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NetSuite finds sweet spot in Asia
With a fast-growing economy and government programmes to drive digital transformation, Asia is proving to be fertile ground for the cloud ERP pioneer
NetSuite knows more than a thing or two about cloud computing, having been formed at a time when the ubiquitous term was not even part of the technology lexicon of the day.
For one, the cloud enterprise resource planning (ERP) software pioneer, which started selling web-hosted accounting software as early as two decades ago, believes standardisation – and not customisation – of ERP software is the way to go.
And to cater to the needs of businesses in a region as diverse as Asia, Oracle-owned NetSuite often points to its localisation, globalisation and industry-specific knowhow to support budding local firms with regional and global ambitions.
In an interview with Computer Weekly, Ronen Naishtein, NetSuite’s general manager for Asia, including Hong Kong and Taiwan, explains why the region remains a sweet spot for the cloud ERP supplier, and how its software scales up with the needs of growing businesses.
How is NetSuite doing in the Asia-Pacific (APAC) region?
Naishtein: I’ve been living in APAC for about 20 years, helping companies expand in this part of the world. I did this for about three or four rounds in various capacities at various companies.
Right now, the entire APAC economy is changing. Enterprises are looking at digital transformation and moving to the cloud, so the outlook is really positive. With the economy looking very good, enterprises are modernising their technology so they can be more competitive.
Read more about cloud ERP in APAC
- Singapore’s Redmart has slashed the time it takes to close the books from more than a week to just three days with Oracle’s cloud-based financial application.
- While cloud-based ERP applications are more widely adopted in the APAC region, some companies are still hanging on to on-premise systems that remain core to their business.
- By adopting cloud-based ERP software, Australia’s Plaut IT was freed to focus on its customers rather than its computers.
- SAP now counts companies such as China’s Ameco Beijing as clients, and it is also going all out to address hitches that stand in the way of wider adoption of its S/4 Hana software.
- Unit4’s APAC chief says the ERP supplier is giving users the ability to tweak its software easily without the need for consultants, turning the traditional enterprise software business model on its head.
Now, I think we are in a really sweet spot right now in Asia. Many companies here still run legacy systems, and they did not invest in new systems because the outlook was not so clear. That is now changing, with more companies looking at ways to become more agile.
What do you think NetSuite is getting right in APAC, given there is no shortage of cloud ERP suppliers? What are your key growth drivers in this market?
Naishtein: As we discussed, the growing economy is one driver, and the second is government. If you look at governments in Singapore, Malaysia and Thailand, all of them have initiatives to help small and medium-sized enterprises (SMEs) adopt digital technologies through grants and other programmes they have put in place.
Also, we’ve been on the cloud since 1998, before people even spell out what cloud is. If customers want to move to a modern technology, they don’t really have many choices, because most of our legacy competitors are still doing things on-premise.
And not many of them have strong and robust solutions on the cloud, along with 40,000 customers that NetSuite has. So while there are choices, we have a big advantage in terms of our technology and best practices.
Specific vertical industries
What about your focus on specific vertical industries? Is that a key driver of growth too?
Naishtein: Correct. We’re focusing on four main verticals – distribution, retail, manufacturing and professional services. In Singapore, for example, most of our growth comes from the services industry and manufacturing.
Over the past few years, NetSuite has been talking about the importance of e-commerce. From what I understand, the company sees e-commerce as the layer that ties everything together. But e-commerce may not be relevant to every one of those verticals that you talked about.
Naishtein: First of all, what we try to do is to provide our customers a full suite of solutions, from the front office, which is e-commerce and customer relationship management (CRM), to the back office, which is ERP in areas like supply chain and manufacturing.
Now, retail is the sweet spot for e-commerce. SunMoon, for example, has transformed from growing and processing vegetables and fruits, to selling their produce online and managing relationships with online customers.
Ronen Naishtein, NetSuite
Second, we also see more customers exploring areas like manufacturing to see how they can sell their capabilities either to the user or in a business-to-business (B2B) relationship using our technology. So really, e-commerce is the key to our growth.
