THE VALUE OF A TRUE CLOUD ERP PLATFORM NetSuite Perspectives

Category: 

Our Experience

Today, cloud computing is at the forefront of the shift to the digital business and enabling companies to adapt to these changing models, both strategically and operationally.

Companies with a cloud-first strategy have learned that the cloud’s real value comes with being able to delegate the Service
Level Agreement (SLA) of an entire solution, from infrastructure to application, instead of components. It is also widely recognized that integrated suites reduce complexity, increase reliability and cost less—it’s just that now, with cloud, the suite includes hardware, security and operations. Most agree that the cloud paradigm has cost and convenience benefits: availability, speed, agility and TCO, enabling faster development processes and providing higher reliability and lower risk. Companies that take an ad hoc approach miss out on many of cloud’s benefits and experience a variety of pitfalls.

In the current state of the market, not all cloud providers can step up to the challenge of providing an integrated offering, and that forces companies to manage more than they want to.

NetSuite Value Proposition

As a leading Cloud ERP company, NetSuite has championed the cause to deliver not only a true cloud platform but also strived continuously to develop a truly integrated suite for our growing global customer base of more than 40,000.

Further, the SuiteSuccess customer engagement model is already helping hundreds of new customers deploy the platform faster and leverage leading business process practices to both create and realize value within their organization much sooner than traditional approaches.

“Enterprises run the risk of getting nasty shocks when the thing they thought they were buying turns out to be something altogether different. Hosting and application management are not synonymous with SaaS.” — Gartner

In this document we hope to provide you our perspective on the components and scorecard to use to not only evaluate a true cloud solution, but also analyze for yourself how our various platform offerings help you to meet your organization objectives today,

adapt to the industry disruptions of tomorrow and realize savings of more than 20%-50% in Total Cost of Ownership (TCO) alone1 or incur $64k-$242k annually in hidden or 2 unexpected costs.

 Multi-tenant
 Versionless
 Designed for Internet  Flexible
 Scalable

TRUE CLOUD

 Single tenant  Version locked  Pre-internet
 Inflexible

 Not Scalable

FAKE CLOUD

aka "private cloud" or "hosted/hybrid"

Reference: HBR – The CIO’s Guide to Cloud Computing
1 Hurwitz & Associates – The compelling TCO case for cloud computing in SMB, mid-market enterprises 2 NetSuite research and example analysis for a $10M revenue company

Chapter 1

NETSUITE: THE VALUE OF A TRUE CLOUD PLATFORM – KEY DIFFERENTIATORS

Software-as-a-Service (SaaS) and Multi-Tenant Architecture

Software-as-a-Service (SaaS)

NetSuite is offered as Software-as-a-Service (SaaS). The applications are accessible via a web browser or mobile app.

Unlike on-premise software, NetSuite customers do not have to be involved with managing the underlying cloud infrastructure including network, servers, operating systems, storage and application upgrades.

Multi-Tenant Architecture

NetSuite has a single instance of the application. Each tenant can make customizations and configurations that are rendered to the views they see and/or invoked when using the application.

Most customers share a common database instance with other customers. In situations where customers need higher performance, NetSuite offers Premium Performance Tiers with dedicated database instances. Some customers start on the shared database and migrate at a later point to their own dedicated database.

This last situation (a shared database) would be considered as the highest degree of multi-tenancy. Virtualization would, by definition, then offer the lowest degree
of multi-tenancy.

Despite what fake cloud vendors will tell
you, multi-tenancy matters. For example,
with a true cloud provider, all customers typically access the same solution from the same cloud. This gives customers continuous and instantaneous access to the latest product upgrades.

Shared application,

Shared application, shared database

License Costs (One-time)

Subscription Costs (Operational Costs/Year)

On-premises

Medium

Hosted

Low-Medium

Medium

Cloud-based

Low

Software Maintenance Costs (Operational Costs/Year)

High

Low

Medium

Low-Medium

Low

Overall Capital Costs

High

Medium

Low

IT Resources (Admin/Dev)

High

Medium-High

Low

Hardware/Storage

High

Medium

Medium

Upgrade Costs

High

Medium

Low

Implementation Timelines

12-36 Months

9-18 Months

4-8 Months

Preserving Your IT Investments

Public Cloud

NetSuite is offered as a public cloud deployment and has a single instance of the application. This is aligned with our strategy to offer SaaS and a multi-tenant architecture that allows both our enterprise as well as small business customers to be on the same version of the application globally, allowing them to reap benefits from economies of scale, less capacity planning, increased agility, scalability and IT costs.

