Presenters Today:
Katherine Jones
Director of Marketing
NetSuite
From Cost to Profit:
The New Role of ERP
Cindy Jutras
Vice President & Service Director
Manufacturing & ERP
Aberdeen Group
© Copyright NetSuite Inc., All Rights Reserved.
Agenda
© Copyright NetSuite Inc., All Rights Reserved.
About NetSuite
Welcome
Co-Founded by Larry Ellison and Evan Goldberg in 1998
Introduction to NetSuite
Largest Integrated ERP base utilizing Software as a
Service (SaaS)
From Cost to Profit:
The New Role of ERP
Awesome product: Every Major Award
Q&A
© Copyright NetSuite Inc., All Rights Reserved.
The Traditional Way – Multiple
Silos of Data
NetSuite: 3 Big Ideas
Create One
System
To Run A
Business
Deliver System
via Internet
© Copyright NetSuite Inc., All Rights Reserved.
Deepen
Capabilities for
Specific
Industries
Inventory
Management
Web/Portals
SFA
Accounting
Support
© Copyright NetSuite Inc., All Rights Reserved.
© Copyright NetSuite Inc., All Rights Reserved.
AberdeenGroup • 1
SuiteFlex
The NetSuite Way
Business Process Customization & Integration
SuiteScript™
Client SuiteScript
User Event SuiteScript
Scheduled SuiteScript
SuiteScript Portlets
Suitelets™
CRM
Ecommerce
Acct/ERP
SuiteTalk
SUITEFLEX
–
–
–
–
–
SuiteScript
– SOAP standard Web
Services
– NetSuite to other systems
and third-party vertical
applications
SuiteTalk
SuiteBuilder
SuiteBuilder
– Personalization,
configuration and vertical
tailoring
© Copyright NetSuite Inc., All Rights Reserved.
© Copyright NetSuite Inc., All Rights Reserved.
o Aberdeen PACE Model
o
o
o
o
ERP Benchmark
Survey
Structure
Benchmarking ERP
Pressures
Actions
Capabilities
Enablers
o ERP Strategies and
Tactics
o KPIs – Usage and
Specifics
o Follow-up Surveys
interviews
Cindy Jutras
Vice President & Service Director
Manufacturing & ERP
Technology Answers
for the Global Value Chain
© 2006 AberdeenGroup • 10
ERP Implementation Maturity
Consolidation Strategies
How did you acquire multiple ERP’s?
How many ERP’s do you have?
Worldwide
60%
50%
58%
1
No ERP
9%
> 15 years
13%
< 2 years, 9%
2 years but
< 5 years
18%
10 years but
<15 years
18%
88%
What system did it replace?
Another ERP
38%
Large
0%
Mergers and
acquisitions
22
3
20%
10%
6%
Home grown
42%
33%
30%
20%
18%
22%
2
48%
40%
20%
Mid-size
10%
4%
ERP decisions Corp. standards
left to
Changed; existing
Autonomous implementations
divisions
were not replaced
Small
9%
4
> 5 years but <10 years
33%
Manual 20%
processes
4%
2%
31%
>4
2%
2%
0%
20%
40%
60%
80%
Source: AberdeenGroup August 2006
© 2006 AberdeenGroup • 11
Yes
74%
100%
Do you intend to consolidate ERP’s?
No
26%
Source: AberdeenGroup August 2006
© 2006 AberdeenGroup • 12
AberdeenGroup • 2
Are you planning to consolidate?
