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How Outdoor Brands Are Leveraging the Cloud for Competitive Advantage

In late January, NetSuite was a sponsor of the Outdoor Retailer Winter Market, a major event in Salt Lake City, Utah, that showcased products from companies in the outdoor recreation industry. NetSuite has been successfully servicing outdoor companies as our cloud-based business management software solutions allow these retailers to gain competitive advantage in what is an increasingly difficult space to gain visibility and differentiation. 

Cloud computing (where key applications to manage your business are based “in the cloud” and are accessed using a browser, an iPhone/iPad or other mobile devices) solutions have a proven track record of helping outdoor specialty brands rapidly scale by eliminating many of the growing pains associated with fast-growing businesses and significantly improving efficiency. More importantly, “going to the cloud” frees companies from the overhead and distraction of creating costly and complicated IT departments and allows them to focus on developing superior products, value and customer experiences.

The increasing expansion of outdoor specialty products into a wider range of retail outlets and direct consumer sales channels means that small companies can find themselves competing with multinational giants for shelf space and customer loyalty. The biggest brands have vertical and horizontal integration advantages that can be nearly impossible for contenders to match.

Cloud computing levels the playing field with affordable access to detailed supply chain and demand planning insights previously found only in high-end on-premise ERP systems. A firm command of costs, margins and availability throughout the supply chain is what gave a few elite companies a competitive advantage in recent decades. That same power is now being put in the hands of today's innovative outdoor brands through the adoption of cloud computing.

Here are some of our customer stories I would like to share:

Outdoor apparel company Mountain Khakis knew it was on the path to rapid growth when in less than two years it went from zero to 200 distributors. As the company continued to grow, its on-premise ERP solution was unable to keep up with demands. Adopting NetSuite has given Mountain Khakis the efficient and flexible solution it needed to add hundreds of additional dealers and manage a 1500% increase in shipments. The company now has sophisticated marketplace controls for its suppliers and product-by-product sales insight from retail partners, ensuring that products are in stock to meet the growing demand. Tune in to this video to hear from Mountain Khakis CEO Ross Saldarini talk about their success.

Cloud solutions make it possible for suppliers and retailers across the world to access and update data crucial to operations, with no need for complex technology integration. Major retailers, distributors and brand partners all demand that key product information be provided in an accurate and timely fashion. Building custom data integrations is cost-prohibitive for smaller companies with on-premise software. Cloud solutions can format and deliver data at the right time, without forcing company employees to become programmers instead of outdoor goods experts.

Because cloud solutions are designed for the modern Web, unlike conventional on-premise software, they make it easier to grow and reach customers through new and emerging channels, all while keeping employees productive and the costs low. Reusable bottle maker Bamboo Bottle Co, a start-up that went with NetSuite to build its business, took advantage of the integrated NetSuite offering to run its multi-channel business, coordinating sales through distributors as well as direct through its Ecommerce channel, which represents more than 50 percent of its overall business.

In this video, listen to their Operations Associate, Mattie Ford, discuss their use of NetSuite.

Mountain Khakis and Bamboo Bottle are just two case studies of how an innovative brand can use technology to differentiate and grow their business. Every worthwhile, dedicated outdoor goods company started with a vision and an enthusiastic outlook as its greatest assets. Cloud computing solutions ensure that a business never has to compromise those foundational principles by becoming a victim to cumbersome and costly technology.

Cloud technologies can help create a path to sustainable, profitable growth and limitless scalability, from the early days of grassroots awareness and reputation-building to becoming a household name. If you’d like to learn more about some of the companies that NetSuite has enabled, you can visit us here. 

Ranga Bodla on February 21, 2012 in Ecommerce, ERP/Accounting, Industry Trends, Wholesale Distribution | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: Bamboo Bottle, business management software, cloud computing, cloud ERP, ERP, ERP system, Mountain Khakis, Outdoor Retailer, Supply Chain Management

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The Outlook for Wholesale Distribution in 2012

The Outlook for Wholesale Distribution in 2012

During the last quarter of 2011, NetSuite conducted a benchmark survey on the state of business within the mid-market wholesale distribution industry.

