NetSuite Strategies for Oracle EBS Customers
Joel Patterson, Founder of The Vested Group
I started my career implementing enterprise business systems in the late nineties when the ERP industry was in its infancy and have watched the industry grow and evolve to where it is today. I spent the first 15 years of my career implementing Oracle E-Business Suite (EBS) and the last 5 years implementing NetSuite’s cloud-based ERP system, it’s been quite a ride!
I decided to write this document to help companies that are currently running their business on Oracle EBS understand how NetSuite might fit into their ERP strategy. I have watched countless companies implement Oracle EBS, for what seemed like the right reasons at the time, yet fail to see the value from EBS that they expected. Years later, these companies find themselves in a situation where they should consider a change but feel scared to change or trapped in their current systems. Hopefully, the perspective I share in this document will help companies understand the options available and make good decisions for the future.
Why NetSuite?
While the intent of this piece is not to share with you all the cool things NetSuite can do, I would like to give you a little background so that you understand where it fits in the competitive landscape of the ERP industry. I was first exposed to NetSuite in 2001 as an end user and was so impressed with the product, I returned to NetSuite as an implementing partner in 2011.
With more than 24,000 customers in over 100 countries, NetSuite is the unquestioned leader in cloud ERP. While most other cloud ERP providers have a very limited breadth of functionality, NetSuite has full capabilities across the core areas of financials, procurement, manufacturing, distribution, and e-commerce. Of the competitors that have even a semi-broad footprint, they typically have a very small number of customers that are actually live on their platform and most have limited to no global capabilities. One last point is that NetSuite comes with built-in business intelligence and reporting capabilities, no more having to wait two weeks for IT to build you a simple report!
NetSuite Deployment Strategies for EBS Customers
There are two primary approaches that an EBS customer can use to leverage NetSuite. The first is a coexistence strategy in which the company continues to leverage the core EBS functionality for their primary business and deploy NetSuite for operations or functions that can take place outside of EBS without business disruption or unnecessary risk. The second strategy is simply to replace Oracle EBS with NetSuite.
The Two-Tier Strategy
If you are on a current release (12.1. or 12.2), your environment was well implemented, and your business is healthy and growing there is no pressing reason to consider replacing it. In this scenario you would fall into the “coexist” or “two-tier” category. The two-tier model with NetSuite lets you preserve your investments in EBS while equipping subsidiaries with a more agile and more flexible cloud-based ERP system and giving headquarters the real-time visibility it needs. Later I will explore some two-tier scenarios that may apply to your business now or in the future.
Two-tier ERP has emerged as a strategy to enable legacy optimization while reinvigorating the organization’s existing ERP system. You can easily have a new subsidiary or division up and running NetSuite in a matter of weeks rather than the months it would take to go-live with Oracle EBS. Leveraging NetSuite for new ventures or acquisitions provides the best of both worlds; you get a truly global platform to facilitate the growth of these organizations while driving cost and complexity out of your business.
The Rip and Replace Strategy
The “rip and replace” category describes you if you are unhappy with Oracle EBS in general, tired of paying maintenance for unsupported software, off support altogether, or just don’t like Oracle. You are probably running a release of Oracle that is not supported, such as 10.7, 11.03 or 11i. An upgrade to a supported release would be complex and expensive and come with a lot of the same pain points as a new implementation. Also, if you have heavily customized your Oracle EBS environment, you will be facing even more expense in accommodating those customizations in your new implementation.
Choosing to replace an older, underutilized installation of Oracle EBS with NetSuite has several benefits. And a NetSuite implementation is typically much smoother than an Oracle EBS install due to NetSuite’s strength and stability, so forget how painful it was to implement EBS. If NetSuite is a fit for your business, it will end up saving you a great deal of time and money and give you users a much easier system to navigate and use.
There are several common scenarios in which we frequently see current Oracle EBS customers. Below, these different scenarios are explored as well as strategies most conducive to improving each scenario.
