Why Oracle needed NetSuite

JACK GOLD AUGUST 1, 2016 3:05 PM

TAGS: JACK GOLD, NETSUITE, ORACLE

Image Credit: Ken Wolter / Shutterstock.com

Oracle is buying cloud-based CRM/HR/ERP provider NetSuite for $9.3 billion, it announced last week. Although Oracle has been beefing up its applications capability through acquisitions over the past several years, most acquisitions were far smaller. Only its previous acquisition of PeopleSoft for $10.4 billion in 2014 is larger. Given the huge price paid, even though Oracle has plenty of cash on hand to make it happen, can Oracle actually get benefit from such an acquisition?

Oracle badly needs to court the mid-tier market

Oracle has been shifting aggressively to the cloud over the past two years as its more traditional client/server based enterprise solutions have become less popular with customers. Indeed, its revenue mix has shown just how important cloud is becoming to Oracle’s future. In addition, the traditionally lucrative market for enterprise back-office systems built on Oracle core database and related products that run most big companies has seen a good deal of encroachment from Oracle’s competitors. Much of that encroachment relates to buying full solutions rather than traditional Oracle infrastructure on which custom apps were built, and most of them being served up in the cloud. This is particularly true in the mid-tier markets. Oracle is buying NetSuite at significant expense to bolster its competitive position in the cloud and to advance its own cloud-based capabilities, but also because it wants to be more competitive in small- to mid-tier markets.

If Oracle hadn’t made the move, someone else would have

Why buy NetSuite now? It is quite likely that had Oracle not gone this route, NetSuite would have been acquired by another company (likely candidates would be Salesforce, Microsoft, SAP, or possibly Amazon, which wants to offer more applications in the cloud and not just be a cloud server service). This competitive threat is now off the table. It’s also true that Oracle has had some trouble selling into mid-tier accounts, a market that is growing faster than enterprise. NetSuite can give Oracle a competitive advantage in this market segment. And finally, it is a “poke in the eye” to competitors, particularly Salesforce and Microsoft, which have been taking mid-market share.

NetSuite customers may end up paying more

What isn’t yet clear is what this all means for NetSuite customers. Oracle says it will run NetSuite as an independent company. But if the PeopleSoft acquisition is any guide, it likely won’t be long before Oracle decides to fully integrate NetSuite into its own offerings. This will likely mean price increases for existing NetSuite customers and links to other Oracle products and services. There is some limit to what Oracle can do here if it wants to stay competitive, but it often finds a way to increase revenues despite market pressures.

Ellison and Oracle should both come out richer

So is this a winning strategy for Oracle? This acquisition does give the company a major path to more cloud-based revenues – something that is critical to its future. And despite NetSuite’s current unprofitability ($125 million loss in 2015), it’s likely that Oracle can quickly turn NetSuite’s revenues profitable by “streamlining” the organization and leveraging Oracle’s current channels and overhead functions.

In addition, the massive resources that Oracle can bring to bear on R&D and services should help NetSuite stay ahead of the pack and remain highly competitive in a market that has been consolidating of late. And despite Larry Ellison’s personal gains from this transaction (he was an early investor in NetSuite), I believe this is a good acquisition for Oracle (although perhaps an expensive one) that will allow the company to gain market share and revenue benefits long term. Overall I rate this acquisition as a positive for both Oracle and NetSuite.

Jack Gold is the founder and principal analyst at J.Gold Associates, an IT analyst firm based in Northborough, MA., providing research and analysis of the many aspects of business and consumer computing, and emerging technologies. Follow him on Twitter @jckgld or LinkedIn at https://www.linkedin.com/in/jckgld.

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NetSuite adds next-gen manufacturing capabilities to its cloud ERP

Posted on 3 Mar 2016 by The Manufacturer

Leading provider of cloud-based financials, ERP and omni-channel commerce software suites, Netsuite has announced that it has acquired IQity’s cloud business.

According to NetSuite, the  acquisition allows it to create the first single cloud software system that meets the needs of both discrete and batch process manufacturers of all sizes with the ERP power to run core business operations along with the deep industry functionality required to meet ever-changing market needs and customer expectations.