Business Drivers Impacting ERP Strategies
Size Matters
90%
84%
Standardization and acceleration of mfg processes
80%
54%
Streamline order fulfillment processes
58%
60%
61%
Pressure to reduce operating costs
67%
70%
47%
Requirements to improve customer service
50%
32%
Yes
42%
40%
24%
Linking of global operations
No
33%
Organic revenue growth
30%
Easier connection with external partners
16%
20%
23%
16%
14%
Revenue growth through M&A
10%
13%
Regulatory compliance requirements
0%
Small
Mid-size
Large
Shorter product life cycles
42% of mid-size companies have more than 1 ERP
9%
0%
10%
20% 30%
40%
50%
60%
70%
All respondents
Source: AberdeenGroup August 2006
Source: AberdeenGroup August 2006
© 2006 AberdeenGroup • 13
Challenges & Responses
Challenges & Responses
from Benchmarking ERP in Manufacturing - August
Challenges
from The Financial Mgt of Enterprise Mgt App - January
Responses
%
Selected
© 2006 AberdeenGroup • 14
Challenges
%
Selected
1. Customization Related
Challenges
45%
1. Aligning business processes to
software capabilities
54%
2. Redesigning Business
Processes
%
1. Redesigning Business Processes. 68%
Responses to Challenges
%
1. Aligning software capabilities to business
processes
55%
41%
2. Aligning software capabilities to
business processes
48%
2. Integration challenges
57%
2. Replaced disparate systems with a single 50%
integrated solution
3. Cost of upgrades/updates
34%
3. Eliminating customizations
43%
43%
4. Training
34%
3. Aligning business processes to software
capabilities
33%
4. Deploying more modern applications
3. Customization Related
Challenges
29%
5. Use external consultants
5. Little flexibility in adapting to
business processes
28%
22%
6. High integration costs
26%
6. Move to standards based hub and
spoke integration methodologies
26%
7. Wrap existing applications with web
services
20%
6. Training
25%
6. SOA enabled existing applications
13%
7. High maintenance costs
8. Replace legacy applications with
applications enabled by Service
Oriented Architecture (SOA)
17%
7. High maintenance costs
21%
7. Moved to a Software as a Service model
10%
8. Replace legacy applications with
applications enabled by SOA
9%
18%
8. Lengthy or incomplete
integrations
4. Cost of upgrades/updates
36%
4. Eliminating customization
36%
5. Little flexibility in adapting to
business processes
32%
5. Use external consultants
32%
Source: AberdeenGroup August 2006
© 2006 AberdeenGroup • 15
© 2006 AberdeenGroup • 16
ERP Selection Criteria
Upgrade versus Replacement versus status quo
SOA Enablement: <5%
37%
Business is evolving
36%
Require functionality not in latest release
34%
Require functionality not in current release
Extensive customization prevent upgrade
All respondents
19%
18%
Unhappy with support from current vendor
14%
ERP vendor not keeping pace
13%
0%
10% 20%
30% 40%
50% 60%
70%
Source: AberdeenGroup August 2006
© 2006 AberdeenGroup • 17
36%
29%
Small
Mid
33%
28% 27%
26%
20%
17%
22%
15%
16%
10%
7%
Large
Software
License price
Integration issues
49%
Integration
Technology
42%
Outdated technology
55%
Industry
Specific
Functionality
62%
ERP consolidation
76%
Ease of
Implementation
Motivation behind replacement strategy
Upgrade to the
latest release of ERP
73%
70%
64%
Ease of Use
39%
80
70
60
50
40
30
20
10
0
Total Cost of
Ownership
Continue running current
vs. of ERP installed
Functionality
Replace ERP
at selected
installations
17%
44%
45%
© 2006 AberdeenGroup • 18
AberdeenGroup • 3
How do you measure success?