Scenario 1: Adding Global Subsidiaries
Your Oracle ERP system has been serving you well as your company grows. But, now you are expanding globally. You need to integrate these new entities with EBS—but can you do so within EBS rapidly and affordably, and achieve the real-time global visibility and efficiency that your business demands? Doing global rollouts of EBS are costly and time-consuming. Below is a list of benefits that would accompany utilizing NetSuite for your global entities instead of EBS.
- No complex localization patches to apply for statutory requirements
- Zero character sets needed for foreign language support
- Easy set up of statutory charts of accounts
- Reduce rollout timeline from months to weeks
Scenario 2: New Subsidiaries or Acquisitions
Your business is doing well, and you are now actively creating and/or buying new businesses to facilitate growth. If your new ventures are very similar to your existing business, rolling EBS out to them may make perfect sense. However, if any of the criteria below applies to your new subsidiary, a two-tier strategy makes more sense:
- New subsidiary or acquisition is considerably different from your existing business.
- The new subsidiary or acquisition is smaller or less complex than your current organization.
- You are working with a small window of time to transition off former parent company’s systems.
Scenario 3: Running an Old, Unsupported version of EBS - HELP!
If your company is on an old, unsupported version of EBS, there are several variables to consider. The first option is to consider an upgrade. If you aren’t heavily customized and aren’t too far behind, an upgrade may make sense for you. But if you are on an older version of Oracle EBS (pre 11.5.8), you are looking at an extremely difficult project, and a re-implementation is probably your lowest risk option. Either way you are looking at a sizeable investment of time, resources, and money. Given the size of this investment, it is a good time to rethink your long-term ERP strategy. Re-evaluate why you selected Oracle EBS in the beginning and check to see if your situation still warrants running a big, industrial on-premise ERP platform.
Scenario 4: Predicted Growth Has Not Been Realized
There are many companies that bought EBS as a small emerging company expecting exponential growth. This scenario is the most common way small companies rationalize an investment in EBS. The thinking is, “while our current requirements don’t necessarily justify an investment in a Tier I ERP system, our business is going to grow rapidly and evolve into one that does. Given our expected future needs we should be proactive and prepare for this complexity by implementing EBS.” Oracle continues to be very successful selling this vision to smaller companies, and many of these companies never experience the exponential growth they expected and now they are running a relatively simple business on EBS, which is massive overkill.
Today, this thinking is outdated, and emerging companies now realize that a cloud option like NetSuite gives them more flexibility to facilitate growth than a big resource consuming ERP system. Companies like GoPro and Roku have embraced NetSuite and have experienced hockey stick growth and managed it in NetSuite. Things that take IT resources weeks to do in EBS can often be done by a super user in a few hours in NetSuite, helping these companies stay lean and nimble as they grow. If your company implemented EBS expecting rapid growth that never came, and/or you are on an older version, you should absolutely consider a move to NetSuite.
Scenario 5: Going Global
There was a time not too long ago when Tier I ERP systems were the only option for global companies, so many selected and implemented EBS. The vision was that having one global EBS environment would integrate the business across borders and greatly reduce the cost associated with maintaining separate systems in each country. The value proposition for global integration is solid. One ERP system with multiple currencies, languages, etc., is extremely valuable to an organization, but it is extremely cumbersome and complex to accomplish this and requires very specialized consultants to help. Today, big clunky Tier I ERP systems aren’t the easiest way to run a global enterprise. NetSuite is built upon a truly global platform and has been implemented in 100+ countries. It is much easier to run a global company on NetSuite than it is on Oracle EBS. Before you invest in a costly global deployment of EBS, you should definitely consider moving to NetSuite.
