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NetSuite vs. Sage: is ERP in the cloud for real now?
Cloud-based provider of CRM, ERP and financial applications NetSuite has announced that more than 500 companies had switched from premise-based solutions from Sage to NetSuite alternatives. NetSuite claims that the switch enables companies to lower costs, streamline processes and become more productive and competitive. Is this a sign that ERP in the cloud is "for real?" Why or why not?
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5 Answers
Cloud is always an option to consider...when it comes to evaluating how to use the functionality you need and what your organization's priorities are. First and foremost, functionality needs to be the driver.
For many companies, SaaS solutions will have the functionality they need and the delivery model (in the cloud) adds other benefits (e.g. avoiding future costs, or reducing current costs of running current on premise software . For others, if their functional requirements cannot be met adequately, then I would suggest be careful in picking a Cloud solution just because it's not on premise, unless you know and evaluate the total impact to your business processes and costs.
An ounce of selection is worth a pound of implementation...is what I always advise my clients.
Depending on your definition of ERP, this question does not actually make a lot of sense. If you think of ERP as Accounting, then it's been "in the cloud for real" for many moons - think Quickbooks Online!
If you define ERP in it's true enterprise wide context, then full cloud solutions are a long way off.
Bottom line - ERP is too broad a term to be used in this context.
If we think of ERP as being comprised of Financial Management, Operations Management, Supply Chain Management, Manufacturing, then we can see that some of those components are more conducive to Cloud solutions than others.
The more generic the need, the more appropriate a Cloud solution is. So - Accounting - sure - an easy step to Cloud. Manufacturing - much less generic, much less benefit to Cloud solutions. Supply Chain Management - partially generic, so we're seeing the rise of hosted SCM apps that integrated into on premise ERP apps like SAP.
Functionality is key - up to a point. When the need is generic - like Accounting - then the zero admin costs of a Cloud solution become more a more important factor than cosmetic functionality. For many CEO's (especially SMB CEO's) the fact that their business never has to upgrade software again has such huge benefits to make feature /function secondary.
Bottom line - It depends on need & definition.
There's not enough data here to conclude that "ERP in the cloud is 'for real?'" Many of the migrations are ACT! conversions going to NetSuite CRM+, and may have no ERP component at all. Others are ACT! and Quickbooks where customers are looking for a single solution. The choice of SaaS eliminates synchronization of remote users and is probably a strong factor in the decision, but establishing SaaS as a cast-in-stone platform may be more related to elimination of servers, IT maintenance, costly hardware upgrades, and cost per user.
Many of my clients are still using ACT! 6.0, last updated in 2004. It serves their needs, but they are now planning to upgrade hardware and will be running Windows 7 64 bit. This means they have to upgrade to ACT! 2009 (version 11) or later. Many take this opportunity to explore other solutions, such as NetSuite.
Most of these customers who have switched to NetSuite from Sage are now using NetSuite for ERP and Accounting functions. You can read a host of testimonials from them about the benefits they experienced by moving from Sage to the cloud here:
http://www.netsuite.com/portal/landing/sage.shtml
Rob
I have experience with SAP, Peoplesoft, Netsuite, Sage (starting with MAS 90) and Great Plains .... as both a CIO and CFO.
From an implementation standpoint, cloud software is easier to implement since there is no software to load, no servers to set up, no database management system to configure. etc., etc. However, you still have the same challenges from a data conversion and software 'configuration' standpoint.
On my latest project, we converted from Salesforce.com AND a separate accounting system to Netsuite. The integration of the accounting data AND the CRM info has been a hugh benefit. Still, the conversion was as difficult as any other migration I have worked on.
I don't necessarily buy into the thought that cloud computing saves costs. It really depends on number of users. Netsuite and Sage charge a monthy fee for each modue PLUS a monthly fee for each named users. So the cost for say a 5,000 users installation will be dramatically different than for 50 users. Common cents statement .... but it you are a fast growing company .... and buy based on 50 users per month .... then a year later you find you need 175 users licenses ... your cost may go up dramatically.
So you need to do a full life cycle cost analysis looking out 3 to 5 years. As both a CIO and CFO in my career, I believe SAAS applications are the best way to go depending on cost analysis.
Also, with SAAS , I love not having to worry about running data centers, watching my IT staff argue over which UNIX servers (IBM or HP for example) are best, and coming up with large capital dollars for harware and software.
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