The exciting news is that the majority of respondents reported significant optimism for growth in the future. More than 69% believe their business will improve in the near term, and almost 99% reported that they believe their business will either improve or remain steady—a dramatic and significant improvement over results of our previous surveys of North American distributors.

For key objectives, 65% of wholesale distributors are focused on both revenue growth and cost savings, with about 28% focused primarily on revenue growth only. That’s a reversal from 2009, when most distributors were focused on cost reductions above all else. Maintaining and increasing revenue growth while watching costs and delighting customers are key priorities for distributors in 2012.

Leaders are striving to boost sales efforts without dramatically increasing costs, and are looking towards technology including ecommerce, cloud computing (SaaS applications), CRM and mobile capabilities for sales to achieve these objectives. 

The survey also reveals a strong focus on improving customer satisfaction, retention and profitability, goals that are further supported by ecommerce and cloud technologies. At the same time, wholesale distribution leaders are looking to improve employee productivity, automate and streamline business processes and reduce overhead to boost overall efficiency.

Wholesale distribution companies want a system that supports all business processes and gives a complete view of what is going on within the business. For that reason, many wholesale distribution businesses are looking at web-based SaaS applications (or cloud computing) as an effective technology for increasing visibility into the business, reducing costs and improving business efficiency.

If you’d like to learn more, I’d encourage you to download the results of the survey.

Ranga Bodla on February 13, 2012 in Industry Trends, Wholesale Distribution | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: benchmark study, cloud computing, cloud WD software, WD software, wholesale distribution

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Benchmark Yourself Against Other Professional Services Organizations

At this time of year, many people make and break New Year’s resolutions. Some even keep them. These resolutions, however, are typically considered for our personal lives. How many take time from their busy professional schedules to take stock, learn from experts and set goals for their services organization based on anything besides their own internal performance?  

In running your professional services organization, it’s probably a given that you set and track certain metrics. Common metrics include employee utilization, billing rates and/or revenue per employee, and project profitability that are critical to your organization’s financial success.  Getting a solid understanding of exactly how you’re doing now is the underpinning for knowing where to focus future improvements.

The challenge is that “current performance” changes every day and even within a day, and having an accurate picture of it at any point in time is not as easy as it might seem. With a services resource planning (SRP) system like NetSuite with NetSuite OpenAir, the dream of real-time visibility can be achievable in an average of five months.

With NetSuite’s cloud-based enterprise resource planning (ERP) and project management system, not only can the P&L manager have real-time visibility into accurate data, but so can every project and account manager. Instead of information locked in silos like spreadsheets on individual laptops or in unintegrated applications, NetSuite’s approach ensures that everyone in the organization who is given permission can access the same, current data.  

Thus, they can quickly adjust resources or project scope to ensure profitability. If you conduct business in multiple countries, this system can also provide an updated view as currencies fluctuate or customers come and go. According to the soon-to-be-released SPI 2012 Maturity Benchmark Study on professional services organizations, companies who use NetSuite OpenAir had a tremendous 19.1% EBITDA (earnings)—significantly higher than those with no PSA solution or a homegrown one.1 If you set the single goal of contacting NetSuite and implementing our cloud SRP system, you can quickly put your organization on the path of being an industry leader.

Knowing your performance relative to similar organizations is a second challenge. Without external information, it’s hard to know whether your revenue per consultant, margin or bid-to-win rates are fabulous or merely average. Even if you’re making continual strides in your own metrics, wouldn’t it be good to know if there were other organizations doing significantly better whose practices you could emulate?

By spending just one hour of your time learning about key industry metrics, you’ll have critical information to decide where to improve or to arm yourself for a discussion with your boss about a nice raise. Join us for a professional services benchmark webinar with tips from a leading professional services practitioner.

2012 Professional Services Maturity Benchmark Results Webinar—Ways to Be the Best!

Webinar:   2012 Professional Services Maturity Benchmark Results

Date:  Wednesday, February 8

Time:  9 am PT / noon ET

At this webinar, Jeanne Urich, Managing Director, SPI Research, will reveal the key trends, challenges and results that shaped the PS industry in 2011. She’ll share enlightening industry benchmarks and some best practices that you can implement.