Two-Tier ERP Strategy

Two-tier ERP is a business and technology strategy that enables organizations to keep their investment in existing ERP systems, i.e. SAP or Oracle, while deploying cloud-based ERP, i.e. NetSuite, at newer subsidiaries.

As large enterprise’s expand and restructure through mergers and acquisitions into larger companies, one of the strategies to preserve their existing ERP investments is to adopt a so-called hub and spoke approach to ERP.

There are three hub and spoke models:

  1. All business units (headquarters and subsidiaries) use a single application instance.
  2. Enterprise hub and business unit spoke use same application—but may have more than one instance.
  3. Business units choose from an approved list of spoke solutions which allows the subsidiaries to pick a solution that best suits their requirements. For example, localized business units often need to address specific customer billing and payments practices, and local regulatory requirements.

Application Stack

ERP/FMS CRM PSA Software Retail Manufacturing Ecosystem

1000+ Partners 400+ SuiteApps

Added Platform Benefits from Application Stack

Global

Localization Management

Mobile

Tablets, Watch iOS Android

100% Browser

Independent

Global Search

Google the Suite

Reporting

Create Complex Forms & Reports

Digital Assets

Manage Unstructured Data

SuiteSocial

Collaboration Tools

SuiteCloud Platform

SuiteConnect

Cloud Data Integration

SuiteScript

Programmable Logic and UI

SuiteTalk

Cloud App Integration

SuiteAnalytics

Built-in Business Intelligence

SuiteBuilder

Point-and-Click Customization

SuiteFlow

Visual Workflow Implementation

SuiteBundler

Cloud Application Distribution

SuiteCloud Infrastructure

Scalability

Enterprise Elastic Capacity

Security

SSAE 16 SOC1/ISAE 3402

Compliance

Type II PCI DSS SOX

Transparency

24x7 System Status & Ops

Assurance

99.5% Uptime Guarantee

Process Tests

Pre-Production Sandbox

No Version Lock

Overnight Upgrades

 

"NetSuite OneWorld has the flexibility to let us build financial controls over the way we do business, instead of trying to mold our processes to inflexible software." — Bankrate

An Integrated Business Application Suite

Integrated Suite

Companies in virtually every industry are using sophisticated business software to fuel their growth but many are still struggling to keep up with their growth and manage costs effectively because of a hodge- podge of disconnected functional systems causing process bottlenecks and employee productivity issues.

Integrated business software suites are transforming how companies run, and enabling them to transcend growing pains that previously were holding them back from taking their business to the next level of profitable growth.

In an ROI study by independent analyst firm Nucleus Research, customers using NetSuite’s integrated cloud business suite accelerated their financial close times by up to 50%, increase sales productivity by 12.5% and increase inventory turns by 50%, amongst other efficiencies.

"NetSuite is our single source

of truth. Our people are very

happy with NetSuite and are

always looking for different

ways to optimize the solution." — Dent Wizard

Cloud business application assessment scorecard – hidden costs of $64k-$242k annually1

Cloud

On-Premise

Hosted/Hybrid

Business Agility

The ability to quickly deploy new business models and products, transact M&A and complete divestitures.

0K

26K

20K

Scalability

The capability to handle growth, create new instance, launch internationally.

13K

25K

19K

Flexibility

Ability to adopt to potential changes in requirements.

0K

12K

12K

Versioning

The ability to remain current on latest software version from the software vendor.

0K

48K

36K

Configuration

Allow business users to re-configure out of the box workflows.

19K

38K

38K

Customization

Develop new functionality not available from the software vendor.

24K

24K

30K

Risks

Security

8K

25K

19K

Availablility

99.97%

99.97%

99.97%

Performance

Time-to-value

Time to realize business value.

