because it's an extra work thing. We're going after a $7 million goal, we need you, we need your talent on this project.

It changes everything. That's the most important thing. You need to understand how the technology is going to save you or make you more money. That is when you can put the right amount of resources into the right parts of the product. If you're going after inventory savings, how are we going to use NetSuite to do this? What other products are out there that tie into NetSuite that are going to help us? We spent another $50,000 on scan guns to make it that much quicker, that whole business case answers all of those questions. That's always our first step — to understand that. That will tell you that, yes, NetSuite is the right product for me. Or, maybe we need to go after something else that does warehousing a little bit better than NetSuite.

Understand, everybody has capabilities, but certain businesses, their idea of warehousing is similar to Super Store Industries — they used to work there. These guys had 200 trucks coming in and out of a California warehouse every day. That's different than four shipments that add my five-day loading dock. Warehousing to them means a whole different thing. We need to understand that on a level of what exactly are we talking about here? How much are we spending the way we're doing it now? And what's it going to save us when we get it done?

Overall, on a scale from one to ten, I would give NetSuite a rating of eight — there is a reason why they're doing so well.

**Disclosure: My company has a business relationship with this vendor other than being a customer: Independent Consultant
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