Performance Improvements
Improved manufacturing
schedule compliance
52%
Streamline business processes
44%
Automation of manual processes
Improved complete and ontime shipments
37%
Visibility to business
ROI
1%
12%
2%
32%
15%
33%
30%
Time to initial “go live”
Reduction of administrative
costs
27%
Cost of software and services
27%
All respondents
25%
Time to full implementation
4%
11%
1%
8%
11%
Ability to meet compliance req'ts
0%
10%
0%
20%
30%
40%
50%
23%
13%
10%
Reduction in inventory costs
13%
Average
Best in Class
Reduction in manufacturing
operational costs
24%
Process cost savings produced
Ability to connect with supply chain
Laggard
26%
10%
28%
20%
30%
40%
60%
Source: AberdeenGroup August 2006
Source: AberdeenGroup August 2006
© 2006 AberdeenGroup • 19
Total Cost of Ownership
Average
Number of
Users
The “average” ERP installation
Average
Software
$’s
Software
$’s per
User
Average
Service $’s
Average
SW+Service
$
Software +
Services
$’s per
User
Under $50
million
38
$138,806
$4,820
$98,635
$235,606
$7,853
$50 million
to $100
million
84
$363,425
$4,622
$339,321
$702,746
$8,827
$100 million
to $250
million
150
$480,048
$3,171
$485,590
$965,638
$6,869
$250 million
to $500
million
256
$527,273
$2,916
$600,455
$1,127,727
$6,247
292
$561,667
$2,463
$495,000
$1,056,667
$2,537
1,485
$1,137,500
$1,535
$1,562,500
$2,700,000
$500 million
to $1 billion
Over
$1billion
© 2006 AberdeenGroup • 20
• Has 10.51 modules implemented
– Based on a total of 24 “generic” modules
– Typical modules: GL, AR, AP, MRP, Inventory
Control, Event Management, Workflow, etc.
– Un-weighted result: 43.75%
• Uses 63% of available functionality of modules
implemented
– Weighted result: 27.6%
$3,278
© 2006 AberdeenGroup • 21
ERP deployment by company size
12
Cost per ERP Utilization
6
70
65
60
4
U
$5
0m
nd
er
$5
0m
to
$1
$1
00
00
m
m
to
$2
$2
50
50
m
m
to
$5
00
$5
00
m
m
to
$1
$1
b
b
to
$2
.5
$2
b
.5
b
to
O
$5
ve
b
r$
5
bi
ll io
n
0
55
Weighted
Average
Cost per user
per
percentage
point of
functionality
used
Under $50 million
9.79
62.01%
25.29%
$314
$50 million to $100
million
10.31
61.52%
26.43%
$316
$100 million to $250
million
10.13
63.09%
26.64%
$241
$250 million to $500
million
10.83
63.10%
28.48%
$154
$500 million to $1
billion
10.86
57.65%
26.08%
$139
Over $1billion
11.71
69.72%
34.01%
$53
50
U
nd
$5 er $
0m
50
m
to
$1
$1
00
00
m
m
to
$2
$2
50
50
m
m
to
$5
$5
00
00
m
m
t
$1 o $
1b
b
to
$
2
$2
.5
.5
b
b
t
O
ve o $5
r$
b
5
bi
ll io
n
2
Average % of
functionality
Used
75
10
8
Average # of
Modules Used
% Functionality used
Average Modules used
14
© 2006 AberdeenGroup • 22
© 2006 AberdeenGroup • 23
© 2006 AberdeenGroup • 24
AberdeenGroup • 4
Responses to ERP Implementation
Challenges
50%
50%
Aligning business processes to software capabilities
30%
Aligning software capabilities to business processes
Replaced disparate systems with a single
integrated solution
60%
25%
Use External Consultants
BIC
All
34%
Application Area
Typical Implementation & ROI Times for SaaS
Customer Relationship
Management
• Implementation in less than 2 months
• ROI in less than 6 months
Supply Chain
Management
• Implementation in less than 3 months
• ROI in less than 1 year
Sourcing & Procurement
• Implementation in less than 2 months
• ROI in less than 1 year
Financial Management
• Implementation in less than 3 months
• ROI in less than 6 months
Product Lifecycle
Management
• Implementation in less than 6 months
• ROI in less than 1 year
15%
11%
SOA enabled existing applications
Moved to Software as a Service model
50%
47%
40%
44%
Eliminating customizations
Replaced legacy applications with applications
enabled by service oriented architecture (SOA)
SaaS Enterprise Application Value Summary
0%
13%
40%
11%
0% 10% 20% 30% 40% 50% 60% 70%
© 2006 AberdeenGroup • 25
© 2006 AberdeenGroup • 26
Discussion and Q&A
www.aberdeen.com
© 2006 AberdeenGroup • 27
© 2006 AberdeenGroup • 28
www.netsuite.com
© 2006 AberdeenGroup • 29
AberdeenGroup • 5