How one Aussie surfboard business rode the SaaS wave
Global Surf Industries (GSI) was founded in 2002 with the goal of being the "biggest small company" it could possibly be -- a goal that's more attainable today due to advances in cloud computing and other technologies of scale.
Fifteen years later, with just 18 staff members, GSI claims to be one of the world's biggest wholesalers and distributors of surfboards, turning over AU$20 million annually. GSI-designed surfboards -- including shortboards, longboards, and paddle boards -- are now sold in more than 70 countries around the world.
But the company was not operating as efficiently as it's able to today thanks to cloud-based software-as-a-service (SaaS) solutions such as G Suite for email, Nexonia for expense management, Skype for instant messaging and video calls, Trello for project management, Zoom for videoconferencing, and especially, OneWorld for overall business management.
OneWorld is a product of NetSuite -- which was acquired by Oracle in 2016 for $9.3 billion -- that acts as a centralised ERP, CRM, and ecommerce platform enabling companies to manage multinational and multi-subsidiary operations.
GSI founder and CEO Mark Kelly told ZDNet that the company, prior to adopting OneWorld, had multiple versions of MYOB's software running for different jurisdictions, which made end-of-month (EOM) reporting time-consuming because the company had to manually consolidate the numbers.
The company then tasked a third-party consultant to build a SQL database so that it could pull all the data out of MYOB and create consolidated reports, but it was still a largely inefficient process compared with OneWorld.
"The MYOB reporting that we had at the time ... the level of complexity that we wanted to put in the business as far as reporting and automation go, it couldn't provide it. We basically handcuffed ourselves to a consultancy life," Kelly told ZDNet.
"Then as soon as MYOB put out a new version, we would all be holding hands and crossing fingers that the latest version would work with all the bits we'd built the SQL database with. So the very old version dovetailed into a new one, but a lot of times that didn't work. Then we would have go to into crisis management for a day or two to get all our reports running again. That was pretty costly.
"I think when I look at what NetSuite costs us now per year versus what we were paying consultants to manhandle our databases and do our automation, it's less now after three years of using NetSuite. We are actually now starting to save money because of the automation we put in place."
It was after a year of deliberation -- and importantly, after finding that a competitive product could not support GSI's multi-location, multi-entity, and multi-currency requirements -- that the company decided to adopt OneWorld, which proved to be a more suitable solution for GSI given that it has four tax entities in Australia, New Zealand, Hong Kong, and the US, with distributors all over the world.
Kelly said the cloud-based SaaS model is also more suitable for the company given its mission to be the "biggest small company" it can realistically be. GSI does not have an IT department, so all tools need to be simple enough for non-technical staff to use; a SaaS model also means that an internal IT department is not required to build, manage, and update proprietary software, he explained.
Additionally, GSI's staff are scattered all over the world, each working from home, which makes cloud-based technologies a necessity within the business if it wants to operate collaboratively and efficiently, Kelly said.
He admitted, however, that GSI had not initially chosen NetSuite because of OneWorld's user interface (UI), which at the time he thought made the product difficult to use. But within six months, Kelly added, NetSuite significantly changed OneWorld's UI, making it a lot simpler and intuitive.
"When you're training people, the user interface is really really key. I'm training them from one side of the world to the other, and we managed to do our implementation in 28 days partially-assisted," he said.
Three years on, Kelly said OneWorld has been about 20 percent cheaper than the old systems the company was running on, and has allowed it to further decrease operational costs by improving efficiencies and providing greater visibility into the business.
Mark Kelly, founder and CEO at GSI
One of his favourite aspects of OneWorld is the Electronic Data Interchange (EDI) functionality; GSI was able to build a platform on top of NetSuite OneWorld that has allowed the company to streamline the order entry process, Kelly explained.
"The customer or the salesperson enters their order online and the order goes automatically into Netsuite. At that point, the salesperson within GSI for that account is advised there's an order in the system," he said.
"He then looks at that and can approve that order straight away and it can go to our 3PL (third-party logistics). Or he'll ring the customer back and say, 'Hey, that blue one that you bought, you sold 10 of those, you only have one left, do you want to up the order?'
"The warehouse people take the information, run that through their system, then ship the goods ... That information from the 3PL is sent back to NetSuite, and [the salesperson] also goes back into NetSuite and goes to billing. Then our customer service manager at the end of every day or a couple times a day hits the button, sends the bill, and then the customer is notified that the order has left and the tracking number is XYZ."
