N ETSUITE ECOMMERCE: TO SUITE OR NOT TO SUITE

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1 June 2012 N ETSUITE ECOMMERCE: TO SUITE OR NOT TO SUITE THAT I S T HE Q UESTION On May 15, 2012 at SuiteWorld 2012, NetSuite announced Commerce as a Service (CaaS), the latest in the growing number of as a Service acronyms. At the very core of this new offering is NetSuite SuiteCommerce, which combines an ecommerce platform with a customer experience management system that is uniform regardless of customer touchpoint. Unlike bolt- on ecommerce systems, the integration with back office fulfillment, billing and support services is seamless and transparent, because all are built and designed as an integrated suite. Yet even though built and delivered as a fully integrated suite, the ecommerce capabilities can also stand on their own merit. NetSuite customers have the choice of implementing a full end- to- end solution, or just the pieces they need. The biggest draw of NetSuite is that it s fully integrated, from the storefront to the back office we were definitely in the market for an all- encompassing solution. We see a huge opportunity to both enhance business at the council level and reduce expenses. WHEN IS A SUITE NOT A SUITE? Barry Horowitz, Vice President and General Manager, Girl Scouts Merchandise ecommerce is not new for NetSuite. With its roots buried deeply in the cloud, it has always been about delivering Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and ecommerce as a single platform. While developed as an integrated end- to- end solution, the suite can be implemented all at once or modularly and incrementally. NetSuite reports that 98% of its 12,000 customers take the full suite approach (although many implement in a modular fashion) while only 2% go the route of what it calls CRM+. The + refers to order management capabilities added to traditional CRM. NetSuite views the customer order as the heart and soul of a business. While it provides an application development platform and encourages its channel partners to develop incremental solutions around its data model, NetSuite takes ownership of any piece of the suite that directly manages the customer order. Zach Nelson, NetSuite s CEO admits this end- to- end integrated suite approach places limits on growing the product and the company through merger and acquisition. But even some of the tightly coupled partner products that complement NetSuite are working their way into its modular suite approach. For example, the core NetSuite product supports the concept of a file cabinet (when a

2 Page 2 of 5 document is signed, it gets filed in the equivalent of an electronic file cabinet). If customers instead choose to implement Box (a NetSuite partner) to keep documents organized, share files and manage content access, they will have a button in their admin panel to check to replace the NetSuite file cabinet with Box. Unlike SAP, which recently announced its intent to break its SAP Business ByDesign business management application (ERP) into separate products, to be packaged with other SAP applications built on different platforms, NetSuite s suite approach remains in tact. But the modularity supports flexibility and diversity. FROM ERP TO COMMERCE ENGINE So how does Commerce as a Service impact this suite approach? NetSuite s Commerce as a Service essentially transforms its business management application into a commerce- aware platform that can flexibly, yet uniformly manage the interaction with any and all customers regardless of channel, whether through traditional transactions, a website, a smart phone, social media site or in a store. NetSuite s business management application essentially combines ERP with CRM, therefore addressing and integrating both front office and back office needs. Yet commerce is the engine that drives business, and customer orders provide the fuel that powers the engine. Hence NetSuite s insistence on owning the part of the application that directly manages customer interaction and orders. While many industry observers today talk about moving from transactional systems of record to systems of engagement, from and to is the wrong way of looking at this. You need both. You need to manage and maintain all the transactions that power your business, and at the same time you need to better manage interaction (engagement) with your customer. This used to be relatively simple because business- to- business (B2B) was managed through business documents (often paper- based) reflected as purchase orders and sales orders while business- to- consumer (B2C) transactions happened in stores. Over the past two decades, this rather simplistic approach slowly evolved to the diversity we see today. Along the way came first generation ecommerce solutions that were largely bolted on to existing business management applications. After all, the customers and products were already stored in these enterprise applications, along with the transactions that formed the system of record of the business. So either these bolt- on applications needed to be integrated into the existing business applications, or (just as likely) they stood apart with their own customer and product masters. Integration, if it existed at all, was usually characterized as an arm s length interface. This interface was often manual and resulted in redundancy of data. NetSuite took

