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THEGREATDEBATE:ONE INTEGRATEDBUSINESS SYSTEM VS.SILOED APPLICATIONSwww.netsuite.com
Table of ContentsHow to Avoid the Pitfalls that Restrict Business Growth2Inefficiencies of a Standalone System Architecture3Comparing the Suite to a Standalone System5Process Efficiency Across Your Organization5Real-Time Visibility and a Unified Customer View7Significant IT Time and Cost Savings8Accelerated Growth and Expansion9Conclusion10How to Avoid the Pitfalls that RestrictBusiness GrowthAs fast-growing companies achieve greater marketpenetration, gain more customers and their organizationgrows, they often run in to a wall where internal processesstruggle to keep up with continued demand. Thekey challenge to supporting that growth is laying thegroundwork to scale the business effectively and efficientlywhile maintaining customer service and support.When starting out, most companies solve problems inthe quickest, cheapest ways possible, which over time,leads them toward one of the biggest pitfalls for growingorganizations—using standalone business applications forvarying departmental functions in an ad hoc manner. As thebusiness and its complexity grow, these disparate systemscreate operational inefficiencies that can be detrimentalto the bottom line, damage the customer experience, andimpede the company’s ability to reach its full potential. NetSuite Inc. 2016Page 2
This white paper covers the types of inefficiencies caused by runningdisparate business solutions and systems for different departmentsand how a software platform that unifies critical business processeshelps companies grow more rapidly and profitably.This paper reviews numerous case studies of companies thatswitched from disparate software systems to an integrated softwaresuite and also covers analysis by independent industry expert, NucleusResearch, of customers’ ROI from using an integrated software suite.Sign supplier, Advantage Sign Supply, was having trouble keeping upwith order volumes and managing inventory and wanted to improveprofitability while growing their customer base. After deploying NetSuite,a completely integrated cloud business system, they were able to cutorder processing time by 66%, decrease inventory on hand by 500,000,automate electronic invoicing saving 1,000 a month, and launch anecommerce sales channel that now accounts for 11% of revenue.Inefficiencies of a Standalone System ArchitectureBusinesses that select their systems over time can find themselveswith a poorly planned architecture that handles short-term tacticalneeds sub-optimally while holding the company back from scalingefficiently over the long term. These inefficiencies can become sosevere that they cripple growth. There are four primary issues thathinder growth when running a business with siloed systems:Wasted Employee Productivity: If your employees are boggeddown with inefficient and disjointed processes, it increases errorsand takes time away from their more important core duties.Important processes such as order processing, invoicing, expenseapprovals and fulfillment, can take a lot longer to get completedif too much manual effort is required and are often erroneous. Forinstance, your employees may be spending hours re-entering orderinformation into the accounting and invoicing system, while otheremployees pull that same information from your CRM system fortheir order fulfillment processes and to calculate sales commissions.If any orders are canceled in the meantime, your employees haveto sift through mounds of data to reconcile this information again.Such labor-intensive and manual tasks steal away time that could beotherwise spent on helping the company grow and innovate. NetSuite Inc. 2016Page 3
Lack of Real-time Visibility: When software systems areunintegrated, you have multiple overlapping databases and cannoteasily get a view of business performance in a timely fashion. Reportsshowing performance across your finance, sales, marketing, serviceand fulfillment departments are crucial to giving you an integratedview of your company’s operations. Most companies simply giveup on acquiring this information on a regular basis because of theamount of time it takes to source, extract and analyze this data. Forthose that do, countless hours are wasted trying to tie unrelated, errorprone and out-of-date information together. Consequently, businessesend up making critical decisions slowly based on inaccurateinformation, or they make hasty and risky decisions off of gut instinct.Integration Complexity and Cost: With so many siloed applications,IT wastes an enormous amount of time and money on integrating,maintaining, upgrading, and acquiring new versions of theseapplications. Once new versions are purchased, even more integrationand maintenance needs to be performed for all the different versionsof software to work together. Consequently, valuable IT time thatcould be used to make the business more productive is wasted, whilemaintenance costs skyrocket. With this