smbs: no, you're not too small for erp spotlight on oracle netsuite

September 2017

SMBS: NO, YOU’RE NOT TOO SMALL FOR ERP SPOTLIGHT ON ORACLE NETSUITE About Oracle NetSuite Global Business Unit Oracle NetSuite Global Business Unit pioneered the Cloud Computing revolution in 1998, establishing the world’s first company dedicated to delivering business applications over the internet. Today, it provides a suite of cloudbased financials / ERP, HR and omnichannel commerce software that runs the business of companies in more than 100 countries. For more information, visit NetSuite. Quick Facts: ü 5,500 employees globally ü Used by 40,000+ global orgs & subsidiaries ü Recently launched SuitePeople (core HR) and SuiteSuccess (industry clouds) ü Is leveraging Oracle for massive global expansion: • data centers • field offices • development centers

We know many small to medium-size businesses (SMBs) fear Enterprise Resource Planning (ERP), thinking it is too costly and complex for a business their size. They hear horror stories, or perhaps experienced one first hand back when ERP had rightfully earned the reputation of being hard to implement and even harder to use. But much has changed over time. Solutions have become more feature-rich, while also becoming easier to use. And most of all, they have become more affordable, particularly when they are delivered via the cloud as Software as a Service (SaaS). In a recent Mint Jutras report, we encouraged SMBs still thinking they are too small for ERP to rethink that conclusion and suggested instead that they couldn’t afford not to invest. In this report we put the spotlight on Oracle Netsuite, an early cloud pioneer that today provides a cloud-based ERP suite, including financials, human resource (HR) and ominchannel commerce software. And because peer networking and customer references are so important to SMBs, we do so from a customer perspective. Featured here are three NetSuite customers: • Tactical Medical Solutions, Inc. went live on NetSuite a year ago. Founded 14 years ago by a former special forces medic, the company manufactures and distributes tactical medical kits to the military, law enforcement agencies and emergency workers.

• Wittek Golf has been in the golf supply business since 1946, but was acquired in 2015 by P&W Golf Supply Co. It provides equipment and supplies for owners of driving ranges, golf courses, miniature golf courses and golf shops.

• Dyla Brands is an omnichannel retailer of two distinct brands of

beverages: FORTO is the #1 Coffee Energy Shot, available online and also sold in over 15,000 stores nationwide. Stur is the fastest-growing brand in the $1.5 billion Drink Mix category, with products in both liquid and powder format. Stur is also the #1 selling drink mix item on Amazon, and is sold in thousands of Natural & Grocery stores across North America. Dyla began implementing NetSuite on February 1, 2015 and went live on May 1 the same year.

Spotlight on Oracle NetSuite Page 2 of 8

THE IMPORTANCE OF A CUSTOMER PERSPECTIVE Data Source In this report, Mint Jutras references data collected from its 2017 Enterprise Solution Study, which investigated goals, challenges and status and also benchmarked performance of software used to run a business.

Before we dive inot specifics about Oracle NetSuite we first make note of why the customer perspective is so important, especially to SMBs. We asked 2017 Mint Jutras Enterprise Solution Study participants to rank the importance of several sources of information in conducting a search for software. Each criterion was ranked on a scale of 1 to 5 where 1 was negligible and 5 was extremely valuable. Asking a friend or colleague (peer networking) and customer references topped the list, both from an overall ranking and also the percentage findung these sources extremely valuable (Table 1). Table 1: How valuable are these sources of information?

Almost 600 responses were colelcted from companies across a broad range of industries, including all sizes, ranging from very small to very large enterprises. This included responses from 326 companies with revenues less than $250 million. We refer to this subset as “SMBs.”

Data in Table1 included companies with revenue less than $250 million only Source: Mint Jutras 2017 Enterprise Solution Study

If you are a small to midsize company just beginning a search and you are unsure of where to start, consider these sources of information. You’ve come to the right place in this report featuring the top three shown above:(industry) analysis combined with what your peers and actual customers have to say.