While it may not seem like much, Kelly said this used to be a bigger and more complex process, therefore NetSuite addresses a significant pain point for GSI.
"[Orders] used to revolve around people getting reports ... Now the only order entry is ever done by the first person who put the order in. They're the only person who touches the keyboard through that whole process," he said.
"So data entry and errors have pretty much been eliminated. We know everything that has been shipped and billed, and the correct tracking number ... It's just perfectly streamlined and really, really efficient."
Using OneWorld, GSI is also able to generate comprehensive reports more easily, Kelly said.
"I've got reports that I look at a lot that has what we did last year, what our budget was, what our actual is this year ... And I have that all on one page so I can see by product category, what our revenue is, what our cost is, pretty much live. I can see what expenses have been run into the system on a daily basis as well," Kelly added.
"So it just [provides] us a really good level of comfort. Where beforehand, building those reports would have been time consuming and messy, now you build them once and you know the data is always correct ... and then [have] the confidence that when you make a decision, you're making the right one because the numbers are supporting it."
Kelly admitted that top-line growth has shrunk since adopting OneWorld, but bottom-line profit has increased roughly 150 percent over three years. In the next few years, he expects to generate 50 percent more revenue with the help of OneWorld.
"What NetSuite has done is it's made me much more astutely aware of the bottom-line number and made the top-line number more relevant. A lot of people are chasing revenue, but at the end of the day, it's about bottom-line profit. If you don't have good reporting tools and you don't have good systems in place, then money just falls through the cracks," he said.
Additionally, staff productivity has improved by cutting annual accounts and tax reporting hours by at least 50 percent, while time spent on EOM reporting has been slashed by at least five days.
"Our aim was to get monthly reporting done by the 15th, and now the 10th is the latest day we get it. It's usually by the 8th of the month. If you're running a business and you're looking at reports and you're making decisions from those reports, you can't have your reporting in the second half of the next month. You're behind the eight ball all the time," Kelly said.
Using OneWorld, GSI has also been able to cut down its stock keeping units (SKUs) from around 900 to less than 640.
"We have 636 live products in multiple sizes and colours, and our goal is to always analyse those and make sure that they're all selling. If they're not, we kill them off or invent something else," Kelly said.
"NetSuite has been a great reporting tool for that, seeing how products get distribution ... [OneWorld] can show distribution down to the sales territory level ... so you can do a good analysis of that, and then you can talk to the people who are running those territories and say, 'Hey look at this account, why are they not buying this?' Before it used to be a bit of a mission to get that information."
The aim is to bring SKUs further down to 450, Kelly added.
"The goal is really to have the least amount of inventory in-house ... Before we just wanted to have lots of products. But then we went, 'Hang on, what are we doing?' When we go back to our manufacturers, if we can have 80 products instead of 200, then it's easy for them to order, it's easy for them to produce," he explained.
"We're doing around about the same volume in numbers but they're producing half the SKUs, so the consistency of making products is really good and helps [the manufacturer's] efficiency as well."
GSI has come a long way since its inception. In the initial years, like many other companies at the time, GSI was reliant on dial-up internet, fax machines, printers, photocopiers, and old-fashioned telephones. Kelly said the company was spending somewhere around AU$30,000 annually on telecommunications alone -- including AU$1,800 for every US-Australia toll-free number per year.
But telecommunications costs have come down to about AU$2,000 as a result of GSI transitioning to cloud products that operate on subscription-based models such as Skype for Business and Zoom, Kelly said.
The company has gone completely paperless, meaning that data is no longer buried in printed documents.
Kelly acknowledged, however, that more automation can be introduced to the business; it's just not clear yet where. He also said changing or introducing new software systems is a big decision for any company, likening it to "getting married", so it needs careful consideration.
"A little bit of that learning is coming from other NetSuite customers about what they do, so going to those NetSuite customer days and forums are really important for us ... I would say on those days we probably learn 15 percent from NetSuite and 85 percent from other people. We go to those events to meet and talk to a lot of people in a similar industry to us -- not as far as the products we sell, but as far as distribution, wholesaling, and product development," Kelly said.
"I don't know where or how ... but I think our efficiencies will just continue to grow which will allow us to spend more time working on the business than working in it. There's quite a good distinction about that."