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When Small Business Packages Have Enterprise Appeal

Written By: Charles Chewning Jr.
Published On: May 27 2005

Introduction

In most instances you get what you pay for. If you want a small business package, you purchase any one of several accounting products for small business. If you grow, you probably have to upgrade to a more powerful middle market product. If your core accounting requirements are somewhat basic, but you require more comprehensive customer relationship management (CRM) or e-commerce functionality, such as a Web store front, you may have to purchase a higher-end accounting system just to get this advanced functionality.

This can be a problem for small and medium businesses (SMB), who need more than basic functionality, but do not need, or cannot afford, larger software solutions designed for large enterprises. As vendors seek to expand their customer base, many are turning to the SMB market, which, until recently, has largely been ignored. Seeking to penetrate this market is NetSuite Inc. which has taken a completely different approach to the design of what should be called a business management system.

Company History

With the vision of Larry Ellison and Evan Goldberg, NetSuite (http://www.NetSuite.com), originally called NetLedger, was formed in 1999 to overcome the complexity of managing SMBs. It aimed to deliver integrated business applications to help users make the move into an e-business environment. The NetSuite application was built from the ground up to be a hosted solution allowing SMBs to move IT complexity out of their resource-poor world and into the data center where it belongs. This combination of integrated products and software-as-a-service has made it easier and more affordable for companies to grow their businesses.

Rather than trying to offer everything to everyone, the developers of NetSuite have identified specific user groups and created powerful sets of applications that meet their needs. They determined that users need business insight, back-office operations, customer relationship management, and Web commerce solutions.

At the same time, NetSuite recognized that there is a distinct difference with small business accounting and systems required by larger organizations. Rather than developing two different products, the vendor created two versions of the same application with appropriate levels of back-office accounting system support: NetSuite Small Business and the broader application NetSuite. NetSuite Small Business was designed for SMB users that require a little bit more than a typical entry level accounting system. NetSuite Small Business contains a basic set of integrated functions, including contact management, calendars, and activity management and offers a comprehensive set of accounting functions with some limited customer service features. The basic accounting functions themselves are well-designed and in some cases, offer surprisingly powerful functionality. Moreover, unlike other products, NetSuite Small Business recognizes that SMBs may require some degree of CRM support, so it provides basic contact management such as lead management, communication automation, sales pipeline tracking, quote generation, and group calendaring and collaboration.

Since the entire NetSuite product line is granular by nature, some specific accounting and CRM functions are not available out-of-the-box in NetSuite Small Business, but are available as add-on modules, including UPS Online Tools, drop shipments, partial shipments and backorders, and partial receipt of purchase orders. Other higher level functions are not available unless the user upgrades to NetSuite. These features include robust CRM and e-commerce, and purchase add-in applications for increased functionality. Back-office ERP, such as general ledger and inventory; business insight, including reporting and executive dashboard; employee management and collaboration, which also includes payroll; and e-commerce, with Web site and Web store features and customer self service, are also included. NetSuite CRM provides traditional CRM capabilities focused on customer acquisition. Customer lifecycle management functionality is offered by NetSuite CRM+, including order management, partner relationship management, incentive management and website building and hosting.

The NetSuite application will likely appeal to larger organizations whose accounting requirements fall somewhere between NetSuite Small Business and higher-end accounting products such as MS Great Plains, MAS 90/200, MAS 500, MS Solomon, or similar systems. NetSuite's ERP is the core, back-office accounting system consisting of financials (general ledger, accounts receivable, and accounts payable), order processing, inventory, and time and billing. It also uses a granular approach to functionality, similar to that offered by products such as MS Navision and MS Axapta.

Business Analytics and Dashboards

NetSuite offers one of the most comprehensive suites of analytics available in the middle market. While many products have been adopting dashboards and key performance indicators (KPI) slowly, NetSuite has spent a great deal of time creating a comprehensive, dashboard-centric and role-based approach to business management. In this case, the dashboard is in fact the workspace.

NetSuite also provides all standard reports common to most accounting systems, but has also created a reporting system that provides users with role-based analytics that, in many cases, eliminates the need to print standard financials. Managers, individual employees, partners, and even vendors can access both information and business processes from a single screen. Information such as reports, business metrics, or graphs, have been organized according to their role in the organization. Users can also access specific business processes through an entry point on the same dashboard.

While many business management systems are beginning to add dashboards that display key indicators, NetSuite subscribers can access more than fifty role-based, pre-configured KPIs and over thirty graphical reports that display trends over various periods. This includes key information like pipeline metrics, sales, orders, new support cases, and items sold. These indicators can also be set for various date ranges and compared to previous timeframes.