in mind, its not a surprise thatthe leading analyst firm, Gartner, reports that 91% of IT staff time isspent on software maintenance rather than on innovation.Increased Customer Churn: Customer acquisition and revenuegrowth are key pillars to your company’s continued success. With fiercecompetition, it is essential that your company provide an exceptionalcustomer experience or risk having customers take their businesselsewhere. When customers are unable to quickly get order statusinformation, can’t get issues resolved easily, have poor product fulfillmentexperiences, customer satisfaction is damaged, the likelihood of repurchase decreased, and the risk of negative word-of-mouth increased.An integrated software system ensures that customers have the rightinformation and customer experience they demand, by providingcustomers with a real-time self-service portal, and by giving all yourcustomer-facing employees instantaneous access to all the customerinteraction and transaction information they need to service and sell.Customers of Australian wine retailer, WineMarket, used to wait anaverage of 45 seconds before getting their call answered with manycalls requiring a call back. With NetSuite, they were able to reducewait times to 11 seconds, achieve a 95% first-call resolution rate andimprove overall customer satisfaction results. NetSuite Inc. 2016Page 4
Monobind, a medical device manufacturer, was able to cut its orderfulfillment times by 50% after deploying NetSuite, and its productionplanning time from days to hours.“BEFORE, WE HAD TOPHYSICALLY BRING A HARDCOPY OF A NEW ORDER TOPRODUCTION AND CHANNELTO EACH DEPARTMENT. NOWNEW ORDERS ARE ENTEREDAND WE ALL HAVE INSTANTVISIBILITY. NETSUITE PROVIDESTHE CRITICAL TOOL TO SEEOUR CURRENT SALES DEMAND,DIRECT THE ORDERS THROUGHOUR SEVEN-STEP ASSEMBLYPROCESS, AND ENSURE THATComparing the Suite to a Standalone SystemWhen companies first start growing, they have several optionsto implement the front- and back-office systems needed. Fromaccounting to CRM to order management and beyond, applicationscan be implemented in a piecemeal, staged process, or in a processthat takes into account how these various systems will interact witheach other and what level of integration they require.As company and revenue growth accelerates, it becomes increasinglymore essential to integrate their business software applicationsand standardize across a single database and business process.The advantages of designing software systems in this manner asopposed to a siloed fashion include tremendously improved businessproductivity, improved visibility across the organization, and IT costsavings. Let us examine some of the key areas in which fast-growingcompanies can benefit from implementing a software suite.THEY GO OUT THE DOOR ONProcess Efficiency Across Your OrganizationTIME TO GIVE OUR CUSTOMERSThe key to avoiding manual, duplicative work is to ensure that your corebusiness processes are seamlessly integrated from the front office tothe back office. Automating such processes enables you to minimizeemployee time spent on activities that would otherwise be required tomanage these processes, and redeploy staff to higher-value activitiesto help your business innovate and grow. Quantifiable benefits can berealized in critical processes such as quote-to-cash, procure-to-pay,accounts payable, and payroll, expense and incentive management.THE BEST DELIVERYPERFORMANCE POSSIBLEMEETING OUR QUALITY ANDPERFORMANCE OBJECTIVES.”MonobindQuote-to-Cash: When a company converts a prospect into an orderand converts them in to a customer, they often do so by re-entering thesame customer data from the CRM system into the order managementsystem and then in to accounting packages, which operate in multipledistinct silos. Without front-to-back-office integration, valuable time iswasted with manual data entry processes, paper-based processes, andback and forth communications regarding order status and monthlyrevenue recognition and the customer experience suffers because ofthese delays. Once an order has been placed into the order managementsystem, companies need to ensure that customers provide payment intime and that the time taken to fulfill an order doesn’t get to a point whereit results in order cancellations or customer dissatisfaction. NetSuite Inc. 2016Page 5
