Future of computing lies up in the ‘cloud’

CLOUD-BASED financials/Enterprise Resource Planning (ERP) software suites provider NetSuites Inc. is convinced the “cloud” is where business is going. It thinks that in the next few years, there will be bigger and faster migration to it from on-premise solutions for cost efficiency and competitiveness.

This observation is supported by industry researches and studies showing that enterprises are ready to consider Software as a Service or cloud- based ERP solutions. NetSuite itself is already experiencing this trend throughout its global operations.

At its first customer conference in San Francisco, the SuiteWorld 2011, key company officials were one in saying that NetSuite was moving to make sure that when the huge migration happens, NetSuite would be the market’s preferred provider of cloud applications that support every aspect of business—including ERP, customer relationship management or CRM, accounting, e-commerce and customer support.

From its small and mid-market focus—which started with its initial offering of a web-based small accounting program in 1998 to a complete suite of business solutions and applications—it is now looking at larger enterprises. Maybe not the top 500 companies, but the 5 million firms under them.

The company, which became a big success in the mid-market, particularly with its NetSuite OneWorld, is confident it will also make it in the bigger arena.

Optimism is high, according to company president and chief executive officer Zach Nelson, because of its product offerings, continued innovations and a 10-year head start over its competitors on the cloud.

Products, partnerships

The slew of announcements at the recently held SuiteWorld 2011 showed NetSute is trying to win over large enterprises through two key strategies—introduction of new products and enhancement of existing ones, and partnerships with big channels and independent software vendors.

Topping the list of the announcements made by Nelson at the opening of SuiteWorld was a new product offering, the NetSuite Unlimited. The target, obviously, are large enterprises, those that can afford to spare a big percentage of their revenues for on-premise business software and for the maintenance of their own servers.

With the Netsuite Unlimited—which packages 26 NetsSuite modules, unlimited number of users and subsidiaries, service capabilities, storage, and all possible applications required by large enterprises—a company only has to pay a fraction of the cost it used to spend for software and servers.

NetSuite’s product line promises a whole suite of solutions and applications to run an entire business.

“We will do it all so businesses can focus on their customers and save on IT costs,” Nelson said.

NetSuite has proven its capability to run and manage suites of business solutions and applications, particularly its NetSuite OneWorld, the first on-demand system that delivers real time global business management and financial consolidation to mid-sized companies with multinational and multi-subsidiary operations.

“We manage our data bases well, and we have the best team to ensure best performance. In the last six years, our uptime is 99.9 percent. We use technology to make faster, cheaper and better products. We spend a lot for this. Last year alone, we invested $50 million in research and development,” he added.

Enhancements

NetSuite OneWorld, which now has about a thousand unique applications and more than 10,000 organizations in its fold globally, is continuously enhanced.

It is highly customized as it is used by big and small companies in about 100 countries. The product features interface translations in 15 languages, conversion for 170 currencies, and customizable tax engine to adapt to any country using it.

At the SuiteWorld 2011, NetSuites announced further improvements in the system and the 10 new countries that adopted it.

For the infrastructure it needs to support the extreme scalability of NetSuite applications, the company announced an agreement with Oracle for Netsuite’s use of the Oracle Exadata Database.

This partnership with Oracle not only ensured faster delivery of services, it also substantially brought down costs for clients.

“Delivery of services, which used to take 70 minutes, will now take only one minute. If you were spending $7 million before, it will now cost you only about $100,000. There will also be a quantum leap in capability,” Nelson said.

Business deals with management consulting, technology and outsourcing company Accenture and business consulting and accounting firm MacGladrey, which were also announced during the event, are seen as part of a strategy to reach large enterprises through partnerships with third-party companies.

Social networking

NetSuite also made a move toward integrating social networking with business through a partnership with Yammer, an enterprise social networking firm.

Several years ago, Nelson had considered getting into social media for possible business applications. Back then, he was already talking about Twitter and Facebook morphing and making their way into business technology.

This seems to be happening now through the company’s SuiteSocial. Through this application, NetSuite is attempting to revolutionize enterprise/workplace communities by providing a social layer to the ERP system.

The partnership with Yammer allows companies to socialize their business processes through connectivity with the ERP system and back to the social activity stream of Yammer. It gives them the ability not only to work across the enterprise but also out to its clients and suppliers.

Vertical expansion

Customization of products is one reason why NetSuite is winning, the official said.

“Every customer wants his business and software different. SuiteCloud enabled that through Suite Bundler, Suite Analystic, SuiteTAlk, SuiteScript and SuiteFlow. The platform is so powerful that, in the next few years, all developers will be building only on the cloud.”

Developers today are expanding horizontally in financial planning and vertically.

During the event, NetSuite also announced its vertical expansion through a new Warehouse Management System built on the SuiteCloud platform by eBizNet, a supply chain management company.

For most businesses, the last vertical link before one’s product reaches the customers is the warehouse. How things are managed in the warehouse, can determine whether one wins or loses the customers, making warehouse management important in the business.

The Warehouse Management System is a combination of advanced technology and best operating practices that optimize all functions and resources inside a warehouse—inventory, storage space, equipment and the people.

“One should allow the system to make decisions in real time,” Nelson said.

Power, agility

The last few years saw more companies giving up their servers and moving on to the cloud. This is because of the tough economic condition and the growing need of companies—big or small—for the fastest and most efficient services that, of course, mean higher profit.

Why would one, even if it can afford the huge cost of maintaining on-premise ERP software, continue doing so if it could get the fastest and more efficient cloud computing solutions at a fraction of the cost?

Indications point to a more rapid migration onto the cloud, and NetSuite’s efforts to expand by making available more offerings and reaching out to large enterprises seem to be the step toward the right direction.

Some sectors, however, have reservations over its strategy to go for the large enterprises. They expressed fear that NetSuite might abandon the mid-market as it focused on winning the large enterprises.

To this Nelson said: “We will not abandon what got us here.”

“It is the market and technologies that are changing. What remains the same is our goal of making available to all the power of the software used by the biggest companies in the world. We just add now, giving the large enterprises the agility of the mid-market companies,” he explains.

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