Sanjeev Aggarwal's Blog

June 10, 2012

NetSuite SuiteCommerce: Transforming Commerce Solutions and User Experience

 Last week I had the opportunity to attend NetSuite

SuiteWorld 2102 in San Francisco. One of the most notable announcements was the launch of NetSuite’s new SuiteCommerce Commerce-as-a-Service (CaaS) platform for B2B and B2C businesses.

The SuiteCommerce offering is designed for e-tailers, retailers and other companies that sell online and provides these businesses with multi-channel platform which is integrated with NetSuite’s core ERP system. This gives companies a unified front-end to manage their various digital sites and brick-and-mortar stores, connected to their ERP to provide a single system of record for history of customers across channels. According to NetSuite, SuiteCommerce will help businesses to:

  • More easily customize web page content and integrate information into back-end financial systems
  • Tailor eCommerce solutions to the requirements of mobile, machine-to-machine (M2M) and social networking platforms
  • Enhanced social networking solutions through integrations that augment the platform with social functionality such as social ratings, reviews, personalized product recommendations and conversations

NetSuite will offer two SuiteCommerce options:

  • The Mid-market version targets businesses with smaller product catalog of products and services. The Mid-market suite starts at $1,999 per month and is available now.
  • The Enterprise version is aimed at larger companies and is designed to handle a more extensive product catalog of products and services. The Enterprise version at $3,999 per month and will be available in August 2012.

The vendor also announced a roster of SuiteCommerce partners, including Square, Stripe, Acquia, Bazaarvoice, MyBuys, Velaro and Shotfarm that have developed apps that integrate with the platform. In addition, it announced partnerships with the creative agencies that can help companies design their sites to optimize SuiteCommerce capabilities. These partners, agencies and VARs can extend the SuiteCommerce platform using NetSuite’s SuiteCloud development platforms and SuiteApps.

Perspective

The timing of this announcement couldn’t be better.

Technology trends are converging to create a perfect storm in the world of commerce—one that empowers customers and raises the bar for companies to meet new, more demanding customer expectations. Social media empowers customers with information from friends and other unfiltered sources. Mobile devices are
facilitating this trend, making it possible to research and shop for products and services anytime and anywhere. Cloud computing and ecommerce are blurring the boundaries between brick-and-mortar and online commerce stores, creating an imperative for merchants to provide consistency and visibility across channels.

This has created an environment where customers expect more from businesses throughout the commerce cycle. They want anywhere, anytime, any-device access to multiple sources for information gathering, product and service evaluation, selection, purchasing and customer service. As a result, merchants need to anticipate what the customer wants, automate and personalize customer interactions, and enable the customer to do business where, when and how he or she wants.

NetSuite’s introduction of SuiteCommerce is designed to help businesses meet these elevated customer expectations. NetSuite has had an integrated eCommerce offering for years, an almost 2,800 of its customers run their web sites and storefronts on NetSuite. However, SuiteCommerce is intended to go beyond the commerce experience to integrate social, mobile and other customer touch points.

As NetSuite’s CEO Zach Nelson noted in his remarks at the event, “Over the past decade, NetSuite has transformed how our customers operate their businesses internally. Over the next decade, NetSuite will transform how businesses operate with other businesses and with their customers through NetSuite Commerce as a Service.”

In addition, SuiteCommerce strengthens NetSuite’s “one system of record” integrated suite story, which is a good one in the mid-market. SMB Group’s research finds that “integrating different applications” is a significant challenge (Figure 1).

Figure 1: Top Technology Challenges in Medium Businesses


Source: SMB Group 2011 SMB Routes to Market Study

The SuiteCommerce offering also aligns with the direction NetSuite announced at last year’s SuiteWorld event, when it unveiled plans to move up from its SMB lineage (that harkens back to its NetLedger days) to pursue the upper end of midsize business, a two-tier strategy in the large enterprise space, and select industry markets.

SMBs increasingly see that customer-facing mobile applications can help them grow revenue, attract and retain customers, and keep up with the competition. SMBs are using both mobile-friendly web sites and mobile apps to offer functionality to foster this interaction, as shown on Figure 2. Regardless of whether SMBs are employing a mobile-friendly web site, mobile apps, or both, what are the top capabilities that they are providing to external audiences? And what do they plan to add in the next 12 months?

Figure 2 Business Functions Available/Planned Via a Mobile-Friendly Web Site/Mobile App.


Source: SMB Group,
2012 Small and Medium Mobile Business Solutions Study

Mid-market businesses are increasingly enabling mobile apps to access line-of-business functions to conduct business with customers, prospects, partners and suppliers. Mobile support in SuiteCommerce will enable significant new revenue opportunities for NetSuite SuiteCommerce VARs and service providers.