Along with KPIs and a dashboard approach to business management data extraction and report creation have been well-designed. For example, subscribers can target specific customer segments through searches and exclusions. Target groups can also be created by using prospect or customer information recorded in the database. NetSuite also enables users to create specific groups which can then be targeted for particular marketing campaigns such as new sales, upsell, or cross-sell. Ad hoc and other types of searches can be saved and added to a dashboard for viewing.

In addition to the analytic tools native to NetSuite, subscribers can use their favorite business intelligence tools, including Business Objects, Cognos, Crystal, FRx, or any software that supports ODBC, to access the database table and extract data directly from NetSuite.

NetSuite CRM and NetSuite CRM+

While NetSuite and certainly NetSuite Small Business are geared to SMBs, NetSuite CRM and NetSuite CRM+ can be used by much larger organizations in almost any industry, largely because both CRM solutions can also function in a completely stand-alone mode.

NetSuite CRM covers all of the most important sales and marketing business processes, but what really sets it apart is its ability to present a comprehensive real-time view of each customer and prospect through reports, graphs, and dashboards. Rather than having to wade through detailed reports to glean important information, reports and graphs present an instant picture of the organization as a whole, as well as customers, partners, and important issues and the dashboards act as their entry point.

Overall, this is a very well-designed CRM suite that covers the critical sales and marketing processes including sales force automation. It also provides seamless integration with territory management and forecasting and also allows marketing automation includes campaign management and real-time return on investment (ROI) and performance management. However, there are some companies do not require all of the sophisticated features available in NetSuite CRM or NetSuite CRM+. Smaller companies in particular may need nothing more than a standard contact manager that helps them schedule prospect and customer interactions (calls, demos, actions, meetings, etc.).

The customer service and support component of the software is also powerful, allowing users to collaborate with their customers to maximize service levels. The call center feature allows customers to access a self-service portal and pose questions or create support incidents that do not require immediate attention by a support representative. Customers can also troubleshoot issues with access to selected knowledge bases. Similarly, customers can also have their issues taken care of relatively quickly through the case management and routing feature, which uses rules to send cases to the appropriate service representative. Two other features include computer telephony integration (CTI) and off-line sales access. CTI allows third party developers to help improve service quality by routing calls to special queues based on phone prompts, which NetSuite makes even easier by automatically recognizing support contract entitlement. Another new application is the off-line sales access, which allows users to access critical CRM functions off-line and then synchronize data with the host system later.

Employee Management and Payroll

What is notable about NetSuite's payroll application is not necessarily the individual payroll functions, but the way they are integrated into a unified, self-service employee management system. Features include single screen access, which allows the payroll manager to see all tasks on this screen and select the specific task that requires attention, and role-based dashboards. As with other NetSuite applications, managers can access dashboards that present snapshots of information that is of interest to them specifically. Other features include expense reporting, time entry, and purchase requests, which are all routed through the flow to appropriate personnel.

E-commerce

NetSuite's eCommerce is a very powerful set of applications that allow even small companies to open their doors to the world through a web store. While many products support e-commerce, in most instances only the selling function is supported. The creation of a storefront requires a great deal of effort, time, and knowledge, making both the creation and update processes expensive.

This solution, however, supports the entire range of functionality required to take maximum advantage of the opportunities available for Web site and Web stores. Users can access development tools and templates to quickly create a Web store, populate it using special tags and images defined in each item master file, and create forms to collect user information, requests, and questions. They can also attract customers or specific customer groups by establishing varying sales prices, creating targeted special offers, using promotional URLs, and offering coupons. Finally users can also track Web store analytics that will drive further sales strategies.

Key Functional Elements

NetSuite supports a number of features that differentiates it from other products in addition to those functions described elsewhere. First, it is an application service provider (ASP) and that, by definition, minimizes the headaches and cost of software acquisition, implementation, database management, system management, and upgrades. While most ASPs are limited in their customizability, NetSuite's NetFlex technology platform customizes and extends NetSuite to meet an organization's unique (personal or industry specific) requirements for personalization, business processes, and best practices. Additionally with NetFlex AppBuilder, users can build entire applications hosted within NetSuite.

NetFlex supports what is called click not code, so users can easily set up an application to meet their specific requirements including terminology, forms, user-defined fields, subtabs within master files, searches, reports, and even real-time dashboards. New record types can be added, such as customer surveys or warranty records. Once these new forms have been created, custom code can be added to integrate business logic. Custom code, if needed, is generated in industry standard JavaScript. Finally, all configuration and customizations can be copied to other company databases and automatically carried forward when the system is upgraded. Additionally, integration and extension is made via SOAP, standard-based Web services that can be leveraged via common application development environments such as .NET and Java.

