What a difference a year makes: A more traditional SuiteWorld 2016

Those who got a bit of a shock at last year's NetSuite conference will be back on familiar ground.

Zach Nelson NetSuite CEO

Zach Nelson, NetSuite's CEO.

Credit: NetSuite

Last week saw cloud ERP vendor NetSuite hold its annual user conference in San Jose. I've been attending SuiteWorld as long as SuiteWorld has actually existed, and hence it is interesting to reflect on the differences over the years. (Disclosure: NetSuite covered my travel and expenses to attend the event.)

Last year's SuiteWorld marked the first outing for the company's newly minted chief marketing officer, Fred Studer. Studer, an alumnus of Microsoft, had a very different perspective on the message that NetSuite should be articulating, and SuiteWorld 2015 was a flashy affair with an aspirational tone that arguably left its traditional customers feeling a little bewildered. NetSuite is, after all, an ERP vendor, and its customers tend to be on the slow, steady and conservative end of the continuum.

Studer is no longer with NetSuite, and so it was always going to be interesting to see the tone of the 2016 event. Frankly speaking, this year saw a return to a NetSuite that is comfortable being what it is, not particularly keen to put on a singing and dancing show and instead focused on driving real value to real organizations.

Perhaps as a response to the general feeling of unease after last year's event, 2016 saw two keynotes on day one with NetSuite's CEO, founder/CTO and COO, Zach Nelson, Evan Goldberg and Jim McGeever, respectively, taking the stage to reinforce that this company is comfortable playing the role of rock solid partner of those within the organization charged with plotting the financial path. That's not to say there were no references or offerings to organizations on a high-velocity path -- merely that the story was all about growth with prudence, change with control and compliance in increasingly turbulent times.

Overall SuiteWorld was less about new product announcements and more about stability. But it wouldn't be a show without some product bling, so here's a quick roundup of what was on offer.

Finally -- NetSuite delivers subscription billing

Those who have watched NetSuite for years will know that the company has a checkered past when it comes to subscription and billing. The company had previously announced third-party partnerships -- first with Zuora and then with Aria -- in an effort to offer customers the broadest options around how to bill customers.

A few years ago, however, a U-turn occurred and NetSuite announced that it would be delivering native subscription billing. To be honest, this makes sense. Billing is a highly complex area which is, naturally, inextricably linked to the transactional side of an organization's back office. SuiteBilling has taken five years to arrive, but now that it's here, NetSuite will be able to offer its customers huge flexibility in this area.

Revenue recognition

The reason that billing should be tied to the financial system is all because of revenue recognition. The next couple of years will see the introduction of an entirely new way of recognizing a company's revenue, ASC 606, and this means that organizations are soon going to have to embark on their process of recognizing and reporting revenue in multiple ways.

At SuiteWorld, NetSuite announced that it is now fully compliant with ASC 606 rules. It also mentioned that it is the only ERP vendor able to handle these new rules -- a contention that its competitor, Intacct, would argue with. Notwithstanding the posturing, ASC 606 compliance is a seriously big tick, and for any organization with complex monetization approaches it is a real issue.

The rise of the verticals

It was pleasing to see NetSuite split the second day of the conference into five different keynotes, all aimed at different verticals. This is an important strategic move for a company that has probably spent too long talking about a broad horizontal platform. The fact of the matter is that an ERP solution for a retail organization looks pretty different from that of a software vendor. It was important for NetSuite to recognize this and start talking up the different vertical solutions.

The vertical keynote I attended, software, did a good job of covering off the life cycle of a software business with customer appearances ranging from small software startups through to large publicly listed ones such as Google's holding company, Alphabet. It was also refreshing to hear Goldberg, who after all built NetSuite from scratch and has been a part of its journey to a billion-dollar revenue company, reflect on the lessons he has learned over his tenure.

Retail to the max

NetSuite has a long history of success serving retail customers, so it was unsurprising to see the company further extend this part of its offering. SuiteCommerce builds off NetSuite's opinion that e-commerce is something that needs to be delivered natively as a part of the ERP system. Rather than relying on third-party e-commerce tools that bolt on to the core ERP, NetSuite offers the solution itself.

The release of NetSuite's Retail Apparel Edition answers this and the desire to offer distinct vertically tailored offerings. NetSuite believes that traditional approaches toward serving this sector, by utilizing disparate solutions, simply doesn't work and leads to information silos and poor user experience. The solution, therefore, ties a front-end retail solution with NetSuite's core ERP. The solution ties unified online and in-store shopping, full inventory management and merchandising. It also includes preconfigured dashboards tailored to this sector.

OneWorld, one love

Answering the needs of its larger customers, NetSuite announced some improvements to its OneWorld product that will keep financial controllers happy. More detailed consolidation and reporting across multiple entities, vendor management, and tools to ensure the needs of CEOs and boards to cover off governance, risk and compliance will all allow NetSuite to compete more easily further up the food chain. It will also be a bonus to small but complex customers that have global operations.

Still work to be done

Nothing is perfect and NetSuite still has room for improvement. A real cause for concern when talking to both customers and channel partners is the difficulty that NetSuite has in ensuring its partners actually understand the breadth of offerings that are available. There seems to be a recurring situation where partners advise clients that a certain piece of functionality isn't available on NetSuite when in fact it is.

This is undoubtedly a function of small partners working with a number of different solutions and thus unable to really invest in understanding what NetSuite does. In a number of cases, NetSuite has taken over customer accounts from channel partners. While resolving the problems for customers, this isn't really a scalable model for NetSuite, and it needs to find ways to ensure its partners really understand the product.

Another area of concern is the complexity of pricing options available. Partners and customers can get confused by the pricing complexities, and NetSuite needs to find ways to make this simpler. I suspect that this is something that the company is working on, and alongside the vertical strategy I'd assume we'll see some movement on the sheer number of SKUs available to customers.

Another issue is around the messaging. It seems that NetSuite has, over the past 12 months or so, somewhat dropped the ball in terms of delivering a clear, coherent and consistent message to prospects. I suspect we'll see lots of investment in building out consistent messaging across the brand -- this will help to reduce the noise and confusion which exists from the current situation of mixed messages. Expect new marketing czar Jason Maynard to spend significant time on this in the next months.

Overall this was a positive event for NetSuite -- less culture clash, and more solid positioning. It felt like something of a "reset year" with the company investing lots of time to move the conversation back to where it was 24 months ago. Expect steadier waters now that the ship has been righted.

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