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NetSuite IPO
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Privacy Policy NetSuite Accounting Software Review

By Steven Briggs

Software Overview

As with most enterprise resource planning software systems, NetSuite possesses varying levels of maturity and capability among the various software components.

Financials. The core financials suite is relatively strong. The chart of accounts is flexible, budgeting is reasonable for the SMB target market and the company offers a number of advanced solutions (most with additional pricing) such as advanced budgeting, expense allocations, amortization schedules, deferred revenue recognition and custom billing schedules. Job costing or project accounting is available, however, is woefully inadequate for most job costing needs. More advanced functionality such as account analysis, variable allocations and non-financial unit accounts are absent from the accounting software suite.

Supply Chain Management. NetSuite offers impressive distribution and supply chain functionality including flexible sale order processing, backorder management, drop shipments, pick/pack and ship process navigation, serial and lot tracking, UPS shipping integration, multiple-warehouse and multiple bin inventory management, economic order quantity (EOQ) replenishment and a choice among inventory valuation methods. We would like to see the addition of electronic data interchange (EDI) in the future.

Manufacturing. NetSuite has recently expanded its core product to accommodate light manufacturing needs such as work orders, bill of materials and assembly operations. NetSuite manufacturing is limited to simple assembly operations and is not intended for manufacturing centric or MRP II type operations.

Human Resources and Payroll. The human resources information system (HRIS) is reasonable for the intended United States SMB market. The basic resource management and payroll processes are fulfilled, however, companies with higher number of employees or sophisticated labor issues may likely consider a best of breed payroll solution and companies outside the United States will likely consider local payroll processing alternatives.

Customer Relationship Management. NetSuite began as an on-demand accounting software provider, so the company’s CRM software does not possess the same levels of flexibility, functionality or maturity as the core financials suite. NetSuite is clearly stronger in back office systems than in front office applications. The CRM software product lacks some basic features such as true CRM analytics (using OLAP and a data warehouse), customer survey capabilities, event management, literature fulfillment, meaningful territory management, competitor intelligence (CI), call scripting and prospect score-carding, Also, several capabilities such as solution selling support and computer telephone integration (CTI) are only achieved with third party solutions (requiring additional integration and investment).

Industry Solutions

NetSuite’s product suites are mainly horizontal software solutions. However, the company also offers industry-specific configurations for several vertical markets including wholesale/distribution, professional services, software or technology companies, retail and nonprofit.

The top 10 NetSuite customer industries are Distribution &Wholesale; Professional, Consulting and Other Services; Computer Software; e-Commerce & Retail; Manufacturing; Computer & IT Services; Telecommunications Services; Financial Services; Healthcare Services; and Education.

NetSuite Wholesale/Distribution edition facilitates inventory-based enterprises in managing their transaction processing lifecycle, from lead to fulfillment to invoicing to payment. This industry solution is designed to support customer-facing processes with sales force automation, marketing and customer service processes integrated with back-office inventory management, order fulfillment and financial accounting. This edition also includes basic industry-specific business functionality such as economic order quantities (EOQ) and inventory replenishment.

NetSuite Services Company Edition permits customers to manage their client service sales and delivery using core software components such as CRM, project tracking, time and billing, customer invoicing and financial accounting. The professional services industry solution includes resource and project accounting capabilities such as deferred revenue recognition, Vendor Specific Objective Evidence (VSOE) revenue recognition, milestone and percentage-of-completion billing, resource scheduling, tracking and utilization and project document management. NetSuite’s recent acquisition of OpenAir is expected to further advance NetSuite’s penetration into the professional services automation (PSA) market.

Technology Solutions

NetSuite was developed using the Java development environment and operates on the Oracle database (no surprise here as Oracle CEO owns the majority of NetSuite). NetSuite provides several technology tools which aid in software development, software customization and system integration.

The NetSuite Business Operating System (NS-BOS) facilitates software customization and extensibility to NetSuite solutions. NS-BOS is a technology platform that allows customers, partners and developers to customize and extend the business software to meet individual company or industry specific requirements related to personalization or business processes. NetSuite’s customization tools allow partners to develop products of their own, including modified versions of the application suite. Similar to the Salesforce.com Platform as a Service (PaaS) concept, NetSuite’s tools provide the benefits of a packaged on-demand multi-tenant architecture with pre-built hosting efficiencies for accelerated development and lower IT infrastructure recurring maintenance investment. This review found the tools to be reasonable for their intended purpose, however, very technical in nature and therefore not well suited for end users or non-technical professionals.

Productivity Solutions

As an integrated enterprise resource planning software system, NetSuite possesses some rudimentary workflow capabilities which can automate business processes across departments. Processes are normally filtered and displayed in NetSuite using the role-based user interface.

The CRM and ERP software application delivers some predefined alerts and approval processes, however, the business software application does not offer a work flow designer tool or process engine which permits a user or System Administrator to define flexible document routing, alert notifications, approval processes, escalations or business process updates.

Business Intelligence

NetSuite displays dashboards upon system access and throughout the application. The dashboard includes key performance indicators (KPIs) which are calculated or refreshed in near real time. The dashboards are extremely flexible and permit users to modify KPIs, create their own KPIs and drill down from KPI results to source documents.

NetSuite has built its own report writer which allows some customization capabilities, simple drill down and basic report distribution. However, the report writer is proprietary, limited and overall difficult to use. Financial statements are particularly non-flexible. Users familiar with financial statement report writers such as Microsoft’s FRx (Financial Reporting Extender) or Infor’s F9 will find NetSuite’s report writer disappointing.

Data Center Reliability and Security

NetSuite is hosted and delivered from a Level 3 (Nasdaq: LVLT) data center located in the San Francisco Bay area. NetSuite is SAS 70 audited which may provide some comfort to SEC governed enterprises in the United States for their Sarbanes Oxley, section 404 compliance requirements. However, in the company’s SEC S-1 document delivered near the time of the company’s IPO, NetSuite admitted having no redundant data center for service delivery and customer data. The report revealed that the company’s single data center is located in a third-party facility in an area of California vulnerable to earthquakes. As specifically stated by the company "We do not currently operate or maintain a backup data center for any of our services or for any of our customers' data, which increases our vulnerability to interruptions or delays in our service." Many prospects will fail to consider NetSuite simply for this lack of redundancy and exposure.

The company does offer a service level agreement (SLA) of 99.5% uptime measured monthly, however, excluding designated periods of maintenance. Under the terms of this commitment, the company offers to credit a full month’s service fees for any month that the SLA is not achieved. A limited view of NetSuite system uptime or downtime can be obtained at http://status.netsuite.com/status.html.

Customer Support

In about early 2007, NetSuite began the process to move the vast majority of customer support to Makati City, Manila, the Philippines. Offshore help desk support is nothing new and Philippine organizations have proven the delivery of very successful call center and help desk operations. However, poor customer support has been a major frustration for many customers and the transition to Makati has exacerbated the situation.

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