Other key functional elements include NetSuite's chart of accounts. Its general ledger sits on the fence between QuickBooks and higher-end products against which it competes. Subscribers may use account numbers, but the system does not require their use, thus smoothing the transition to NetSuite. If people want to use chart of accounts numbers, NetSuite supports a fifteen character natural account, plus three additional fields to track location, department, and class. The names of these account segments can be changed to suit the needs of each organization.

While NetSuite is not fully compliant with all multicurrency accounting regulations and procedures, it does allow users to maintain conversion tables and revaluate open transactions. In addition, users can maintain pricing in other currencies and bill customers in those currencies at the appropriate rates. Users can also integration with UPS Online to set up shipping to any UPS supported destination, select shipping preference, validate shipping addresses, and calculate shipping rates and handling fees which can be instantly added to a customer's invoice. NetSuite also has patent-pending integration between NetSuite and popular e-mail systems such as Microsoft Outlook, Lotus Notes, Yahoo! Mail, and America Online. Finally, NetSuite has its Advance Partner Center and supports collaboration between companies and independent (non-employee) partners. Using customized partner access, the application allows partners to jointly manage and access all of the critical sales functions.

Reseller Programs

Although users can contact NetSuite directly, the company has recognized that many organizations prefer to deal with a local entity. NetSuite's Solution Provider Program is similar to many reseller programs, whereby firms develop NetSuite expertise and then assist clients decide which applications best suit their requirements. Obviously the most significant difference between a NetSuite Solution Provider and a typical reseller is that there is no "sale". In all other respects, the NetSuite Solution Provider is a trusted business partner and advisor.

NetSuite also supports an Alliance Partner Referral Program whereby the partner refers users to NetSuite, but does not provide technical expertise. Finally NetSuite has established a group of Business Partners whose products may be of interest to users and in some cases whose products integrate with one of the NetSuite applications.

Competitive Analysis

NetSuite is a very powerful business management system that can meet the needs of many organizations, as long as the user has no reservations about being reliant on and placing important corporate information in the hands of an ASP, or if the user does not require industry specific functionality or heavy customization.

There is no fundamental reason why firms should not consider an ASP approach to business management, but users do appear to be slow to adapt. NetSuite has attracted what appears to be a sustaining number of subscribers, so users should have little fear about the company's longevity.

Although there are literally thousands of companies that would fit NetSuites target market, each can be the ideal prospect for any number of lower end to middle market resellers. NetSuite will compete very favorably against products such as QuickBooks (including QuickBooks Enterprise), Peachtree, and ACCPAC Simply Accounting because it offers solid accounting functionality as well as contact management.

NetSuite can also compete favorably against higher-end products, as long as the user's requirements are not industry specific or requires extensive modification.

In some respects NetSuite is caught between the lower and higher-end accounting software markets. There is no question that NetSuites functionality mix exceeds most lower-end products. The real question is whether users in this market are smart enough to recognize the advantages that can be accrued. At the same time higher-end products offer a whole host of industry-specific applications against which NetSuite cannot compete and chooses not to compete. This can be seen as a competitive disadvantage, but there are a sufficient number of companies that do not require significant modifications or industry specific functionality—and these are the companies that NetSuite targets.

User Recommendations

Users should at least consider NetSuite as a viable alternative to the more traditional accounting products. The fact that it is an ASP should not necessarily eliminate it from consideration. ASPs have reached a point in their life cycle where data protection is comparable to other products, and in some cases, superior simply because a professional team is managing the database. (See Trends in Delivery and Pricing Models for Enterprise Applications: Pricing Options for more information about ASPs).

The question that most users must answer is whether they are ready to move to an Internet-based accounting system. If they are, then they should compare their specific requirements against NetSuite. If the product meets these requirements, then it should be considered in the same league as other products. If it cannot compete in terms of functionality, then it should not be considered. In summary, NetSuite should be judged using the exact same criteria as any other business management system.

About the Author

Charles Chewning, Jr. is president of Solutions, a Richmond, Virginia-based (US) consulting firm specializing in accounting software selection. He is considered a leading software selection expert. Chewning has written a number of accounting software reviews and is a frequent speaker on the subject of accounting software selection as well as sales and marketing. He is the publisher of The Accounting Library (http://www.AccountingLibrary.com).

He can be reached at cchewning@accountinglibrary.com.

 
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