I understand that NetSuite’s sweet spot is in the mid-market, right? For mid-market companies, their challenge is to scale up at a rate that’s fast enough to keep up with the growth in demand for their products and services. How do NetSuite solutions adjust to that level of scaling that these companies often struggle with as they grow?
Naishtein: Let’s look at the struggles of companies as they scale up. A small local company growing to become a regional player would have to grapple with the challenges of operating in multiple countries, and even managing different subsidiaries.
The company would need to have visibility and transparency across its entire business. And that’s exactly what NetSuite does well. Our solutions can support small shops with five or 10 people, all the way up to large enterprises.
Scoot, a low-cost carrier, just went live with NetSuite not too long ago. They chose us because they wanted to be agile and scale quickly, from the back office to the front office on a single platform. That’s the sweet spot of NetSuite and there are not many other players that can do that.
We also have NetSuite OneWorld, which will support companies as they grow from one subsidiary to multiple subsidiaries handling multiple currencies.
Oracle Fusion applications
And if they grow over time to become a very large enterprise, is there a pathway for them to deploy Oracle Fusion applications if they want to?
Naishtein: At the moment, we don’t see many customers going in that direction. I think NetSuite has allowed them to scale to quite well. We have a customer that is a really large enterprise, and I don’t see that coming to play at the moment.
But I believe in the longer term, if they choose to deploy Fusion applications at some level while maintaining the use of NetSuite in their subsidiaries, they will need to have a strategy to help them with migration and integration.
One of the challenges companies face with cloud ERP is the level of customisation. Some companies struggle with that, because multi-tenancy cloud applications don’t lend themselves very well to being customised at a granular level. How is NetSuite addressing such challenges and what are your thoughts on rivals like Unit4 that let businesses customise their applications as much as possible post-deployment?
Naishtein: First of all, we need to find the balance between customisation and standardisation. Our view is that in the long term, standardisation is the way to go. The beauty of NetSuite is that we’ve been in this market for about 20 years, amassing about 40,000 customers so far. That means most industry best practices are already incorporated in the software. I don’t think many other competitors can say that.
Companies that want to customise their software can do so in most cases through the configurations that we support, rather than through actual customisations. We believe our solution is flexible enough to cover 90% to 95% of your needs without customisation. Once again, I don’t think many other suppliers can say that, because their product is not mature enough yet.
Oracle’s cloud infrastructure
There has been some talk on the possibility that NetSuite may use Oracle’s cloud infrastructure at some point. What is the thinking behind that, and how far are you in that conversation as far as your APAC footprint is concerned?
Naishtein: I think that is still work in progress. We want to leverage Oracle’s investment in NetSuite and utilise their infrastructure. But at the moment, we have nothing to update for now.
What are the key markets that you are focusing on right now? Of course, APAC is a very diverse place and because there’s no single market to begin with, technology suppliers tend to do business in different ways in different markets. Could you provide some colour on NetSuite’s go-to-market strategy in this region?
Naishtein: Yes, definitely. In mature markets like Singapore and Hong Kong, it is more about understanding our customers and driving their business. In those markets, we have a package called SuiteSuccess, which provides customers with a set of best practices in their industries, with everything fully configured and packaged. We can go live in a matter of weeks without issues.
We have a different strategy for emerging countries such as Vietnam, Indonesia and Thailand. We work a little differently to address those markets, starting from raising awareness about NetSuite in those countries and working together with partners and alliances to build up our footprint.
But even in mature markets, you still have a partner network as well, right?
Naishtein: Yes. Partners are a very critical in helping us with coverage. Our model is a combination of direct business, where we’re building up our direct sales teams in almost every country in Asia, as well as partnerships.
What about markets like China, or is that being managed by a separate team? What are your thoughts about competing with the Chinese players?
Naishtein: Yes, our China business is managed by a separate team, but what I can say is that China is growing like no tomorrow. I don’t want to comment too much on China because it’s not a part of my portfolio, but we have similar challenges, say in Taiwan or Hong Kong where many of the Chinese players are also present.
However, because of the localisation and globalisation capabilities in our software, our customers prefer to go with NetSuite rather than a local player because companies today are thinking globally. And they understand that if they choose a local player, very soon their business will outpace the product and they will need to replace it.