Sometimes numbers don’t provide sufficient insight on their own, so to ensure you’ll be able to set at least one new positive resolution for your organization, Beat Neuhaus, VP of Global Service Operations for Siemens, will share his experience. Siemens uses NetSuite OpenAir to track real-time customer project status in the cloud and is recognized as one of the top PS organizations in the world with PSA practices in 26 countries. He will give you suggestions for improving your organization that he’s seen work in a complex multinational services organization and discuss how he’s created real-time project dashboards that give him both “transparency and simplicity.”

Experts who have studied resolution-setting say that a key is to break the goal into very small steps. So register here and spend one hour on February 8 and you’ll have a head start on implementing better practices for your professional services organization. Plus, we believe you’ll have an extra bit of motivation and enthusiasm by hearing how well a reasonable amount of effort has paid off for others. 

Best wishes for a happy and profitable 2012!

Ed Marshall, General Manager, Services Vertical

 

1 David Hofferberth, pre-release information from The 2012 Professional Services Maturity Benchmark, Service Performance Insight.

NetSuite on January 30, 2012 in Industry Trends, Professional Services | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: professional services automation software, professional services organizations, Project based ERP, PSA software, Services Resource Planning, SPI research, SRP

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Cloud ERP: Freedom to Move, Freedom to Innovate

People use iPhones and other mobile devices in all sorts of ways—texting, phoning, listening to music, watching movies. But to a large majority of business professionals, these devices and others like them, including today’s ever-lighter laptops, mean one thing more than any other—freedom to move. 

Think about it. Just a few years ago, the idea of telecommuting was more a dream than a reality, partly because it was hard to do. For the telecommuter, working from home meant buying or borrowing a desktop or laptop, then fighting your way into the corporate database through VPN connections that were slow and frustrating. For the business, telecommuters meant more work for the IT Help Desk, and more spending on network switches and other gear.

Today that model has been flipped on its head, thanks much to Internet-friendly laptops and other mobile devices, but also to Internet-friendly cloud ERP software. In fact, for years conventional ERP locked people and organizations in to conventional thinking and planning because of the high costs of change. By contrast, cloud ERP gives us the freedom to move, whether it’s user telecommuting or organizational decentralization and, at a higher level, the freedom to find innovative solutions. Here are two examples:

Telecommuting ROI

Telecommuting used to be difficult for a business to cost-justify because of the increased expense in IT resources, as well as the potential losses in worker productivity. Today, thanks to Internet-enabled devices and cloud ERP architectures, it doesn’t take a week, a day, or a high-priced CPA to figure out the ROI for telecommuting users.

The Louisiana Advocacy Center, a NetSuite customer, is a vivid example of how telecommuting can benefit an organization.

The center originally brought in NetSuite following Hurricane Katrina, because it didn’t want to risk losing conventional network connections in the event of another large-scale emergency. What they didn’t foresee, however, was having to deal with a six-month renovation of the center’s New Orleans headquarters. With a conventional ERP setup, they would have had to rent temporary office space, costing a minimum of $60,000. Instead, the Advocacy Center instead set up a telecommuting operation, with staffers working out of their homes or other branch offices.

Decentralizing Business

Want to take user mobility a step further, to include remote branch offices? Fine. Same rules apply. Setting up a new branch office used to be a major hassle and a major expense, and the more remote in terms of geography, the more challenging. Again, the business has to determine if the time and expense—for setting up servers, extending networks, and finding, hiring and training staff­—are justifiable based on the potential increase in business.  Today, thanks to Internet-friendly devices and cloud ERP, it’s much simpler to achieve a positive ROI.

And because cloud ERP isn’t limited by geography, it can mean more than just saving time and money—it can help a company develop a global footprint that would have been impossible with conventional ERP.