0K

44K

44K

Potential additional investments for a $10M company

$64K

$242K

$218K

Comprehensive Good Average functionality functionality functionality

Cloud IT application assessment scorecard – TCO savings of 20%-50%2

On-Premise

Total Cost of Ownership (TCO)

Limited functionality

No functionality

Cloud Developments

Multi-Tenancy

Hybrid

License costs (one-time)

$$

N/A

$$

Software Maintenance Costs (Operational Costs/Year)

$$$

N/A

$$$

Subscription Costs (Operational Costs/Year)

N/A

$$

$$

IT Resources (Admin/Dev)

Hardware/Storage

$$$

$$

$$

Upgrade Costs

$$$

NA

$$

Implementation

$$$

$

$$

Security

$$$

$

$$

1 NetSuite example analysis for a $10M revenue company
2 Hurwitz & Associates – The compelling TCO case for cloud computing in SMB and Mid-Market Enterprises

Chapter 2

ASSESSMENT SCORECARD

Large enterprises, SMBs and mid-market enterprises alike need business solutions that help them manage day-to-day operations and processes more efficiently. At the same time, they want insight and intelligence to successfully adapt to a fluid business environment, and ensure compliance with regulatory requirements. It is then no surprise that some of the strategic business leaders that we engage with evaluate their cloud computing platforms not only
on Total Cost of Ownership (TCO) criteria alone, but also engage their line of business operational leads to actively participate in the selection process to determine the true return on their investment that is aligned with their business strategy and objectives.

In this section, we present both a typical business need evaluation scorecard and a Total Cost of Ownership (TCO) scorecard that can assist, at least at a high level, in aligning business and IT requirements, eliminate siloed platforms and solutions that create spaghetti environments and justify the needs for an integrated platform that is aligned to your business objectives, can drive business process improvements and thus preserve your company valuations.

1 Study of NetSuite customers by SL Associates

"The ROI of cloud ERP can be achieved relatively quickly and this delivery model brings IT cost reductions and increased employee productivity to the broad range of the companies using it. SMBs can also achieve other important benefits from ERP in the cloud, such as increased inventory accuracy, better customer satisfaction and increased sales." — Nucleus Research

Value Realized by NetSuite Customers1

360° visibility

Reporting time

Audit completion

+55% to 80%

–40% to 55%

–25% to 40%

Order process efficiency

+40% to 60%

Time to close

–45% to 70%

IT support resources

–40% to 65%

Enabling Business Agility and Scalability

Business Agility

$26,250 – $131,250*

Increase revenue by 1% on 75% of revenue ($7.5M).

Enable your business strategy to expand into new markets and channels.

Added Platform Benefits from Application Stack

Global

Localization Management

Mobile

Tablets, Watch iOS Android

100% Browser

Independent

Global Search

Google the Suite

Reporting

Create Complex Forms & Reports

Digital Assets

Manage Unstructured Data

SuiteSocial

Collaboration Tools

SuiteCloud Platform

SuiteConnect

Cloud Data Integration

SuiteScript

Programmable Logic & UI

SuiteTalk

Cloud App Integration

SuiteAnalytics

Built-in Business Intelligence

SuiteBuilder

Point-and-Click Customization

SuiteFlow

Visual Workflow Implementation

SuiteBundler

Cloud Application Distribution

SuiteCloud Infrastructure

Scalability

Enterprise Elastic Capacity

Security

SSAE 16 SOC1/ISAE 3402

Compliance

Type II PCI DSS SOX

Transparency

24x7 System Status & Ops

Assurance

99.5% Uptime Guarantee

Process Tests

Pre-Production Sandbox

No Version Lock

Overnight Upgrades

* Example analysis of hidden costs for a $10M revenue company, with 35% gross margins. The lower box, details other assumptions used for calculating the hidden costs

Scalability

$25,000 – $50,000

Increase gross margins from 35% to 36%-37%.

Grow your business and revenues without the limitations of an on-premise ERP capacity planning holding you back.