3 Page 3 of 5 a different and rather unique approach in building ecommerce right into the business management system. Of course NetSuite is not the only ERP solution provider to offer ecommerce capabilities, but even today many are still based on Electronic Data Interchange (EDI) methodologies first introduced by the American automotive industry decades ago. And few outside of the retail industry address the enormous diversity of devices used for ecommerce today including websites, smart phones and even embedded commerce- enabled capabilities that allow for machine- to- machine (M2M) commerce. Think about the simplicity of your enterprise printer automatically ordering toner when it gets low. What adds simplicity for the customer adds complexity to the systems that record the ordering and shipment of product. Taking a suite approach to design and development to address these new modes of commerce insures that both front and back offices are in sync and are not introducing a new layer of data redundancy, requiring off- line synchronization. Taking a modular approach to installation and implementation allows customers to implement new features as needs evolve. WHAT S NEW IN THE PLATFORM? The platform consists of three new technologies: SuiteCommerce Experience: For those who understand tech- speak, this is a page serving and development framework that offers sub- second page times by avoiding the redundant rendering and downloading associated with traditional frameworks. For those that don t, think of it as the underlying tool that allows NetSuite to deliver rich user interfaces quickly regardless of touchpoint (website, smart phone, social media site, etc.) Of course the delivery of a pleasing customer experience still requires some creative design. Several leading ecommerce agencies have jumped on the NetSuite bandwagon, including Fluid, Sweden Interactive, Live Area Labs and Pod1. SuiteCommerce Services: Again, for the technology literate, these new services expose NetSuite s back- end commerce functionality and data as services to the SuiteCommerce Experience and any other commerce front- end application. For the businessperson, this enables customers to apply business logic across multiple touch points. For example, promotions (and also credit limits) can be managed across on- line, telephone and in- store transactions. Think about a customer that orders product across a variety of different channels. Does the system recognize the same customer and apply logic universally? NetSuite Commerce Platform: The commerce platform provides all the business processing capabilities including order management,

4 Page 4 of 5 inventory management and payment processing, as well as personalized promotions, merchandising, account management and support. This combines traditional business processes (transactions) with built- in sales and marketing tools (engagement). CASE IN POINT: GIRL SCOUTS OF THE USA The Girl Scouts of the USA, headquartered in New York City is implementing NetSuite SuiteCommerce to power a new ecommerce website. The organization supports 2.3 million girls and 900,000 adult volunteers. The website is expected to drive growth in merchandise sales and build brand awareness while also supporting business efficiency and customer engagement. The Girl Scout organization has also deployed NetSuite for inventory and warehouse management, distribution and analytics, replacing a legacy on- premise wholesale distribution application along with a custom- built ecommerce storefront and a stand- alone reporting tool. The new platform will replace about 65 individual websites run by regional Girl Scout councils. Forty- seven councils currently without a storefront will have one for the first time. The biggest draw of NetSuite is that it s fully integrated, from the storefront to the back office we were definitely in the market for an all- encompassing solution, said Barry Horowitz, Vice President and General Manager, Girl Scouts Merchandise. We see a huge opportunity to both enhance business at the council level and reduce expenses. CONCLUSION AND KEY TAKEAWAYS NetSuite views commerce, and therefore the customer orders, as the very lifeblood of a business. As a result it closely guards the development of applications that directly manage those customer orders. But it also recognizes the diversity of sources of customer orders. Long gone are the days when only traditional paper- based purchase orders were converted to sales orders and long gone are the days when consumer purchases were only transacted in a physical store. The world of commerce today is much more diverse. And yet the key to handling this diversity is in simplifying both the customer experience as well as the back end business processes. Instead of merging different pieces together in the hope they will one day all fit together, it has taken the approach of designing an integrated end- to- end process that recognizes diversity but introduces a level of uniformity. Recognizing that many companies can t handle a big- bang approach to changing their business and some are intimidated by the breadth and scope of an end- to- end ERP solution, NetSuite is toning down its suite message.

5 Page 5 of 5 However it continues to develop an end- to- end integrated solution that supports both front office and back office enterprise activity, along with the commerce that fuels the business. Whether you implement all of it or pieces, all at once or in modular stages, NetSuite has taken on the challenge of making sure it all works together seamlessly. About the author: Cindy Jutras is a widely recognized expert in analyzing the impact of enterprise applications on business performance. Utilizing over 35 years of corporate experience and specific expertise in manufacturing, supply chain, customer service and business performance management, Cindy has spent the past 6 years benchmarking the performance of software solutions in the context of the business benefits of technology. In 2011 Cindy founded Mint Jutras LLC ( specializing in analyzing and communicating the business value enterprise applications bring to the enterprise.