If you have attended a technology provider conference in the last 20 years, you know the drill. They find ways to top the previous year’s event and create a blast of energy around the latest release of software. It’s an intoxicating (literally) mix of hype, hope and huge marketing horsepower. Throw Las Vegas in the mix and you can spin off the planet. Add in “Cloud ERP” and welcome to the next generation of strategic thought leadership and technology platform.
I’m not saying that just because I shook Wayne Newton’s hand a few hours ago and had a brief conversation with an amazingly humble man who is truly a living history with connections to the pillars of American entertainment culture. He left our event to go perform one of his four-shows-a-week at the Bally in a 150-seat theater at the age of 76. (Sidebar: Next time in Vegas, spend time at his home/museum; you will not be disappointed, and you may be lucky enough to meet him as well.)
Why am I spending so much time on an icon of American culture? Because it’s a lesson in value, relationship, and also the transition taking place in distribution technology today. What I didn’t realize until this experience is what an incredibly thoughtful business entrepreneur this man has been who was willing and capable of changing his model many times to reinvent his business and core passion of service. There are parallels to what cloud software offers.
I’m at Oracle NetSuite’s annual conference (#suiteworld2018) in Las Vegas. My first NetSuite event was in 2006 with about 800 attendees. It’s at 7,500 this year. NetSuite makes some bold claims about how its customers outgrow the competition, but they have some pretty strong numbers to work with. Whatever the reality behind the numbers, cloud-based products like NetSuite are changing the distribution competitive landscape in terms of making ERP capabilities accessible to much smaller companies than the enterprise platforms like Oracle (NetSuite's parent as of last year) and SAP can serve. It is truly a field leveler, and they have been taking share as a result in distribution verticals. (Full disclosure: they have been an MDM marketing partner, as have all the core distribution ERP providers, for the past ten years).
We spoke with one executive from a distribution company with 15 employees who implemented NetSuite in 2016. I’ve always thought of a company like that as being too small to afford and benefit from an ERP-style platform, but he said they love their new system. They installed it in six months with only a part-time focus and he can run his business when he’s on the road with customers, from his mobile phone.
We also spoke to a C-suite executive from a much larger distribution company considering NetSuite, although there are two systems under final bake-off. Like the smaller distributor, they have old systems that are “kluged” together and don’t provide integrated operating systems, inventory management or financial reporting. There is always a trade-off between highly customized solutions that have a complexity of moving parts and a single platform system that can simplify the operating systems of a business.
This is going to be the competitive front for ERP over the next few years. There are many software providers that are claiming cloud, but it’s important to really get the advice to vet whether it is hype, hope or reality. NetSuite has driven the competition in this cloud space as they started it 20 years ago. The crux of the matter over the next few years is integration. How do you simplify the integration of ERP, CRM, marketing automation, content management system, product information management, and another half dozen acronyms that will give you headaches and whiplash.
You’ve no doubt heard a lot about “the cloud” before, but it really just means you don’t buy and manage your own servers and install software on site. Instead, you buy functionality that you access via the web and let NetSuite or some other provider worry about security updates, hardware, software updates and the like. It’s a model that is adaptive and scalable, and if you are considering a software upgrade, you have to include it in the mix of options. Integration of as much as possible is the holy grail.
Software developers like NetSuite benefit because they achieve scale in their operations that reduces their costs and allows them to access the highly lucrative “SMB” (small and medium size business) market. SMB companies benefit because they can afford these systems thanks to the cost reductions. The play over the next few years is how well this cloud solution can support larger distribution companies with the functionality and e-commerce user experience required for more complex websites.
Sidenote: An incentive NetSuite announced is their new “SuiteCommerce” application that makes it easier to build a turnkey, full-function and fully-integrated website without developer support – the first thousand customers to sign up for SuiteCommerce get implementation included for pre-defined themes. It will be interesting to see how competitors respond to buying share in the cloud arena in distribution, but you have to be on the NetSuite ERP to plug in this e-commerce feature. I think this is an indicator that IT providers are placing easy websites with strong e-commerce as the big opportunity to gain share. The cloud supports this strategy.
Whether your distribution company selects NetSuite or some other provider, it’s clear to me that you need an integrated ERP and web platform. The data interchange is native and effortless, meaning you enjoy substantial business benefits. For example, your online inventory availability and pricing are exactly right, all the time. You have to evaluate the trade-offs of standardization with the power of customization.
The cost of all this functionality has come down to the point where even sub-$10M distribution companies can afford it. What you cannot afford is the lack of online selling capabilities. Whether you decide to sell through Amazon or not, you need state-of-the-art e-commerce in your company. If you don’t have this, you’re very late and you need to build it now.
That’s the report from SuiteWorld2018. Bringing it back to the start, Wayne Newton has been able to change his value proposition over several generations of customers; that is truly something to admire. If you’re not considering cloud today, take a lesson from Wayne and think about how you can adapt and best serve your shifting customer base far into the future. That is truly strategic planning. If you aren’t rethinking your business model every year (see Sales GPS 2018 Conference for our sales model transformation conference in June), you have to ask whether or not you may be stuck in the past. Wayne isn't.