“NETSUITE’S PAYROLL MAKESIT EASY. OTHER COMPANIESWILL TRY AND SELL YOUSOMETHING THAT DOESN’TCONNECT WITH YOURSYSTEM AND REQUIRESSEPARATE SERVERS,BUT WITH NETSUITE,ACCOUNTING AND CRMARE TIED TOGETHER.COMPETITORS CAN’T DOTHAT. NOW I DON’T WORRYABOUT IT, SOFTWARE ORUPDATES AND TO ME,THAT’S PRICELESS!”I.D. Me Promotions“I CAN BE IN A CAFÉ IN ITALYAND USE MY IPHONE TO SEEHOW SALES ARE GOING,WHAT SHIPMENTS ARE ONTHE WATER, WHICH POSHAVE BEEN PAID—AND THEN ICAN GO BACK TO THE TRADESHOW AND TALK ABOUTNEW COMPOSITES FORBICYCLE FRAMES. NETSUITEIS EASY TO USE, BUT IT ALSOCAN TAKE US TO A 100MILLION COMPANY WITHOUTMISSING A BEAT.”Niner Bikes NetSuite Inc. 2016Procure-to-Pay: To fuel growth, businesses may need to purchaseequipment or raw materials. The procure-to-pay process that startswith acquiring the raw materials and culminates with paying the variousstakeholders is a complicated one that involves several touch pointswithin your purchasing, receiving and accounts payables functions.Each of these functions deal with siloed software that needs to worktogether to enable the purchasing of equipment or raw materials, andthen eventually pay the vendors providing these deliverables.An integrated suite ensures that the procure-to-pay process isstreamlined. It monitors and automates the entire process andeliminates manual errors by your employees. When your employeescan track the status of purchase requisitions and orders throughself-service functionality that eliminates paper-based forms and theirassociated errors, it frees up your staff for higher-value activitieswhile simultaneously trimming the bottom line.A further benefit of a suite enabling automation is ensuring thatpurchase orders are automatically generated once reorder pointshave been reached for certain goods or raw materials. This meansthat instead of having to pull staff off projects to look up previouslycompleted purchase orders and order quantities, and to generate anew purchase order, these purchase orders can automaticallybe generated. An independent analysis by industry experts, NucleusResearch, of customers using NetSuite found that they reportedinventory carrying cost reductions of an average of 20%.Accounts Payable: Once purchase orders have been generated,vendors that provide goods or services to the company needto get paid. The finance staff will then need to confirm with thereceivables department whether the services or goods weredelivered as promised and only then authorize accounts payable torelease payment to the vendor. All these activities consume valuablecycles that employees could instead spend on the core business.Integrating receivables with accounts payables ensures thatpayment can be promptly delivered to vendors.Payroll, Expense and Incentive Management: As a companygrows, so does its number of employees. Operating siloedsoftware systems for payroll, expense management and incentivecompensation management can result in a spreadsheet nightmare.Calculating parameters such as salary, withholdings, deductions, andsick and vacation day accruals can consume several hours each weekand consist of manual, error-prone processes executed primarily onthese spreadsheets or duplicated across these software silos.Page 6
A closely related aspect of payroll is incentive compensation for yoursales force. Your sales operations personnel have to spend countlesshours on sales incentive plan construction as well as research andresolve sales disputes on how much commission is due. A softwaresuite that includes incentive compensation allows sales operationsand finance employees to save time by automatically calculatingcommissions based on sales orders processed, taking into accountsophisticated sales commission rules based on quotas, sales, quantityand profitability. It integrates the incentive compensation system withyour payroll and accounting systems to streamline payment processing.When it comes to expense management, a suite allows self-servicefeatures to be embedded so that employees can enter expense reportsand have them routed automatically to the appropriate managers, withall approvals being instantly captured in payroll and accounting.Mindwave Research, a professional services company, deployedNetSuite and reduced their time to perform cash flow analysis by 18hours per week, and the time for monthly financial closings by eighthours per month. They also gained the ability to forecast cash flowup to six months in advance and saved 50,000 yearly over extrastaffing that would be required without NetSuite.“WITH NETSUITE, ALL OF OURDATA IS 100% ACCURATE,PRESENTED IN REAL TIMEAND AVAILABLE AT THECLICK OF A BUTTON. IT’SMADE A HUGE DIFFERENCETO THE WAY WE WORK.”Arboricultural Association NetSuite Inc. 2016Real-Time Visibility and a Unified Customer ViewGetting an accurate view of your company’s operations can be achallenge if you have multiple disconnected business systems. Datais frequently fragmented and scattered across these systems, andspreadsheets are often out of date, error-prone and hard to maintain.Efforts to tie together multiple sources of data together can be timeconsuming and incomplete. Traditional add-on analytics tools forthese siloed applications are expensive to purchase and implement,and often lack the ease of use necessary to make them pervasive.Financial reporting or revenue recognition can drag on for weeksas employees have to extract and sift through data from multipledivisions, geographies, subsidiaries and business units, each with itsown set of order management, revenue and accounting packages.Page 7