SOME COMMON THREADS In speaking with these three customers, Mint Jutras immediately noticed some common threads running through the conversations: • • •

Ease and speed of start-up Completeness of the solution Flexibility in tailoring the solution without invasive customization

All three of these are components of NetSuite’s SuiteSuccess, so it was not surprising to learn each of these customers had participated in this program. NetSuite calls SuiteSuccess “a unified industry cloud solution,” focusing first and foremost on the ability to bring customers through the “last mile” for a complete solution. But it is also focused squarely on the first mile, promising the customer will go from zero to cloud in 100 days or less. So it is both a


SuiteSuccess focuses squarely on the first mile of an implementation, but also the last mile… with specialized solutions born in the cloud.

mechanism for rapid deployment, aided of course by being born in the cloud, and a very specialized solution. And NetSuite has accomplished this in a single suite, with the benefits inherent in a true multi-tenant SaaS solution. In our report, SMBs: Think You’re Too Small for ERP? we noted many SMBs continue to limp along with systems that fall far short of a modern, technology-enabled, integrated solution, believing that ERP is only for the “big guys.” We also noted some of the tell-tale signs that would tell you that you need an integrated solution. All three of these companies were not only astute enough to recognize some of those symptoms, but smart enough to do something about it. Like many SMBs, prior to NetSuite, Tactical Medical Solutions was running QuickBooks for its financials, along with a collection of other solutions for inventory, quality management and payroll. And of course there were a lot of spreadsheets involved. It had no customer relationship management (CRM), struggled to support EDI Advance Shipping Notices (ASNs) and integrate with its website for eCommerce. Wittek Golf was also using QuickBooks along with some outdated software running on an IBM AS400. About eight months after it was acquired by P&W Golf Supply Co. it found it could not handle the growing volume of business and even with an online catalog, it still had no eCommerce capabilities to accept orders directly from its website.

“We didn’t want the responsibility of establishing and maintaining the infrastructure, starting with a VPN. We were familiar with other ERP solutions and we knew how hard they were to implement and manage. SaaS was really a driving factor and NetSuite proved to be very intuitive. It was the only true SaaS we looked at. Others were ‘SaaS light,’ more like a hosting model, leaving much of the burden still on us.” Justin Lawrence, head of supply, operations and finance, Dyla Brands

Dyla Brands was quite a young company when it first turned to NetSuite. In its very early days it had managed its business with spreadsheets, but in early 2015, after 2.5 years, it too had implemented QuickBooks for accounting. But inventory remained offline in spreadsheets and data was “all over the place.” Being a small, but fairly virtual company (half of its 20 employees work out of their homes), this created some challenges, particularly as it expanded rapidly. Business has more than doubled each year since 2014.

SAAS AS AN ADDED BONUS Of course all NetSuite customers are running a true multi-tenant SaaS solution. However, not all of its customers start out searching for one. Of these three, Dyla Brands was the exception. As a small company with a remote work force, Dyla Brands went looking for a cloud-based solution. According to Justin Lawrence, Dyla’s head of supply, operations and finance, “We didn’t want the responsibility of establishing and maintaining the infrastructure, starting with a VPN [virtual private network]. We were familiar with other ERP solutions and we knew how hard they were to implement and manage. SaaS was really a driving factor and NetSuite proved to be very intuitive. It was the only true SaaS we looked at. Others were ‘SaaS light,’ more like a hosting model, leaving much of the burden still on us.”

Spotlight on Oracle NetSuite Page 4 of 8 “NetSuite had everything we needed and the easy access from a web browser was an added bonus. Before we had to be on a work computer.” Katie Hembree, operations manager , Tactical Medical Solutions

“It is good to not have to maintain servers. And we already had experience with Office 365 in the cloud and were open to moving more services to the cloud. Now we don’t worry about updates.” Alex Novikov, NetSuite administrator and business consultant, Wittek Golf

Unlike Dyla, Tactical Medical Solutions (Tac Med) didn’t start out looking for a SaaS solution. Katie Hembree, operations manager for Tac Med, admits that she and her selection team had to sell management on the cloud. “But NetSuite had everything we needed and the easy access from a web browser was an added bonus. Before we had to be on a work computer.” Alex Novitek, NetSuite administrator and business consultant for Wittek Golf, found himself in a similar position. While Wittek Golf wasn’t really looking for a SaaS solution, he said, “It is good to not have to maintain servers. And we already had experience with Office 365 in the cloud and were open to moving more services to the cloud. Now we don’t worry about updates.”

