To understand what NetSuite is, we must first be clear on what it isn't: accounting software on your hard drive.
Yes, it looks like accounting software and includes every accounting feature and function you can find in robust small-business accounting programs like QuickBooks or Peachtree Complete. But your books aren't on your office server, available only to PCs with a particular program. They're in one of NetSuite's clean-room data centers, where they're updated continuously and are accessible by web browser from anywhere in the world.
That's critical to the co-founders of Irvine, California-based China Manufacturing Network. President Everette Phillips, 47, and 60-year-old chairman Al Tien log lots of frequent-flier miles shuttling between the $5 million company's U.S. business customers and its Far East contract manufacturers. Phillips and Tien need to be able to see the same up-to-the-minute accounting entries and work-in-progress details no matter where they are.
Mobility may not be as critical to your business. But even desk-bound entrepreneurs can profit from NetSuite's most significant feature: Any data entered is immediately available to all appropriate accounting and business processes and to a robust set of decision-making tools.
What you do with NetSuite isn't just bookkeeping or even managerial accounting. It's end-to-end business management that addresses all those enterprise resource planning and CRM tasks that fill your day--with a strong e-commerce platform thrown in for good measure. Instead of discrete programs operating on data in disparate formats, NetSuite's tools are just different views of the same records kept in an Oracle 10g database. Your monthly NetSuite subscription buys you just the amount of transacting you need from this Fortune 500-class distributed data manager, and you have the option to buy the amount you'll need later when the time comes.
What that means for SOHO entrepreneurs like Jeff Block, president of Davie, Florida-based JustPaperRoses.com, is the freedom to grow more quickly than old methods allowed. Before NetSuite, the 52-year-old paper floral designer gave his bookkeeping to an outside accountant, while changes to his gift website had to be sent to a contract designer who coded them in HTML. One of his three employees spent a large part of each day retyping web orders into different forms for accounting, shipping and customer resource management.
"It was hard getting all the orders out the door by the end of the day," remembers Block. "And every time I wanted to change a price or add a photo to the website, my designer would tell me, 'I'll get to it in two weeks.'"
Block says he never could have reached this year's revenue goal of $600,000 using the old system. He now operates sans accountant, web designer and order clerk, saving JustPaperRoses.com more than $60,000 annually. Block keeps his own books and makes changes to his website by clicking boxes in NetSuite item records.
Not Just for Starters
Even so, JustPaperRoses.com doesn't really put NetSuite's inventory management and transaction-crunching limits to the test. But Ilan Douek, president of TonerZone.com, does. He has used NetSuite to more than double his company's toner and ink SKUs and increase customer orders from 80 to 1,100 a day without a corresponding surge in capital equipment.
While his staff has grown with his company, the 37-year-old e-tailer figures that under his pre-NetSuite order fulfillment regimen, he would have had to spend $500,000 annually for 16 more clerical workers to keep up with the business's projected $18 million run rate this year. The old way required the time-consuming re-entry of data into QuickBooks and separate shopping cart, shipping and CRM programs.
"Think [about] what it takes for a bookkeeper to reconcile 1,000 bank transactions a day," says Douek. "But when I see a drop-down list of 1,000 deposits pending in NetSuite, I just hit 'enter.'"
NetSuite isn't cheap. An entry-level subscription to its a la carte services starts at $499 a month, and Douek is spending about $30,000 annually. But he is saving the $48,000 a year it would otherwise cost to run a website like TonerZone.com. And the money Douek spends with NetSuite helps grow his Bell, California-based company's sales and profits directly instead of being sunk capital costs. Financial leverage is just one potential benefit that software as a service, or SaaS, offers growing companies.
Another advantage unique to NetSuite is its easily customizable dashboard for business alerts, to-dos and all those process and financial metrics you need to monitor. Sales per employee, inventory turns, days sales outstanding and the age of payables are standard gauges watched by entrepreneurs. But each user can populate his or her dashboard with whatever data comparisons he or she prefers.
Phillips and Tien use theirs to choreograph an intricate ballet of product designs, work orders and manufactured parts moving between their U.S. customers and 90 overseas factories. Besides extreme inventory and process challenges, Phillips and Tien have to closely watch numerous variable costs, including a complex skein of tariffs and other landed costs that can cut deeply into margins. Says Phillips, "Managing cost by customer is key, but I can't even count the number of factors that go into it."
New Economy markets like his are complex and move quickly, he explains, and it takes the freshest information and the latest tools to keep up.
Do You Need It?
Your business might be a candidate for NetSuite if:
- You'd like more timely insight into your financial records and business processes than accounting reports can provide.
- You'd like customer and vendor records, bookkeeping and inventory tightly integrated with your e-commerce site.
- Duplicate data entry of file transfers are hindering your company's transaction growth.
- Team members need access to company records from more than one location.
- You lack the capital to invest in IT, but your cash flow could support NetSuite's subscription expense if it improved sales and/or margins.
Mike Hogan is Entrepreneur's technology editor.