Service Tier

Shared

3

2

1

1+/0

Availability

Standard

Standard

Standard

Standard

Enhanced/Premium

Business Data

10GB

100GB

500GB

1TB

3TB

File Cabinet Data

10GB

25GB

200GB

200GB

400GB

Premium Sandbox

No

No

Required

Required

Required

SC+ Licenses1

1

2

3

5

10

Upgrade Phase

Fixed

Selectable

Selectable

Selectable

Selectable

Users (maximum)

100

150

800

1,200

3,600

NetSuite Service Tiers

Enabling Business Flexibility and Eliminating Version Lock

Business Flexibility

$12,000 – $18,000

Reduction in time to add new capabilities. 160 hours per capability at $75/hour.

Enable your business strategy to expand into new markets and channels.

Zero Lock Versioning

$48,000

320 hours at $75/hour per upgrade. 2 upgrades/year done by NetSuite.

NetSuite’s patented “phased release” process ensures that 100% of our customers are on the same version. Typically, NetSuite plans
for two major upgrades per year and ongoing minor upgrades throughout the year. A release preview environment is also provided to the customers. Certified customizations carry forward and customer use cases are incorporated in QA testing.

SUITEBUILDER SUITEFLOW

• Custom fields and records • Centers
• Rolers
• Point and click

• Custom workflow
• Decision trees
• Extend with SuiteScript • Point and click

SUITESCRIPT SUITETALK

  • Custom back-end logic
  • Custom UI
  • Industry-standard JavaScriptprogramming

• Application integration
• Token-based authentication • Support for customizations • SOAP-based web services
• SuiteScript REST

SUITEANALYTICS SUITEBUNDLER

  • Real-time analytics
  • Report builder
  • Dashboards
  • Saved searches
  • SuiteScript and WS APIs
  • SuiteAnalytics Connect: ODBC/JDBC integration

• Easy application packaging
• Rapid deployment
• Business template replication • Managed releases

PHASE 1 CUSTOMERS

PHASE 2 CUSTOMERS

PHASE 3 CUSTOMERS

PHASE 4 CUSTOMERS

NetSuite Upgrade 10% Upgrade

30% Upgrade

PHASE 1 PHASE 2 PHASE 3 PHASE 4

Remaining Upgrade

ACCOUNT SNAPSHOT

Configure and Customize and Carry Them Forward

SuiteSolutions

$37,500 – $50,000
1 IT FTE reduction, effort shift to business user.

In addition to offering a host of configurable forms, reports and process flows that are configurable by the business users, NetSuite SuiteSolutions offers a library of ready-to- launch solutions to address common business requirements across market verticals. SuiteSolutions facilitate accelerated time- to-market and reduce development costs— enabling customers to achieve business agility with fewer resources.

SuiteCloud

$24,000 – $36,000

160 hours at $75/hour per customization. Faster execution and elimination
on customizations.

With SuiteCloud you get the best of both worlds—centralization in a suite for core business function, data and analytics to avoid unnecessary hairballs plus the most flexible system for customization, extension, integration and development in cloud ERP—making “smart integrations” easy and putting the business processes that give you competitive advantage right in your system of record.

Personalize Dashboard

End User

Custom Searches

Custom Forms

Custom Fields

Custom Reports

Custom Records

SuiteBundler Application Deployment

SuiteScript Programmable Logic and UI

Developer

SuiteFlow Graphical Process Customization

SuiteApp

Web Services Integration

Custom Code

Business Analyst

Extend, Connect and Integrate to Anything

NetSuite Apps

ERP | SRP

Build your own Apps and Processes on NetSuite

Your Custom Apps

SuiteCloud Platform

| Commerce |

260+ Certified Apps Developed by our Partner Network

Built for NetSuite Apps

Industry Specific

Two Significant upgrades per year Customizations and Apps Run on the Latest Version Automatically

Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Page 15

Built-In Security and Redundancy

Security

$25,000 – $50,000

Analysis assumes 1% customer churn due to security issues (500 customers & $20k revenue/customer).

NetSuite employs stringent round-the-clock monitoring tools, controls and policies and a dedicated tenured security team to ensure that it provides the strongest security (Application, Network and Data) for its customers.

This results in benefits to our customers by getting stringent security certifications for their business applications and lets them enjoy security controls such as fully guarded premises and physical access management that are economically unachievable with typical in-house, on-premise deployments.