An example is Sundia Corporation, a multimillion-dollar fresh produce brand based in Oakland, California. With customer support in the Philippines, accounting in India and the executive team in California, Sundia needed to get operations up quickly while maintaining an efficient ongoing cost structure. It went to cloud ERP so its personnel around the globe can access, manage and even innovate with the ERP system in real time.

Brad Oberwager, Founder, Chairman and CEO, observes that Sundia’s organizational structure would have been untenable with conventional, centralized ERP. “We simply wouldn’t be in business with the old way,” he says.

NetSuite on January 16, 2012 in ERP/Accounting, Industry Trends | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: Cloud ERP, Enterprise Resource Planning, Enterprise Resource Planning Software, ERP, Web-Based ERP

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Can ERP Keep Up with the Speed of Business?

Thanks to the web, today’s local startup can become tomorrow’s global competitor—literally. A good business idea and a strong web strategy can create a new market almost overnight. At the same time, that good idea can be quickly swamped by more nimble competitors if it has to drag an outdated ERP infrastructure along behind it.

Conventional on-premise ERP software, originally designed in the 1990s or earlier, has a hard time keeping up with the global aspirations of many of today’s aggressive organizations. Asking an older ERP architecture to support a new, aggressive subsidiary with multiple online sales channels and a dynamic, multi-warehouse logistics organization is asking for trouble. It may require rolling out a new instance, a version upgrade and/or hiring new development and maintenance staff.  It may take many months, and the budget may go well over expectations.

By contrast, a cloud-based ERP system brings flexibility and cost-predictability that conventional ERP designs can never hope to achieve. Because it’s cloud-based, the software is automatically kept on the latest version, and because it’s web-friendly, a new office setup requires little more than a user laptop—or even an iPhone—for access.

And because its financial, inventory management, ecommerce, CRM and other applications are integrated and delivered only as needed via the cloud, it doesn’t force users to pay for more processing power than they need, so it doesn’t penalize growth with a large up-front capital investment.

Called the fastest-growing company in history, Groupon is an example of a how an aggressive company can leverage cloud ERP for growth. Groupon, whose revenues expanded to more than $700 million in 2010 from $30 million in 2009, needed to add one country every three weeks to meet a one-year growth plan. It selected NetSuite cloud ERP to replace its Microsoft Dynamics GP software so its financial processes wouldn’t be sacrificed to keep pace with growth, and its ERP system would stay in alignment with the company’s aggressive growth strategy.

Another company, Olympus, chose NetSuite ERP to power a new subsidiary in India, rather than deploy an up-to-date version of its SAP central ERP system based in the company’s Japan headquarters. A major reason for the selection was the company’s need to bring the new subsidiary online quickly. The installation beat Olympus’ own nine-month installation objective by 33% by going live in just six months, and it now serves as a prototype for future two-tier ERP installations at Olympus. 

NetSuite on January 5, 2012 in ERP/Accounting, Industry Trends | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: Business Software, Cloud ERP, ERP, Great Plains, Groupon, Microsoft Dynamics GP, SAP

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Businesses Still Gambling with Outdated ERP

Every month, we see more evidence that companies are suffering as a result of being locked into outdated ERP systems. A study published last week by the Technology Evaluation Centers IT research consultancy identified that 55% of mid-market organisations are unable to make data and business process changes to their ERP systems due to the costs associated with outside IT consultation.

The research concurs with an earlier Forrester study that found 50% of ERP customers are stuck with aging ERP that may be four or more years old. The clear message is that too often, businesses are being held to ransom by ERP investment that is frozen in time as a result of software version lock.

In a business climate where organisations are constantly seeking ways to gain an edge on the competition and stay ahead of the curve, the question isn’t whether businesses can afford to update their ERP—it’s whether they can afford not to. In a competitive environment, the risks of making do with software that doesn’t include the latest functionality—whether in terms of security, accessibility, compliance, integration and other factors—are severe.

For companies that can’t afford to keep throwing money at their existing on-premise ERP, the cloud can provide an answer. Businesses using NetSuite are never ‘version-locked’ and have access to the latest upgrades as soon as they happen, without the need to hire outside consultation for installation and without additional cost. This flexibility means that businesses don’t need to waste time and resources on managing and maintaining an outdated ERP system but instead can focus on the top priority—growing the business.

