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NetSuite IPO
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Privacy Policy NetSuite ERP Software Review

By Steven Briggs

ERP Software Review Summary

Key advantages include:

  • A single and enterprise wide integrated business software system. The application possesses a respectable balance of application breath and product depth.
  • Flexible digital dashboards. NetSuite has made dashboards a showpiece of the ERP system. The dashboards are flexible and impressive.
  • Role-based application navigation and security. NetSuite believes their role based structure provides a distinguishable difference from other ERP system. While largely true, it is less certain and left to each individual to determine whether this paradigm is an advantage or disadvantage.
  • A native thin-client solution designed for on-demand Internet delivery.
  • Strong market leadership positioning. NetSuite is a marketing powerhouse. The company invests near $100 million annually in aggressive advertising, marketing and media promotions.
  • Several industry specific or vertical market solutions.
  • The company’s Partner Relationship Management (PRM) is well designed, thoroughly integrated throughout the business application and provides flexible lead distribution, joint forecasting, commission management and partner performance metrics.
  • While limited to SMB companies, NetSuite’s e-commerce shopping cart is the best integrated solution in the SaaS ERP market. Advanced functionality such as the keyword marketing module, affiliate management, eBay integration, promotional URLs, real-time credit card processing and basic SEO capabilities collectively provide an impressive e-commerce solution.

Key disadvantages include:

  • A difficult system to use. The company must improve the product’s ease of use or will lose competitive position.
  • Troublesome customer support. Moving the customer support operation to Manila has been a problem that is seemingly not getting better.
  • High customer support costs. Charging additional recurring fees of 22.5% to 37.5% for users who need to email and speak with help desk representatives is significantly higher than other comparable hosted ERP systems.
  • Poor company reputation. NetSuite business partners, users and former users leverage social media channels to share their extreme frustrations regarding poor support, constant price escalations, system downtime and product instability issues. Recognized sites such as ZDNet, BusinessWeek and a host of blogs and social media networks list pages and years of rants directed at NetSuite.
  • High customer turnover. Primarily as a result of the issues previously cited, NetSuite’s customer churn is unacceptably high.
  • Difficult customization tools. NetSuite does provide a suite of complimentary product tools, however, they are limited in nature and difficult to use.
  • Product upgrades are notoriously troublesome. NetSuite uses an unusual phased upgrade release progression which resembles more traditional on-premise software solutions rather than the all at once model used by most SaaS companies. Due to the difficulties, experienced users recommend going last in the phased upgrade progression.

In our limited survey, the number one registered complaint was a lack of ease of use. The NetSuite user interface (UI) is extremely unique relative to traditional ERP applications. While innovative approaches are appreciated, we found the navigation and workflow extremely difficult to use. ERP, accounting and back office processes are not well defined by a combination of business processes and tasks as much as they are by role. Since software features are designated to roles, users must assign, integrate and learn the roles for the multitude of tasks to be completed. It may be difficult for many users or businesses to make this transition.

Competitor Summary

White NetSuite, and in particular company CEO, Zach Nelson, use marketing and media opportunities to compare themselves to and position themselves against ERP software giant SAP, such a comparison is for the most part rooted more as a public relations ploy and less a legitimate threat to the German software maker. However, as SAP continues its inroads to the software as a service market, NetSuite will face the software giant within that limited context.

As a provider of fully integrated and on-demand ERP software applications, NetSuite faces a cast of direct and indirect competitors. NetSuite’s most direct competitors include the following on-demand ERP software manufacturers:

  • Aplicor. Aplicor also delivers on-demand ERP software systems on a global basis. While both companies deliver impressive ERP application suites, which both include accounting software, supply chain management, human resources software, light manufacturing and CRM software, the products, target markets and company cultures differ greatly. NetSuite’s corporate culture is closely identified with its unofficial and surrogate heir parent Oracle and the very high majority of NetSuite’s customers are small businesses. Aplicor’s culture is much more personified by the company’s customer-oriented relationships and impressive reputation among its customer and business partner community. Aplicor’s customer population consists largely of middle market companies.
  • Intacct and Salesforce.com. Intacct is a maker of hosted accounting software and located very near NetSuite in Silicon Valley. Intacct partners with Salesforce.com to provide a broader solution that includes customer relationship management software. Intacct belongs to the Salesforce.com AppExchange directory and has a pre-built integration between Salesforce.com’s sales force automation (SFA) module and Intacct’s sales order processing functions (from sales order entry through inventory fulfillment and customer invoicing). Intacct has filled a major back-office software void for software as a service giant Salesforce.com and the combined solution supports hundreds of global companies.

NetSuite indirect competitors include the following non-hosted software makers:

  • Intuit QuickBooks. NetSuite first set its sights (and its marketing and advertising efforts) toward small businesses looking to replace the popular QuickBooks. NetSuite has been successful in converting large numbers of QuickBooks users from a simple but limited accounting software system to a more comprehensive enterprise resource planning software application. QuickBooks converts are the most popular upgrade source for NetSuite.
  • Microsoft Dynamics. Microsoft has wrapped its four accounting software acquisitions (Great Plains, Solomon, Navision and Axapta) into a unified banner called Dynamics with a product portfolio which includes Dynamics AX, Dynamics GP, Dynamics NAV, Dynamics SL and Dynamics CRM. The software giant has succeeded in achieving SMB (small and midsize business) market share in the traditional on-premise market, however, does not offer a credible software as a service ERP system. NetSuite faces Microsoft Dynamics as a competitor only when a prospect is uncertain about their choice in on-demand or on-premise delivery. Notwithstanding certain advantages such as more robust manufacturing offering or greater availability of integrated third party products offered by long-time incumbent players such as Microsoft, NetSuite is a formidable competitor to the Dynamics solutions when viewed from functionality, flexibility and capability perspectives and provides sole advantage for customers seeking subscription-based pricing and hosted delivery.
  • The Sage Group. Sage’s MAS 90, MAS 200 and MAS 500 are legacy systems with deep software functionality, large customer bases and a mature VAR (value added reseller) distribution channel. Sage also has an impressive SMB market share and is the primary competitor to the Microsoft Dynamics accounting software lines. However, like Microsoft, Sage has no credible SaaS ERP solution and is therefore an indirect NetSuite competitor.
  • Epicor. Epicor is another software manufacturer of traditional software licensed products, however, is beginning to promote inroads to the software as a service industry. Like many legacy providers, the transition is slow and message has more marketing substance than credibility and competitive positioning at this point. Nonetheless, Epicor offers a mature and functionality rich on-premise business software application that appeals to many buyers not looking for an on-demand solution.

Report Summary

NetSuite provides a comprehensive suite of enterprise resource planning (ERP), customer relationship management (CRM) and e-commerce capabilities that permit customers to manage their critical back-office, front-office and web operations in a single information system. The migration from multiple disjointed best of breed systems to fully integrated enterprise-wide applications gave rise to the extraordinary growth incurred by ERP vendors SAP and Oracle during the 1990’s. However, not before NetSuite and other upstart software as a service ERP systems was such as capability available to the SMB market within the purchase constraints and business objectives that this market demands.