Netsuite's Trojan Horse for Mid-Market Customers

NetSuite, a cloud-based ERP (Enterprise Resource Planning) system, rose to prominence by offering businesses a unified platform for managing finances, inventory, customer relationships, and more. Acquired by Oracle in 2016, NetSuite has become a juggernaut in the Cloud-based ERP SaaS (Software-as-a-Service) space, praised for its scalability and functionality. However, beneath the surface lies a potential pitfall for businesses, especially those considering (or currently running) the seemingly cost-effective Mid-Market solution.

NetSuite's pricing structure utilizes a tiered system (based on the number of licenses you purchase), with the Mid-Market edition targeting companies under 1000 employees. This edition boasts a significantly lower price tag compared to the Enterprise version. While the feature sets are not identical, the allure of a lower upfront cost is a powerful line and sinker, the hook comes when your organization crosses the 1,000-license threshold and is forced to upgrade to their Enterprise Edition.

Imagine this: you've implemented NetSuite, integrated it with other systems, trained your staff, and just as it gains traction, your company surpasses the 1,000-employee mark. Suddenly, you're facing a potential increase of 200% to 300% of your costs to upgrade to the Enterprise edition and access the full suite of features your growing business now requires. By then, switching to a different ERP system becomes a complex and expensive proposition due to sunk costs and integration efforts, leading to a high cost of switching. That’s when NetSuite's pricing strategy might feel a bit like a "Trojan horse" - a seemingly attractive initial offer that leads to a much larger commitment down the line.

NET(net) Chief Value Officer Mike Welsh says, “NetSuite’s mid-market solution is a third of the cost of its Enterprise edition, which leads to a huge price shock when customers either cross the 1000 employee mark or require the advanced features only available in the Enterprise edition.”

Navigating the NetSuite Subscription Options:

NetSuite offers various subscription levels within each edition (Mid-Market and Enterprise) catering to different needs and user bases. Here's a simplified breakdown:

• User Limits: Each tier restricts the number of users that can access the system.
• Features: Higher tiers unlock more advanced functionalities within the core ERP platform.
• Storage: Data storage capacity varies across tiers.
• Support: The level of customer support (response times, dedicated account management) is often tied to the chosen tier.

Demystifying Service Tiers:

Adding another layer of complexity, NetSuite offers service tiers on top of the subscription levels. These tiers determine the level of disaster recovery, support response times, and access to dedicated account managers. Higher service tiers naturally come with a higher price tag.

NetSuite vs. The Competition:

Before diving headfirst into NetSuite, consider these top 5 competitors and their strengths:

While exact market share percentages are difficult to ascertain and vary based on sources, here's our best educated guess on the distribution for the Top 5 Mid-Market SaaS ERP suppliers, incorporating industry insights and publicly available information as well as NET(net)’s Federated Market Intelligence:

• NetSuite (Oracle): Not just a market share leader, a dominant player with a long history and Oracle's backing makes it a formidable supplier.
• Acumatica Cloud ERP: Highly customizable with strong financial management tools, ideal for growing businesses.
• Microsoft Dynamics 365 Business Central: User-friendly interface with strong integration with other Microsoft products, suitable for mid-sized businesses.
• Sage Intacct: Known for its robust core accounting system and ease of use, ideal for companies with a focus on financials.
• Zoho One: Comprehensive suite including CRM, accounting, project management, and more, a cost-effective option for businesses seeking an all-in-one solution.

Additional Considerations:

• Industry-Specific Solutions: There are also niche players offering specialized ERP solutions tailored to specific industries like manufacturing, healthcare, or distribution. These might be a good fit if your company has unique needs.
• Regional Players: Depending on your location, there might be strong regional competitors with a loyal customer base in your area.