EASE AND SPEED OF START-UP All three of the customers we spoke with engaged in NetSuite’s SuiteSuccess program, which promises “zero to cloud in 100 days or less.” Just to put this promise in perspective, 100 days is a little more than 3 months. The average time to first go-live milestone across all our 2017 Mint Jutras Enterprise Solution Study participants was 8.87 months. If you think smaller companies implement faster, you would be correct. Survey respondents from small companies (those with annual revenues under $25 million) averaged 7.64 months. But once you cross the threshold of $25 million we actually saw a very significant increase. In fact lower mid-size companies were the slowest to reach that milestone (Figure 1). Very often the complexity of these companies grows faster than their ability to keep up in terms of skills, expertise and sheer numbers of staff. And for many, this is their first venture into a full-fledged ERP solution. Figure 1: Time to First “Go-Live” Milestone

Size of Company In Figure 1 we measure size of company by annual revenue: Small: Under $25 million Lower-Mid: $25 to $250 million Upper-Mid: $250 million to $1 billion Large: Over $1 billion

Source: Mint Jutras 2017 Enterprise Solution Study

However you look at the numbers, going live in less than 100 days is an impressive accomplishment. And all three of these customers did just that. Ms. Hembree tells us, “We [Tac Med] went live in three months, with the help of a consultant, some hard work, including some nights and weekends. We still had some more to do in terms of tailoring and customization, but we could run our business.” She said that getting the data out of QuickBooks and into


NetSuite was the hardest part, largely because of some QuickBook limitations. The email address field serves as an example. “We could put anything in that field in QuickBooks, but NetSuite requires it to be a valid email address. So NetSuite would reject it and we would be forced to clean it up… which is a good thing in the end, but a time-consuming process.”

“Best Practices” included in SuiteSuccess were key to a speedy implementation. “Being a newer company also helped in that we weren’t set in our ways. We were open to adapting and accepting the best practices.”

Dyla Brands started its implementation on Febrary 1, 2015 and went live on May 1, 2015, and that included integration with its web sites on Amazon. Mr. Lawrence attributes the speed to the “Best Practices” included in SuiteSuccess. “Being a newer company also helped in that we weren’t set in our ways. We were open to adapting and accepting the best practices.”

Justin Lawrence, head of supply, operations and finance, Dyla Brands

Wittek Golf also went live in “under 100 days.” According to Mr. , “We were among the first to participate in SuiteSuccess; time-wise it was quick and data was easy to import. If I were doing it today, I might have done it a bit differently, taking more advantage of matrix items [think color, size and style] in order to avoid the proliferation of stock keeping units (SKUs).” But Wittek will use what it learned as it adds a newly acquired, California-based company to its NetSuite implementation.

COMPLETENESS OF SOLUTION If you move to NetSuite’s cloud-based solution, can you get rid of every other piece of software you have? Probably not. But you can eliminate a lot.

So if you move to NetSuite’s cloud-based solution, can you get rid of every other piece of software you have? Probably not. But you can eliminate a lot. While running QuickBooks prior to moving to NetSuite seems to have been the common denominator across these three (and many other) small to midsize NetSuite customers, it is also quite common for NetSuite to replace a variety of disparate systems, and, of course, the ubiquitous spreadsheet. Today these customers look to NetSuite to do “most everything.” We found occasional gaps, some of which are simply not a typical function of ERP and some others that might be.

Dyla Brands, for example, has future plans to add more demand planning functionality and this is not something that is included in the NetSuite suite. However, Dyla is satisfied with the choices available for third party partner solutions, believing it is not necessary for this to be an embedded function, provided it is integrated with NetSuite. Mr. Lawrence also views the recent acquisition by Oracle positively in this light, noting some possible options from the new parent company, along with some advanced technology. Tac Med needed some additional help for ISO certification and also in order to pass a Food and Drug Administration (FDA) audit for their medical kits. Wittek Golf uses Mail Chimp for outbound email campaigns. But one thing these three companies have in common is the need to support eCommerce. NetSuite is differentiated in the market by embedding this capability right in the suite, but does not require that its customers use its SuiteCommerce module. While Tac Med and Wittek Golf do use NetSuite’s


SuiteCommerce, Dyla Brands offers its products online through Amazon. These Amazon sites are then integrated with NetSuite.

FLEXIBILITY AND “CUSTOMIZATION” Multi-tenant versus Single-tenant SaaS Multi-tenant SaaS: Multiple companies use the same instance of hosted software; configuration settings, company and role-based access personalize business processes and protect data security. Single-tenant (or Multiinstance) SaaS: Each company is given its own instance of the (hosted) software, but may share common services, such as an integration platform, and security.

