One of the biggest problems facing enterprises today is that the world is communicating faster than their IT systems can keep up with. This is particularly obvious in businesses that operate multinationally. Their managers collaborate and communicate daily across timezones and geographies by phone, email and Web conference, but their business applications don't. Those applications were designed for an older, slower-paced world, in which business metrics were rolled up on a monthly schedule and it was quite an innovation to actually analyze last month's data to look for emerging trends.
In today's faster, flatter, world, that kind of monthly batch reporting style seems distinctly old-fashioned, but it's quite a challenge to graft new real-time reporting capabilities onto the older generation of software applications. It's even more of a challenge in organizations that operate internationally.
This is an opportunity that on-demand application vendors seem to be realizing is tailor-made for them. Today, NetSuite launches its OneWorld edition, describing it as the company's most biggest announcement since it introduced its first release in 1999. Dan Farber on CNet appropriately headlines his coverage NetSuite finds a sweet spot.
What struck me when VP of product management Craig Sullivan outlined the concept to me on a visit to London last week was how similar it sounded to the pitch delivered by another ERP cloud vendor, Workday. Intriguingly, one of NetSuite's announced charter customers is online customer service vendor Kana, which Workday also announced as a charter customer at its launch in November 2006. It seems Kana is using Workday for people management and now NetSuite for financials and sales force automation.
Business decision-makers in today's highly connected world feel a pressing need to have access to accurate, real-time data when they make decisions, and conventional midmarket business software doesn't give them that, especially if they operate internationally or across multiple business units. Only the largest multinationals have the resources to fix those integration challenges with costly consolidations of their SAP or Oracle infrastructures. Move down a tier into mid-size companies that still have to operate across multiple locations, and you'll find that each separate business operation has its own business systems and the data from each system has to laboriously aggregated at the end of each month before it can be evaluated. This time lag is going to be even more keenly felt now that everyone is nervous about the effects of the credit crunch. If your sales have suddenly reversed the rising trend of the past few years, you need to know that straight away, not six weeks after the fact.
Another intriguing side-comment: NetSuite gets its real-time exchange rates from a third-party on-demand service, Xignite, which is one of those under-the-cover Web service ventures that seems to be doing quite well for itself. The arrangement is a great example of the back-end service provider opportunities opening up on the Web. NetSuite doesn't want to get into the business of providing exchange rate data, and its customers certainly don't want the bother of sourcing it themselves. Having a specialist service like Xignite built into the NetSuite application solves the problem for both parties.
Of course it's open to conventional on-premise software vendors to pursue the same opportunity that NetSuite and Workday have each latched onto (note, though, that the Xignite service would be individual to each customer implementation, highlighting one of the innate benefits of the on-demand model). However on-demand vendors are more alert to the potential, and their customer base is probably skewed more towards companies with this mid-size-but-multinational profile. "As a SaaS vendor, we're predisposed to having customers with multiple geographical locations," Sullivan commented. Such companies of course face greater infrastructure challenges implementing conventional on-premise software than those that operate within a single location.
Sullivan also mentioned that it was NetSuite's move into Europe five years ago that first set in train the development of the OneWorld suite. "When we landed here in 2003, the first thing I took back to the team was, we've got to have a multinational version." It was a much bigger issue for European companies than for US ones because the individual country markets are so much smaller, forcing them to go multinational to expand. The story illustrates how long NetSuite has been working on this capability, and its maturity seems to be assured by the news that there are already 30 customers already live on the system — including some well-known tech industry names such as Kana and blogging software vendor Six Apart, but also from industries as diverse as airliner leasing and TV production. NetSuite itself was running on the OneWorld code through its IPO last year, I'm told.
The OneWorld option is available for a monthly per-organization fee of $1999, paid as a supplement to the per-organization and per-user fees paid for the core application and other optional modules. The option enables the organization to then deploy multinational subsidiary units. Organizations that already operate internationally with their existing NetSuite implementation will require some professional services help to migrate their existing records to the new architecture.