For more on how companies can avoid the ERP upgrade cycle for good, click here to read our white paper.

NetSuite on December 21, 2011 in EMEA, ERP/Accounting, Industry Trends | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: Cloud ERP, ERP, ERP Systems, Technology Evaluation Centers IT

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Manufacturing the Cloud: The Air Conditioned Server Room

So it looks like cloud computing is here to stay after all. Like most innovations, there are a few early adopters while the majority sit back and look on with interest to see where it’s all going to go. Evolution is a pretty cool thing—just ask Darwin.

I’ve been in manufacturing for over 25 years and have seen how manufacturing has evolved.

Over that time I’ve worked with some pretty sophisticated solutions. Or at least that’s what ERP is meant to be—right? A solution to a problem? So if that’s the case, why do some ERP systems often cause more problems than they solve? Shouldn’t a company be more efficient after implementing their solution of choice than before? That would seem logical—but logic doesn’t always come into the equation.

Logic would dictate that not having to buy, maintain, upgrade and care for a plethora of servers to run the abovementioned on-premise ERP “solution” would be a good thing. However, some manufacturers have traditionally been more inclined to spend money on a shiny new piece of production equipment than on an ERP solution. Of course, on-premise ERP does afford the comfort of being able to walk into a specially built, air conditioned server room, admire the large rack of equipment and chat with the IT guy who is lovingly attending to it and praying that that latest virus isn’t going to bring the whole infrastructure crashing down.

With more and more companies now outsourcing their manufacturing operations to specialized manufacturers all across the globe, isn’t now the time to also outsource the management of your IT infrastructure? SaaS solutions (ERP, mail, document management etc.) are uniquely positioned to facilitate this outsourcing with anytime access from (in NetSuite’s case) a variety of devices including your iPhone, iPad and others.

At the beginnings of cloud computing, there was a period when SaaS ERP meant that organizations had to sacrifice functionality for a lower cost of ownership, but that is no longer the case. Take the example of NetSuite, which enables companies to leverage a modern architecture and outsource their financials, marketing, CRM, manufacturing and more. All on a platform that is significantly more flexible and able to evolve, and updates automatically and painlessly.

So today we challenge Darwin’s theory of evolution, at least as far as it applies to the world of ERP and the air-conditioned server room. Let NetSuite worry about keeping your ERP solution running so that you can worry about the evolution that’s most important—the evolution of your business into one that is more efficient, agile and profitable.

- Gavin Davidson, Vertical Market Expert, Manufacturing

NetSuite on December 19, 2011 in Industry Trends, Infrastructure, Manufacturing | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: cloud computing, cloud ERP, cloud manufacturing, ERP, manufacturing, manufacturing software, SaaS ERP, saas manufacturing

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Old ERP: Gambling with Regulatory Compliance

Rules, rules and more rules. You know the drill. While your company is doing its best to compete in its industry, it’s also trying to stay current with a seemingly never-ending barrage of accounting and regulatory challenges. These include everything from sales and corporate tax changes to more stringent governmental requirements such as FASB’s recent EITF 08-01 and 09-03 rules governing revenue recognition for “multi-element” products and services.

How well you can handle these has a lot to do with how effective your ERP software is.  But just because you spent millions on installation and you’ve paid hundreds of thousands for maintenance doesn’t mean it’s up to the task. 

Legacy ERP doesn’t take to changes well, because it couldn’t have anticipated the kinds of regs—like revenue recognition—that your company is facing today.  Yes, you get patches and upgrades and add-ons, but they only add to the time and effort required for maintenance, and they’re often outdated by the time you’ve got them working.  Plus, by the time your ERP software is updated, your operating environment has probably changed, too. To hold everything together, you’ve probably resorted to spreadsheets, CSV exports and manual data entry—and these don’t hold up well to scrutiny by today’s auditors.

Think Cloud, Two-Tier ERP

By contrast, today you’ve got an alternative choice—cloud ERP.