Scenario 6: My Business is Very Complex
Thinking your business is too complex for anything other than a Tier I ERP system is one of the most common reasons companies have chosen to run their companies on Tier I ERP systems like EBS. It is also a very valid reason to stay with EBS. There are many things EBS can do that NetSuite cannot, this is true. But NetSuite has much deeper functionality than most realize. NetSuite is also extremely flexible, and there are hundreds of partner developed SuiteApps that reside on NetSuite’s SuiteCloud platform to address functionality enhancements customers need that are not natively provided by NetSuite. The SuiteCloud platform allows partners to build NetSuite certified applications that are designed and architected to plug easily into a customer’s NetSuite environment to add functionality. Even complex businesses can run on a combination of NetSuite and partner developed SuiteApps. NetSuite or a combination of NetSuite and partner provided SuiteApps may provide even very complex businesses an alternative to upgrading Oracle EBS. Before you make the huge investment in an EBS upgrade, take a look at NetSuite as a cost– and time-conscious alternative.
Scenario 7: Unsupported Software
There are many companies that implemented Oracle EBS and didn’t foresee the costs associated with supporting and maintaining their environment. As a result, these companies fell behind on releases and are now operating on unsupported versions. In some cases, the remedy is as simple as budgeting and planning for an upgrade. Unfortunately, there are many companies that customized their system, and the costs of upgrading a highly customized instance can be crippling. Some companies didn’t see past the costs associated with license and initial implementation, and then years later realize they need more staff than they have. Companies in this situation are required to perform costly and time-consuming upgrades every few years that they can’t afford.
If you find yourself several versions behind the current EBS release, you should reflect on why you fell behind to begin with. If your organization has fallen behind you have to ask yourself, are we going to do better next time? If I invest in this upgrade, yes I will be supported for a while, but will I eventually fall behind again?
Consider the possibility that managing all of your software upgrades yourself may not be the best use of your time and resources. With NetSuite, you will never fall behind in software releases because every customer is automatically upgraded on a predictable and non-invasive schedule. Most companies would be well served to get out of the IT business and focus on running their business. ERP is no longer a competitive advantage for anybody; there is no strategic reason to keep your IT in-house.
Scenario 8: Significant Business Changes
Oracle EBS has been around a long time, and there are many companies that have environments that implemented an EBS system well over ten years ago. In this day and age companies change and evolve at such a rapid pace that if you take your eye off the ball, your business may change while your EBS environment stays the same. EBS requires constant care and feeding to stay in alignment with dynamic businesses.
I have seen companies morph from domestic make-to-stock manufacturers into global engineer-to-order companies in just a few years. Can you imagine the challenges that would arise from running a global engineer-to-order business on a system that was implemented for a domestic make-to-stock organization? If you find yourself in a similar position, you need to pause and do some due diligence. If you are on a fairly current version, an upgrade and some remediation may be the path of least resistance. But if you are further behind on versions you are probably looking at a re-implementation and you should definitely consider completely moving to NetSuite.
Scenario 9: Divested from Parent Company
Divesting happens all the time. A larger company sells a division of their business, and the departing division will now operate independently on its own ERP system. If the acquiring company doesn’t have anything for them to use, they often inherit the former parent company’s system. So the new, smaller company inherits an EBS environment that was designed and implemented for a larger, more complex company, and comes with massive amounts of data that is irrelevant clutter. It can be time-consuming and complicated to purge data from EBS, so frequently companies perform a re-implementation to get rid of the unwanted data and reconfigure the system to be in better alignment with their business. Companies in a similar situation should take the time to evaluate NetSuite as an alternative to taking the former parent company’s EBS environment.
Next Steps
If you run EBS, you should be aware of NetSuite’s capabilities and how it may fit into your long term ERP strategy. You have options from companies other than Oracle. With The Vested Group being a five star NetSuite partner founded by and largely comprised of EBS consultants, we are uniquely qualified to help you determine how NetSuite fits into your ERP strategy. If you decide there is a place for NetSuite in your strategy our EBS background will make us a valuable partner to you now and in the future.