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The combined strengths of NetSuite and IQity’s deep domain experience can reportedly enable manufacturers to manage their business more profitably from order-to-cash through build-to-ship, helping them to achieve overall operational excellence, take control of supply chain processes and improve business value, while reducing operating costs and IT overhead.

Founded in 2007 and headquartered in Pittsburgh, IQity Solutions joined NetSuite’s SuiteCloud Developer Network (SDN) in 2012 as a key solution partner.

Leveraging the NetSuite SDN Platform, IQity created the IQity Advanced Manufacturing SuiteApp—natively built on the NetSuite platform—providing NetSuite customers with shop floor; resource capacity planning; finite production scheduling; batch work order management; integrated quality management, and advanced data collection capabilities to track actual production results; equipment utilisation; labour productivity; downtime; rework and more; culminating in lower operating costs and improving profitability.

By combining the strengths of NetSuite and IQity, manufacturers gain access to a modern cloud solution, helping to position them for the industrial Internet of Things (IIoT).

The IQity Advanced Manufacturing SuiteApp achieved “Built for NetSuite” certification from the Built for NetSuite (BFN) program, which is designed to give NetSuite customers additional confidence in the quality of SuiteApps.

At the time of the acquisition, NetSuite and IQity had nearly 40 joint customers.

NetSuite President, Jim McGeever commented: “As today’s manufacturers face increased global competition, rising customer expectations and digital transformation, they need modern technology solutions to enable them to adapt.

“The combination of NetSuite and IQity arms these companies with a unified, cloud-based system that extends across manufacturing, financial and commerce processes to help transform their business operations.”

IQity Solutions founder, Dave Gustovich explained: “Market pressures on manufacturers have never been greater and legacy, on-premise systems are not sufficient to manage the growing complexity of the business environment.

“With the acquisition of the IQity cloud business, NetSuite is offering the opportunity to power the next level of business results with a unified system that lets manufacturers focus on product innovation, efficiency and profit margins; not managing a patchwork of disconnected point solutions.”

The traditional, on-premise software approach used by manufacturers—typified in legacy deployments and costly customisations—creates barriers to product innovation and business growth by increasing IT costs, driving up the cost of production, and decreasing business efficiency and accuracy.

By combining the strengths of NetSuite and IQity, manufacturers gain access to a modern cloud solution, bringing them to the forefront of modern manufacturing and helping to position them for the industrial Internet of Things (IIoT).

   

Embedded Business Intelligence, No Need To Wait, For Extract Functions, Each Transaction Is Reflected In The System Dashboards In Real-Time Are Valuable Features.

NETSUITE ONEWORLD REVIEW

Embedded Business Intelligence, No Need To Wait, For Extract Functions, Each Transaction Is Reflected In The System Dashboards In Real-Time Are Valuable Features.

Feb 24 2016

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Valuable Features:

Embedded business intelligence, no need to wait, for extract functions, each transaction is reflected in the system dashboards in real-time are valuable features.

Improvements to My Organization:

I’m Netsuite implementer consultant, and has implemented in various organizations, I think the biggest benefit has been providing a serious powerful software to small and mid-size enterprises at a cost they can afford, improving their operations, that in the past where not integrated into single tool.

Room for Improvement:

Project collaboration through Dashboard Business management and Relations Management is easy to perform, it does need to be worked on as it is difficult for customers, suppliers, and internal users to use.

Use of Solution:

6 years

Deployment Issues:

Typically this kind of Netsuite Project issues in Mexico, is due not to the tools from where the information proceeds or where information goes. Almost always is about the information quality, I think small and mid-sized enterprises as well as consultants should pay special attention to this before deployment, to prevent Project not become a nightmare.

Stability Issues:

No

Scalability Issues:

No

Customer Service:

The service level with Netsuite is contract based, some customers who contract the services obtained very good results, but those who have contract basic service level have good results but, few days later.

Technical Support:

Technical support is a sensitive issue in Mexico, there are Netsuite partners across the country, but the lack of well-trained people is still a major unresolved issue, all technical knowledge in Mexico is concentrated in three partners throughout of the Country.

Previous Solutions:

I used to be a traditional computing ERP (Prodstar-2, X3, X5, SAP R / 3, JDEdwards) implementer, often bill very well… I am convinced that cloud computing is a trend that we will not be able to avoid, allows organizations dramatically reduce their operating costs, and make them more profitable. This is why I decided to become cloud integrator.