Not only is cloud ERP faster and way less expensive to get running than legacy ERP, it’s designed to be more agile in handling regulatory changes—or changes of any kind, for that matter.  It fully understands revenue recognition and all the subtleties, such as calculating commissions, that go along with it. And it’s versionless, so at any given time you’re running on the latest version, the most current regulatory processes. Compare that to legacy ERP, where your IT group dreads having to coordinate installation of new software versions across the company’s hundreds of users.

If you’re a newer company, your due diligence will show that bringing in cloud ERP over on-premise ERP is literally a no-brainer. And if you’re a subsidiary or division of a larger, older company, you can embark on a two-tier ERP strategy, bringing in cloud ERP instead of running on an extension of your parent company’s legacy ERP system.  More and more companies are doing that today, and there’s plenty of third-party help in doing the integration with SAP or Oracle ERP software.

NetSuite on November 22, 2011 in ERP/Accounting, Industry Trends, Software | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: Cloud ERP, EITF 08-01, ERP, ERP Software, ERP System, revenue recognition

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The IMA Survey: Issues Facing ERP

Where Would You Improve your ERP?

What would you most like to change about your ERP system? Where does the cloud fit in your roadmap? And what's important to look for in a cloud ERP vendor? We put these questions to the Institute of Management Accountants (IMA) membership at a webinar last week, and more than 500 financial professionals responded.

No surprises from IMA members on where they’d most like to improve their current ERP deployments. Better business intelligence was the #1 reply with a resounding 32%, followed by improving ease of use (17%). Most on-premise ERP systems in place today were designed before BI was considered essential. Old ERP systems such as Great Plains, Sage and even SAP and Oracle almost invariably require some level of "bolt-on" BI—query, reporting and analysis tools purchased separately for use with the ERP.

That expensive add-on BI software means additional tools to maintain, and complex configuration and data management just to do some basic analysis. Another issue is that often the data is siloed, with financials in one database, sales in another—making Excel the application du jour for consolidated reporting.


Area to Improve

As a result, reporting is often out of date and analytics is available only to a few specialized users. Many bolt-on BI tools sit on the shelf, because the pain of getting the data out of ERP is simply just too much to contend with. Bolt-on BI is often too hard to use and provides only a small window into the ERP data.

In contrast to older on-premise ERP, many modern cloud applications include analytics as standard. For example, at NetSuite, our analytics is completely woven into the ERP experience, and it's all available through just a web browser. Rather than just a few users having access to dashboards, KPIs, and self-service management reporting, everyone does—from the accounts clerk to the CEO, from account execs to the VP of Sales.

And because BI is completely integrated with cloud ERP, users can drill from dashboard to the actual transaction or the customer—making analytics truly operational and actionable, rather than based on partial, out-of-date information. In a nutshell, if you want better BI, you've got to take a long hard look at modern cloud ERP applications.

To Cloud or Not to Cloud?

While 37% of IMA respondents were neutral on where they were taking their ERP over the next 12 months, a substantial 34% rated cloud ERP as a moderate to strongly higher priority over the same timeframe. Sixteen percent of respondents ranked cloud ERP a moderate to strongly lower priority over the same period. When you consider that cloud computing was a new concept for many just a few years ago, the fact that more than a third of IMA respondents rank cloud ERP as a priority over the next 12 months signals an important and significant shift—one that we'll be keeping tabs on in the next survey.

Versus 12 months ago

What's the Keys to Evaluating a Cloud ERP Provider?

Finally, we asked the IMA membership what some of the most important evaluation criteria are for cloud ERP. Almost equally, the two key areas were vendor viability and ease of customization.

Areas to Look for

These are clearly areas that buyers should scrutinize closely. With the growth of the cloud, more vendors have appeared on the scene. Many of them will be here today, gone tomorrow, because they never achieve scale or run out of funding. So it's critically important to inspect a vendor’s track record, ensuring it has solid cash reserves, a sound recurring revenue stream, and that the company is generating cash. ERP is a mission-critical system, so long-term vendor viability is key.