Availability

$0

Benefit analysis assumes that customer evaluates this SLA for all platforms it may be considering.

NetSuite maximizes application availability by operating multiple geographically separated data centers. Its data center redundancy includes data mirroring, disaster recovery and failover. NetSuite has achieved a historical uptime track record of 99.96% over more than the past five years and guaranteed uptime of 99.5% backed by transparent Service Level Commitment. To add to its commitment, NetSuite’s SLC is backed by a service credit if availability commitment isn’t met. System status is displayed at all times at http://status.netsuite.com.

99% SLA 99.5% SLA

Potential Downtime Potential Downtime

99.97% ACTUAL Actual Downtime

"NetSuite is designed for life, just like my Sactionals. They’re both built to last and infinitely adaptable." — Shawn Nelson, CEO and Founder, Lovesac

Performance to Boost Productivity

Performance

$0

Benefit analysis assumes that customer evaluates this SLA for all platforms it may be considering.

Application performance is key to NetSuite and our customers. NetSuite’s built-in performance monitoring tools provide deep insights into the application’s behavior and exposes granular details about performance metrics.

"We can do twice as many transactions in the same amount of time."
— Ed McMahon, CEO, EPEC Engineered Technologies

Typical Day HTTP Requests Data Persisted Health Checkpoints Queries Processed

Actionable Insights:

40%-55%

Accelerate Time to Close: 45%-55%

Productivity:

25%-50%

PROBLEM

• Inconsistent customer experience • Managing several systems

• Revenue leakage
• Limited insight into customer behavior

• Project and resource misalignment • Complex regulatory requirements

• Currency and subsidiary consolidation • Limited purchasing controls
• Limited company performance data

• Spreadsheet processes • Manual period close
• Limited or no reporting

IMPACT

• Decreased customer satisfaction • Fragmented information

• Missed revenue opportunities • Lack of customer loyalty

• Lost revenue • Increased risk

• Lack of global business insight
• Compliance and visibility issues • No cash flow transparency

• Incomplete financial data
• Takes too long to close books • No access to real-time metrics

SOLUTION

• Customer self-service
• Fully integrated business insights

• Financial planning & analysis • Integrated marketing

• Centralized HCM
• Project management • Global compliance

• Multi-subsidiary management
• Streamlined procurement
• Enhanced financial management

• GL, AR & AP unified
• Period close automation
• Role-based reporting and metrics

TRANSFORM YOUR BUSINESS

A strategy for companies to meet the challenge of today’s disruptive times.

TRANSFORM

EXPAND

INNOVATE

ENHANCE

REMEDIATE

Chapter 3

SUITESUCCESS – ZERO TO CLOUD IN 100 DAYS

SuiteSuccess – Time to Value

NetSuite packages the experience gained from tens of thousands of deployments worldwide amassed over two decades into a set of leading practices. These practices pave a clear pathway to success and are proven to deliver rapid business value. Intelligent, staged implementation begins at sales contact and spans the entire customer life cycle so that there is seamless continuity from sales to services to support.

Most ERP vendors have tried to solve the industry solution problem with templates, rapid implementation methodologies,
and custom code. NetSuite took a holistic approach to the problem and productized domain knowledge, leading practices, KPIs and an agile approach to product adoption. The benefits of this are faster time to value, increased business efficiency, flexibility and greater customer success.

Within each industry offering, NetSuite
has built unique micro-vertical solutions to address specific market needs. SuiteSuccess has over 300 customers and is available now, expanding globally into more industries and to current NetSuite customers over the course of this year.

"Our team at NetSuite has been nothing short of spectacular. They provided us with a smooth, on-time and rock solid delivery of our new ERP."

— Dave Ullmann, Director of Ecommerce, Lindemann Chimney

Chapter 4

NEXT STEPS

Path towards a strategic partnership

NetSuite is aligned and committed to your transformation initiatives. As a strategic partner we will take this responsibility extremely seriously and are ready to bring our expertise and cloud solutions delivery experience to your organization.

Proposed Next Steps:

  • Plan and schedule a value assessment engagement to confirm and validate the platform value that can be realized with NetSuite solutions.
  • Establish a joint executive sponsorship and governance team to track and monitor our strategic partnership.
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