Oracle NetSuite: cloud ERP with both a vertical and local flavor
Two years after Oracle’s acquisition of NetSuite, a massive expansion program has been set in motion by the cloud ERP vendor, with plans to strengthen its market presence in local markets such as France or Germany. SuiteSuccess is a combination of tools, methodologies and content and one of the cornerstones of the firm’s strategy to address the fast-growing market for industry-specific enterprise management solutions.
Cloud ERP is one of the hottest topics in the market for enterprise applications, and there is hardly any ERP vendor that has not joined the race. Yet, so far there is no single player that really owns this market.
NetSuite is one of the leading companies in this space and was in fact the first to offer cloud ERP. To date, the company has around 15,000 customers worldwide. To learn more about NetSuite's recent expansion plans, we were eager to attend the company's latest events, SuiteConnect in London and Grow Live in Frankfurt, both of which were taking place last week.
The company has started an initiative to strengthen its positioning in markets where it has limited visibility so far, including France and Germany. Although the latter is home to roughly 400 different, sometimes very specialized ERP vendors (and let’s not forget about a certain Walldorf-based software company...), NetSuite is convinced it will find significant business potential in the country. Localization is a key priority for NetSuite, and the company is answering this call from its customers with increased staffing and the opening of local data centers (the first will open in Germany in May 2019).
For us, another key success factor is the ability of an ERP vendor to address the requirements of vertical industries. In this context, NetSuite's approach is SuiteSuccess, a combination of a deployment methodology, pre-configurations and content. And even though this concept is not entirely unique – other vendors and systems integrators working on things that are similar to a certain extent – we think that what is special about NetSuite is the fact it has declared SuiteSuccess a major plank of its growth strategy.
The concept actually has great potential, as it combines two things: the fast deployment of ERP on the basis of cloud technology and the delivery of industry-specific features without the need for large-scale customization. Most configurations can in fact be done without coding. There is one basic ERP platform that provides the foundation for all the specificities required by the various industries. According to the company, where coding is required developers do not need to learn a proprietary programming language; Java development skills are sufficient. SAP developers, by contrast, sometimes need to be familiar with Advanced Business Application Programming (ABAP), which is specific to SAP.
All in all, we think that NetSuite is a company worth having on your radar as the ERP market shifts to the cloud. What role it will play in the future will depend on the following aspects: NetSuite’s ability to establish a local market presence, its ecosystem and, last but not least, Oracle and its ambitions.
Is there anything missing in NetSuite’s strategy? Maybe. It still relies on a large number of partners to provide specific functionality, or for certain micro-verticals that it does not serve itself. This has its pros and cons: on the downside, it loses the company some application revenue; but on the upside, it means a vibrant ecosystem of partners that help to evangelize the platform. Of course, the company also has the possibility of assimilating other technologies from the Oracle portfolio into its own platform – although that, too, can take time and resources, compared to partners that have already optimized their applications for NetSuite.
In the past, NetSuite has sometimes decided to acquire other companies rather than build a certain functionality from scratch – for example, iQity in 2016. iQity had created the Advanced Manufacturing SuiteApp – natively built on the NetSuite platform. Back in 2008, NetSuite bought OpenAir, another NetSuite partner building web-based software aimed at professional services firms, including timesheets, expense reports and project management.
We believe NetSuite and its parent company, Oracle, will be keeping a close eye on such partners, with a view to a potential acquisition to fill in major gaps in its own portfolio. For now though, NetSuite is focusing on enhancing its own platform – with what it described as a “limitless” R&D budget provided by Oracle – as well as based on geographic expansion.
For more information about NetSuite, please have a look at our worldwide company profile (subscription-based).