Ease of customization is another important area—it ensures business and power users can create workflows and reports, and modify forms without having to engage outside consultants. A flexible customization layer also means there's less chance of outgrowing the ERP, and that it can be easily adapted to ad hoc business needs more easily. At NetSuite, the majority of our users use our SuiteCloud customization layer to make changes—and better yet, unlike many on-premise systems, the customizations migrate automatically with each upgrade.

Paul Turner on November 14, 2011 in ERP/Accounting, Industry Trends | Permalink | Comments (0) | TrackBack (0)

Technorati Tags: Accounting, Accounting Software, BI, Business Intelligence, Cloud ERP, ERP, ERP Software, Financial Software, Great Plains, Oracle, Sage, SAP

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Where’s the Innovation?

It’s well known that enterprise IT wants and deserves to play a more strategic role in company business operations and planning.  That means becoming more proactive than reactive, aligning IT with your company’s strategic objectives, and finding new ways to put IT innovation to work in building your company’s competitive advantage.

The problem is, you can’t do all these things without greatly expanding your budget or substantially cutting costs. 

Five years ago this problem might have been unsolvable.  Today, not so – or at least not necessarily so.  The reason: today you’ve got more options for making changes to your organization’s single most strategic business application, your ERP software.

Problems with Earthbound ERP

If you’re a large enterprise, chances the fundamentals of your ERP system were designed years ago – before the Web, before iPhones and iPads, and certainly before cloud computing.  Since then you’ve patched and fixed it, upgraded and added servers and server software, added IT staff and outside consultants – and possibly even end up with more ERP systems from acquisitions.  The last time your ERP actually got a substantial upgrade is likely years ago.

One of the reasons for this is your maintenance costs could be running as high as 90 percent of your total IT budget, according to industry analysts, stifling the ability for IT to meet the needs of the business.

If, on the other hand, your enterprise is considering bringing in new ERP software from SAP or Oracle, your implementation cost will likely be in the millions, and then you’ll face similar maintenance-cost issues as your deployment grows older.

You’ll be faced with a constant need to upgrade software and hardware, and these upgrades will become more costly and time-consuming as you add customizations over time to try and stay aligned with the changing needs of your company.  Your deployment will gradually become version-locked – unable to practically upgrade further because of the complexity, cost and risk of migrating customizations. 

If so, you’re ripe for losing business to younger, more nimble and more innovative competitors.

Cutting Maintenance Costs with Cloud ERP

Why? Because your younger competitors are already changing their budget allocations, minimizing maintenance and expanding their opportunities to innovate with IT.  They’re using the cost savings from cloud ERP to support innovations such as creating cross-functional workflows and reporting processes, adding sales channels for new online storefronts, enter new markets and geographic regions, and improve connectedness between suppliers and customers.

Perhaps most important, their IT management participates in strategic planning meetings as a full member, rather than an order-taker.  IT is able to take the lead on making recommendations, such as mobilizing the workforce and piloting new business processes.

An example of how cloud ERP can boost innovation comes from Commco, a Kansas City, Missouri-based manufacturer and distributor of moulding and millwork products.

Spun off nine years ago, Commco found itself maintaining a costly and aging SAP R/3 ERP system. Tired of making changes that cost thousands of dollars per request and facing a six-month, $1 million upgrade to the next SAP version, Commco decided to realign their ERP and IT cost structure to benefit the business.

To do that, Commco wanted to get off the upgrade treadmill and get automatic upgrades as a means of lowering their ongoing IT costs and freeing up resources to improve business efficiency. Commco also wanted to make the new software more accessible to more employees so they could perform analytics and self-service customizations – difficult, if not impossible, with the old software.  With NetSuite’s cloud ERP software, Commco was able to cut IT costs, eliminate expensive upgrades and lower training costs.  At the same time, the company innovated improvements in core business processes such as sales order management, stock picking, and others.

NetSuite on November 9, 2011 in ERP/Accounting, Industry Trends | Permalink | Comments (0) | TrackBack (0)

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  • How Outdoor Brands Are Leveraging the Cloud for Competitive Advantage
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