The flexibility of the solution was a big factor in Tac Med’s decision to go with NetSuite. In the initial demonstration, the selection team watched as the person doing the demo set up a new field. Today Katie Hembree does that, creates searches and workflows, customizes screens and reports, and more. And she doesn’t have a technical background. Yes, she took some NetSuite classes, but she is quick to say that the “customizations” she does are “super easy.” While many think no customization is allowed in a multi-tenant SaaS solution, NetSuite likes to say, “Customization is not a dirty word at NetSuite.” The caveat to this is obviously… as long as you can upgrade. As a multi-tenant SaaS solution, NetSuite customers are all running the same code, yet all are a little different. One of the unique features of NetSuite’s platform (unique for a SaaS-only solution anyway) is the ability to make even complex changes to the data model with no negative impact. This feature is becoming more and more popular among NetSuite’s customers. According to NetSuite’s polling of its customers, from 2015 to 2016, the ability to add custom fields went from the 5th most used feature to number 1. This level of flexibility came as a surprise to Justin Lawrence from Dyla Brands, but a very pleasant one. He finds the amount of customization that can be done with very basic skills to be impressive. He’s added new fields, changed workflow logic and even automated the communication stream with brokers within his supply chain, cutting out at least three to four emails back and forth. Even without a technical background, he says these kinds of customizations are easy. And if he finds himself in need of assistance, the first place he looks is Suite Answers, an online forum for the NetSuite community.

WHAT ABOUT RESULTS?

ü Katie Hembree, operations manager for Tac Med, says she is glad the company made the move before they got any bigger. They are now able to handle huge volumes of business both domestically and internationally with just 30 full time employees.

In SMBs: Think You’re Too Small for ERP? we offered some clues that would indicate it was time to make a move to a fully integrated suite to run your business. These three companies seemed to have recognized these symptoms themselves. While they might not have formalized a set of specific goals, they did set out to gain more control while growing their businesses. Tac Med had no specifical timeline or dollar amount in terms of return on investment (ROI) but it knew it had to improve efficiencies if it wanted to continue to grow. Ms. Hembree says she is glad the company made the move before they got any bigger. They are now able to handle huge volumes of business both domestically and internationally with just 30 full time employees.


Increased volumes were also a big factor for Dyla Brands. Prior to implementing NetSuite, the staff were handling 150 to 175 orders per month. In the first month after going live, they processed roughly double that volume, with the same staff and avoided adding an additional headcount. Mr. Lawrence is confident they can continue to grow an additional 50% with no additional staff. Plus, prior to implementation their ontime delivery had been in the low 90’s in terms of percentage. Today their ontime delivery rate is between 95% and 95.5%. While Wittek Golf couldn’t share any key performance indicators with us, they were able to eliminate duplicate customers and improved accounts receivable with little manual effort, relying instead on automated reminders. They have totally eliminated the negative inventory balances previously in allowed in QuickBooks and no longer have to shut down for physical inventory.

SUMMARY AND RECOMMENDATIONS All too often SMBs try to compete with something less than a complete and integrated solution, making do instead with a collection of disparate applications held together with the equivalent of baling wire and duct tape. You have just (virtually) met three different SMBs that recognized the limitations of this scenario and took action. As noted in our previous report: If you find yourself in this situation, struggling to compete, you are a potential candidate for a new system to run your business. If you are still on the fence, you may simply be putting off the inevitable. Why wait? Yes, deciding to purchase a new ERP is a big decision. If you are thinking your situation is not that bad, do you think it will be any easier to fix the problem when things get worse? Or when your business is larger and more complex? A well-executed ERP implementation can enable change and provide ongoing savings that can help you sustain and grow your business. Why not get started now?

If you are thinking your situation is not that bad, do you think it will be any easier to fix the problem when things get worse? Or when your business is larger and more complex?

Not sure how to get started? Table 1 offered some sources of information that are useful in looking for a solution. Among them are industry analyst reports such as this one, but even more valuable, advice from others that have gone before you. Take the advice offered by Katie Hembree from Tac Med. Don’t wait. Take action now. NetSuite is certainly not the only option out there to consider, but it is certainly worth consideration.


About the author: Cindy Jutras is a widely recognized expert in analyzing the impact of enterprise applications on business performance. Utilizing 40 years of corporate experience and specific expertise in manufacturing, supply chain, customer service and business performance management, Cindy has spent the past 11+ years benchmarking the performance of software solutions in the context of the business benefits of technology. In 2011 Cindy founded Mint Jutras LLC (www.mintjutras.com), specializing in analyzing and communicating the business value enterprise applications bring to the enterprise.