Quick Take

The large number of customers and partners in attendance at SuiteWorld 2012 seemed excited about SuiteCommerce and NetSuite’s direction to help transform from the core internally-focused business application into an integrated, commerce-aware business platform. I talked to several NetSuite VARs at the event, most of them were very excited about the comprehensive easy-to-use solution multi-channel commerce solution.

NetSuite’s ability to get both developer and creative partners for the SuiteCommerce launch bodes well, as these are the applications and services that will bridge the last mile for many customers.

SuiteCommerce currently offers good mobile capabilities to mid-market businesses. However, SMBs increasingly see that customer-facing mobile applications can help them grow revenue, attract and retain customers, and keep up with the competition. NetSuite should look at developing some core mobile apps that integrate with SuiteSommerce, these apps can me customized by the VARs and offered to mid-market business providing significant competitive advantage to the SuiteCommerce platform.

There has been a significant rise in demand for social networking capabilities in mid-market businesses. On the social side NetSuite has already enabled the platform for social networking. Several of the social solutions partners help complete the solution to provide a comprehensive social solution.

One question that remains unanswered, however (although asked by analyst Brian Sommer and explored in NetSuite SuiteWorld Part 1: The Big Points | ZDNet), is how NetSuite will help companies crunch through, manage and make sense the massive amounts of new, external and transactional data that they will be bringing in. While big data, HANA, Hadoop and in memory databases are still fuzzy concepts for many, major players (IBM, Oracle, SAP, etc.) will get better at articulating what it means–and their solutions. And as NetSuite turns further upmarket, the pressure will build for it to have a solid and well-crafted big data strategy.

July 31, 2009

Prognosis on SAP’s Business ByDesign – SaaS based ERP solution for the core mid-market

I came across a good analysis on some aspects of SaaS vs. on-premise vendors and solutions in the smoothspan post Why Do SaaS Companies Lose Money Hand Over Fist?

After reading through the post and various responses, I have some comments that could shed more light on the SaaS vs. on-premise topic and how this relates to SAP’s continued focus on Business ByDesign.

  • The global ERP market opportunity driven by the large number of SMB/mid-market companies. In the U.S. there are 11 times more mid-market companies and on a worldwide basis the number is 13.5X.

     

    # of U.S. Companies

    # of Worldwide companies

    Enterprises (1000+ empl.)

    9,000

    52,000

    Mid-Market (100-1000 empl.)

    100,000

    700,000

    Ratio – Mid-market/Enterprise

    11X

    13.5X

     

     

  • The enterprise market is heavily penetrated by ERP type solutions, mostly on-premise solutions. The U.S. mid-market has less than 42% ERP penetration. This penetration of ERP solutions is much lower outside the U.S. Existing SaaS solution vendors until now have primarily focused on the U.S. market, with less than 15-20% international sales (other than Salesforce.com). SAP being a global company, has the potential of ramping up fast in the international markets which is very under penetrated, where SAP already has established relationships and market presence (significantly more than any of the SaaS vendors). This presents a significant upside revenue opportunity for SAP in the mid-market (especially in the 100-500 employee segment which is outside of the sweet spot of other SAP midmarket solutions – BusinessOne and Business All-in-One).
  • One also needs to look at the Total Cost of Ownership (TCO) of SaaS vs. on-premise solutions. A recent paper investigated details on this, The TCO of Cloud Computing in the SMB and Mid–Market Enterprises; A total cost of ownership comparison of cloud and on–premise business applications. Thee general conclusions are:
    • Considering a 4 year TCO, works in favor of the SaaS ERP solutions when the number of users is less than 400 users. Beyond these numbers of users, the on-premise TCO starts to become better (lower). These would be mostly enterprise companies, who favor on-premise solutions.
    • When considers a TCO beyond 4 years, on-premise solutions are better (lower). Again, these tend to be larger companies.
  • Most of the SaaS vendors like Salesforce.com and NetSuite have a much higher sales and marketing expenses ratio (~ 54% of revenue as shown in the smoothspan post Why Do SaaS Companies Lose Money Hand Over Fist?) primarily driven by their direct sales model. For Business ByDesign, for which SAP is promoting a channel driven model, this percentage should be lower.
  • R&D spending of 16% by SaaS companies – the strategy that needs to be explored by vendors looking to develop SaaS products, they need to seriously consider SaaS platforms like force.com (from Salesforce.com) and QuickBase (from Intuit). The developers that have used these platforms, have significantly reduced both their initial R&D spending and also their product development timeframe, brining SaaS solutions to market in some cases 1-2 years sooner. These SaaS/cloud platforms-as-a-service were not available when SAP embarked on development of ByD (or would they have used one, even if it was available…I am sure they have developed a significant internal expertise with this development experience). It is prudent for SAP to control the roll-out of Business-ByDesign until the product, delivery and channel kinks have been worked out. Prediction – Past experience with German engineering should alert the ERP market that in 2010, SAP will probably deliver a successful mid-market SaaS ERP solution for the core mid-market.