How to Choose the Right:

Focus on finding a solution that aligns with your specific needs, not just on market share. Here are some key factors to consider:

• Company Size & Growth Stage: Consider your current user base and projected growth. Does the solution scale with your needs?
• Industry Requirements: Do you have industry-specific needs that require specialized functionalities?
• Budget: Evaluate pricing structures, including subscription costs, per-user fees, and potential upgrade costs down the line.
• Implementation & Support: Research the implementation process, ongoing support options, and customer reviews regarding support quality.
• Integrations: Does the ERP system integrate seamlessly with other business-critical applications you use?

By carefully considering these factors, you can choose the best Mid-Market SaaS ERP solution for your company, avoiding the potential pitfalls of the "NetSuite Maze" and ensuring a smooth and cost-effective ERP journey.

Mid-Market SaaS ERP Feature Comparison Chart

Additional Notes:

• This table provides a general comparison, and specific features might vary depending on the chosen plan within each supplier.
• The "Industry Focus" is a suggestion based on the supplier’s strengths and existing customer base. It doesn't necessarily mean they can't cater to other industries.
• The "Company Size Focus" is an estimate based on the functionality and scalability of the platform. Some suppliers might have customers outside the listed range.

How to Use This Chart:

By reviewing this chart, you can get a quick understanding of the strengths and weaknesses of each supplier. Consider your specific needs in terms of ERP functionality, CRM requirements, financial management depth, industry focus, and company size. This will help you narrow down the options and choose the supplier that best aligns with your requirements.

Remember: It's always recommended to conduct a more in-depth evaluation, including demos and free trials, before making a final decision regarding your Mid-Market SaaS ERP solution.

Top 5 Ways to Save on NetSuite

Here are 5 ways to optimize your NetSuite costs:

1. Evaluate Needs: Carefully analyze your current and future business needs. Don't get swayed by features you might not require.
2. Right-size User Access: Ensure only authorized personnel require access to NetSuite. Streamlining user licenses can keep you within a lower-cost tier.
3. Optimize Storage: Implement hierarchical storage management, including data archiving strategies to avoid exceeding storage limits and incurring additional charges.
4. Leverage Expert Support: Work with us to price-benchmark your proposed deal and (re)negotiate your commercial arrangement and contractual agreement. Discounts are generally available for platform selection, BoM inclusions, added volume, and extended terms.
5. Consider Alternatives: If your needs don't perfectly align with NetSuite's offerings and/or they are unwilling to negotiate reasonably requested commercial concessions, research alternative competitive solutions that might provide a better fit at a lower cost point.

The Takeaway & Call to Action:

If you're a growing business nearing the 1,000-employee mark and currently on NetSuite's Mid-Market edition, it's time for a proactive evaluation. Analyze your future needs and explore all options, including alternative ERP solutions. Don't get locked into a potentially expensive upgrade path later. Remember, the best ERP solution is one that scales and adapts with your business, not one that forces a costly migration when you least expect it.

Take control of your ERP journey – avoid the NetSuite maze!

Conclusion:

The Mid-Market SaaS ERP landscape offers a wealth of options beyond the "NetSuite Maze." By carefully analyzing your specific needs, considering the strengths and weaknesses of each supplier as outlined in this guide, and exploring features beyond just market share, you can make an informed decision. Remember, the ideal ERP solution is one that empowers your business to grow and thrive, not one that locks you into a costly upgrade path. Start your ERP journey with confidence, choose the right partner, and avoid the potential pitfalls of the Mid-Market maze!

About NET(net)

Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get, and keep more economic and strategic value in their technology supply chains. Over the last 20 years, NET(net) has influenced trillions of investment, captured hundreds of billions of value, and has helped clients cost and value optimize all major areas of IT Spend, including XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, and Telecommunications, among others. NET(net) has the experience you want, demonstrates the expertise that you need, and delivers the performance you demand and deserve. Contact us at info@netnetweb.com, visit us online at www.netnetweb.com, or call us at +1 (616) 546-3100 to see if we can help you capture more value in your IT investments, agreements, deployments, and relationships.

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