Initial Setup:

It is really the simplest ERP tool that I set up, I think in medium complexity, because you may know Netsuite well and understand requirements as well.

Implementation Team:

I worked with two partners in Mexico and have had partial share with two others, definitely all have different competitive advantages that should be assessed, there are complex combinations of price and capabilities of their team.

ROI:

30% average

Cost and Licensing Advice:

Properly size number of users that will need in the medium term, this can generate savings in licensing, that Netsuite can respect for several years, prices vary depending on the type of organization, and implementation services, depends on experience and prestige of implementing Netsuite partner.

Other Solutions Considered:

We competed with many ERP solutions the main competitor is SAP BusinessOne, midrange ERP as MS Dynamix, the advantage in several projects was not spending on hardware nor specialized personnel.

Other Advice:

As a small and mid-size enterprises tool, usually in Mexico and Latin America Netsuite customers migrate from very small systems, and suddenly their operations become more complex, if data migration and training issues are not well taken, implementation experience can turn into a very complex and time consuming problems; validate well your Netsuite Partner references of past projects, also check credentials of performing implementation personnel that will assist you.

Processes That Previously Took Hours To Complete (Such As Reviewing A Sales Order And Calculating Inventory Across Warehouses) Are Now Accomplished In Minutes.

Agriculture Industry, located in Monterrey Mexico. Applications Replaced: Custom-built legacy applications, Aspel, CONTPAQ, Microsoft SQL Server, Microsoft Access, Microsoft Excel.

Customer Success:

Sugar producer Ingenios Santos has dramatically improved business visibility, control
and efficiency since migrating from disparate on-premise legacy applications.

Company has streamlined and automated core business processes including sales orders, procurement, multi-location inventory management, order management and
fulfilment, customer management and more in a single integrated solution.

Real-time visibility into sugar stock across all five mills enables Ingenios Santos to
optimise production processes and better meet customer demand.

Processes that previously took hours to complete (such as reviewing a sales order and calculating inventory across warehouses) are now accomplished in minutes.

Company has doubled its number of customers since going live on NetSuite.

NetSuite OneWorld global business solution provides management control over subsidiary sugars mills and enables multi-currency transactions in Mexican pesos, U.S. dollar and Euros.

Cloud-based solution provided business continuity and eliminated risk of damage to
on-premise systems when a flood shut one mill for a month.

Rich customisability has enabled Ingenios Santos to easily tune NetSuite to meet
unique business demands.

Challenges:

Antiquated on-premise applications offered no standardisation across processes and
information.

Ingenios Santos lacked visibility into inventory management and other core processes,
inhibiting visibility and forcing guesswork decisions.

Previous infrastructure could not scale to meet company growth objectives and consumed valuable time with tedious data re-entry.

Solution:

Ingenios Santos selected NetSuite over SAP, Microsoft, Oracle and TOTVS as a solution offering better business functionality and ease customisation.

NetSoft, a Mexico-based NetSuite partner that has led more than 60 NetSuite
implementations, implemented the solution on time and on budget.

NetSuite cloud solution provides mobility and business continuity without the high IT
maintenance and troubleshooting costs of the previous on-premise system.

"NetSuite has given us a world-class solution with minimal initial investment. A cloud solution has many advantages over an on-premise solution, and there is not a better solution in the cloud than NetSuite." 

Ingenios Santos

Is Netsuite a Complete solution?

The asnwer is "Not Yet", unfortunately Netsuite not contemplate a robust WMS nor Complex Manufacturing production processes solution. Netsuite reported improvements will be made during 2016, So we must wait a bit more.

Best ERP for Business

Lider en la implementación de Netsuite, el sistema ERP en la Nube No. 1 a nivel mundial, al contar con más de 100 implementaciones exitosas y referenciales. Esto habla de su amplia experiencia, compromiso y eficiencia.

Actualmente, Netsoft  es el Socio de Negocios de Netsuite más grande y estratégico para México y América Latina; cuenta con más de 9 años de experiencia en la entrega de soluciones ERP, CRM y Comercio Electrónico bajo el esquema de Software como Servicio (SaaS) o Cloud Computing.