Reviewing the above, including good reviews from the current customers of Business ByDesign, it would be prudent for SAP not to scale back efforts on the roll-out of Business ByDesign – as strategy they have consistently communicating to the market.

July 9, 2009

Business Intelligence (BI) – Does it have a place in the SMB and Mid-Market Enterprises?

The recent demise of LucidEra has brought forward the discussion of the need for BI in the SMB and Mid-Market enterprises (companies with 1-999 employees and revenues usually less than $1 billion). My take is that this was based on the limited BI value LuidEra offered and the current difficult economic conditions vs. their SaaS based business model. With the explosion of BI solution targeted at the SMB & mid-market, the BI industry is inundated with newer solutions and scaled-down versions of existing enterprise solution targeted at this segment. I have also seen several discussions on the potential increase in adoption of BI solution based on these solutions being delivered in a SaaS model to address the IT resources and infrastructure in the SMB and mid-market companies.

Business Intelligence is all about gaining 360 degree insight into a company’s business, and helping company executive make decisions based on the facts as opposed to information in Excel spreadsheets or gut feel. Business intelligence can offer significant benefits to small and mid-sized organizations. The problem becomes sifting through the plethora of solutions to select offerings that meet the SMB’s needs. SMBs don’t have the required resources or time to do this.

The key question that needs to be addressed is – what are the BI related need of the SMB and mid-market companies and weather these needs are being met by these BI solutions? The solution delivery model is secondary to the key question. This segment of companies is realizing that business decisions need to be made on more than excel spreadsheets and gut instinct.

SMBs don’t understand data warehouses and BI, as it is applied to large enterprises as they do not have staff that can make sense out of the reporting provided by these standalone BI tools nor do they have IT resources/budgets to integrate standalone BI applications to data from various business applications and business processes. SMBs understand BI in the form of dashboards and reports with drill down capabilities. They need solutions that can provide quick real-time insights and ROI that can have measurable business results. How can the use information from the past to more accurately predict the future or to look at real-time data to more efficiently utilize the existing resources or inventory; make changes to enhance business process or operational efficiencies?

In my recent interaction with business solution vendors that focus on the SMB and mid-market, BI solutions are now available and embedded as part of a larger business solution – integrated business solution like NetSuite; SAP (based on Business Objects acquisition) – Businessone, Business-by-Design, Business All-in-One; Oracle Business Intelligence Standard Edition; other ERP and CRM solutions (Salesforce.com) .

SMB and mid-market companies need to first investigate the BI capabilities that are already provided by these applications or modules that are already integrated and can be easily add-on to their business application solutions. It does not matter whether these solutions are cloud-based (SaaS), hosted or on-premise; utilizing these exiting BI functionality will provide much easier implementation and ROI compared to bringing in new vendors. Most of the vendors mentioned provide easy to use dashboards with BI analytics capabilities to enhance operational efficiencies, analytical and predictive analysis, risk analysis, forecasting, etc. Business application vendors need to increase their focus on their BI solutions as a key value proposition to the SMB and mid-market.


 

March 19, 2009

Why are SMBs and Mid-Market Enterprises interested in Cloud Computing?

As SMBs and mid-market enterprises are looking at their IT budget and face the realities to cut them, they look at what is discretionary and what can be supported through innovative IT strategies. However, at the same time they need to adopt new technology solutions that will make them more competitive in the current economic environment and prepares them to grow when the economy improves. They following arguments shed light on why these companies are actively exploring various cloud computing initiatives:

  • Vendors Making it Easy to Adopt Cloud Services – Amazon leads the cloud computing movement because they make it very easy for companies to adopt their platform and storage services with implementation and pricing services that are easy to understand and try without the need for complex contracts and pricing. Vendors that seek to service the SMB market need to learn from the simplicity and flexibility of the Amazon Web Services model.
  • Change in Appetite for Risk – SMB and mid-market companies focus on risk has changed, driven by the realities of the current economic environment. Instead of making do with outdated systems and slowing adoption of new technologies, these companies are now more comfortable with the risks associated with cloud computing solutions. This is driven by examples of success achieved by some of the high-profile companies through “show-me” examples. They are feeling more comfortable with security, access and reliability issues.
  • More Effective Backup and Disaster Recovery SMBs usually do not have remote data centers. Cloud services provide them the ability to encapsulate the internal virtual machines and replicate them to the cloud off-site. Virtualization vendors like VMware and Citrix are making this easier.
  • Shift away from New On-premise Hardware Purchases – As SMBs and mid-market enterprises look at the Key IT initiatives that are being considered in the decision-making processes, initiatives that will help save costs and show quick ROI are getting attention. IT strategies based on flexible monthly operating expenses, without a significant upfront investment is gaining momentum. New hardware purchases and upgrades have a lower priority; business applications that are critical to the business operations are getting approval. However, implementing new business applications sometimes require additional new hardware purchases, the spending on hardware purchases can be alleviated by adopting flexible pay-as-you-use cloud computing solutions and services with business applications which are delivered software-as-a-service (examples NetSuite and Salesforce.com) or hosted in the cloud (example Rackspace).
  • Increase in Adoption of Virtualization – As SMBs and mid-market enterprises adoption of virtualization solutions enters mainstream, adoption of cloud computing solutions is becoming easier.
  • Significantly Reduced Application Implementation Time – SMBs don’t have to go through a two week purchase order process and an additional two weeks of configuration and testing before an application is available for productive use.
  • ISVs Solutions Supporting Cloud Platforms – Majority of the ISVs are now developing solutions that are multi-tenant and built to be delivered over the cloud. Some of them are using cloud platforms like force.com or Quickbase built to support cloud solutions.
  • Savings in Power and Data Center Space – Cloud computing enable SMBs to control server and storage sprawl by moving some of the applications and storage to the cloud vendors data centers, freeing up data center space and at the same time saving on power consumption costs. These SMBs do not want any more hardware in their equipment closets.

February 23, 2009

Cloud Computing and Managed Services Opportunity – Is it the Large Enterprises or SMB/Mid-Market Enterprises?

The convergence of web delivered IT services – Cloud Computing, Infrastructure-as-a-Service, Hosted Applications, Software-as-a-Service, Virtualization – will continue to redefine and add value to the SMB/mid-market IT services landscape, especially in the current economic climate.

Our outlook calls for rapid increase in adoption of various Cloud Computing and Managed Services components over the next 2-3 years as businesses look to cut costs and reduce capital expenses. This adoption will still be on a piece-meal – with Online Storage/Archival and related services, Hosted applications, Business Continuity/Disaster Recovery and SaaS delivered Business Applications being the most sought-after capabilities (SMB/Mid-Market Key IT Initiatives in the Current Market Environment blog). We see early adoption of these services starting in 2008-2009 and gaining more momentum into the mainstream market by 2011-2013 when the global economy emerges from the current financial conundrum.

It is interesting to see some of the SaaS companies like Salesforce.com focus on small number of enterprise accounts which account for half of their revenues through their direct sales force (they don’t have much of a channel presence). Even in the recent earnings call for NetSuite (again majority of the focus is on direct sales with some VAR efforts), all the financial analysts had questions only on the large account focus. In the U.S.(total 6.5 million businesses with commercial locations), there are less than 0.1% large enterprises(more than 1000 employees) and 0.4% midmarket-enterprises(500-999 employees); the remaining 99.5% are SMB companies. As the low hanging opportunities in large enterprises are already converted into customers, the growth of these SaaS companies is slowing. Why the continued focus on large enterprise, direct sales focus?

Well, to begin, if a vendor is serious about selling to the SMB segment, they should first seek to become their market channel, or connect to their channel – a strategy and value proposition they need to create. The SaaS value propositions that convinced the large enterprises do not always work well for the elusive SMB segment, which is a much more difficult and complicated market, but offers tremendous revenue potential. Although, with somewhat different value propositions, pricing and revenue models.

Who are the well positioned channels or links to the channel to enable selling to the SMB and mid-market enterprises? This can be addressed by segmenting this SMB/mid-market market and then looking at the channels that are well positioned to sell to the various segments based on the existing relationships and touch points. A topic for a future blog!

The vendors that have a good lead in the cloud computing segment are Amazon.com, some of the hosted services vendors like Rackspace and Savvis, and managed services vendors like Iron Mountain, IBM, BT and EMC. Virtualization will play a big role in this migration; vendors like Citrix, VMware and Microsoft are developing cloud services and platforms to help virtualize the data centers of some of the cloud solution and services vendors. Who out of these vendors understand how to navigate the complex SMB segment?

Cloud Computing and managed services providers (and their technology partners) need to learn from the business models of SaaS companies and early cloud computing vendors. Then put in place strategies and channels to capitalize on the huge IT services opportunity in the SMB and mid-market enterprises that lack the IT and financial resources of large enterprises, outside of the small number of technologically sophisticated SMBs and software developers (ISVs) that are the early adopters and have the IT resources to leverage the cloud solutions and services. In addition, by taking advantage of the internets’ low-cost marketing and delivery capabilities, companies can profitably mine the “long tail” of the SMB market.

Blog at WordPress.com.