“NETSUITE GIVES US ASINGLE VIEW OF THECUSTOMER, RATHER THANHAVING CUSTOMER DATAALL OVER THE PLACE. WEHAVE STRENGTHENEDCUSTOMER SUPPORT ANDCUSTOMER RELATIONS, ANDWE’VE BEEN ABLE TO SPEEDUP ORDER PROCESSINGWHILE IMPROVING SYSTEMAVAILABILITY AT THESAME TIME.”Lightspeed Technologies“WE WERE BECOMING ABIG COMPANY, BUT WECOULDN’T AFFORD A BIG,INTEGRATED ERP SYSTEM.WITH NETSUITE, OURCOMPETITIVE ADVANTAGEIS STRENGTHENED.”Schaeffer Manufacturing NetSuite Inc. 2016So how does a software suite provide you with the key businessintelligence components that you need in order to have a holistic aswell as detailed view of your business operations? Because all criticalfunctions and processes are in one central database, it can instantlydeliver personalized insights of the company’s performance tailoredto each user’s need—be it CFO, controller, CEO, sales manager,marketing manager or inventory manager. Because all reports anddashboards extract data from a single, centralized data repository,the multiple versions of the truth that your employees currentlyobtain from disparate spreadsheets are eliminated.Continued business growth often requires that companies maintainand enhance customer relationships. This is particularly challengingas a company employs more and more people, often in differentdepartments, geographies, and divisions using different processes andsystems. By arming your sales, service, operations, and other customerfacing staff with real-time access to all critical customer information, theteam can more quickly and accurately handle the customer’s requests.This complete view of each customer’s interaction and transactionhistory is also powerful for maximizing upsell, cross-sell and renewalrevenue and can be used to identify customer trends and patterns forstrategic planning and marketing efforts.Significant IT Time and Cost SavingsCompanies with disparate software systems have to contend withseveral types of applications ranging from accounting to financialplanning, order management, CRM, ecommerce, and businessintelligence tools. Multiple applications consume valuable IT timespent planning, deploying, managing, integrating, maintaining,and upgrading various systems. Capital-intensive hardwareinfrastructure and software licenses, combined with expensive,time-consuming upgrades, drive up your expenses and can get outof control the faster you grow. Nucleus Research found softwarecompanies moving from on-premise applications to NetSuiteeliminated an average of 23,000 in software license maintenancecosts per year. IT staff savings for those companies ranged from50% to 65% of total IT time.Page 8
“WITH NETSUITE, WE’RERUNNING A LOT MOREPROFICIENTLY. WE CANSEE OUR INVENTORY, SEEWHAT’S SELLING ANDWHAT’S NOT, AND WE CANCOMMUNICATE MUCHBETTER WITH CUSTOMERS.GROWTH ISN’T A PROBLEMNOW—IT’S AN OPPORTUNITYAND WE CAN MAKE THEMOST OF IT.”Outback ToysIn fact, as business systems age, functionality starts falling shortof organizational needs, but the disruption and expense ofupgrading them to the latest version makes it unfeasible to do so.This is precisely the situation that synthetic motor oils producer,Schaeffer Manufacturing, found itself in. The company’s growth to 100 million in sales outpaced its 25-year-old fragmented AS/400based proprietary system. Its larger customers were demandingautomated order and payment methods, and Schaeffer was facedwith buying an expensive ERP system or a collection of applicationsthey would have to integrate. By choosing NetSuite’s unified businessmanagement system, Schaeffer saved 100,000 annually inprogramming costs alone.In a software suite, IT no longer has to procure, install and maintainmultiple systems and the various integrations between them.Operational costs can be significantly reduced while IT time caninstead be spent on growing the business and improving thecompany’s business operations.Accelerated Growth and ExpansionExpansion to new geographies, markets, product lines, andadditional sales channels can be accomplished faster with anintegrated system because of unified order and accountingmanagement processes and data. Toy retailer, Outback Toys,deployed NetSuite and experienced a 33% growth in orders whilesimultaneously saving 25,000 per year on web store managementstaff, and without having to increase warehouse staff. NetSuite Inc. 2016Page 9
ConclusionToday, companies in virtually every industry are using sophisticatedbusiness software to manage operations but many are still strugglingto keep up with their growth and manage costs effectively becausea hodgepodge of siloed software applications is causing processbottlenecks and employee productivity issues. Integrated cloudbusiness management software suites such as NetSuite aretransforming how companies run, and enabling them to transcendgrowing pains that previously were holding them back from takingtheir business to the next level of profitable growth. NetSuite Inc. 2016Page 10
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information and customer experience they demand, by providing customers with a real-time self-service portal, and by giving all your customer-facing employees instantaneous access to all the customer interaction and transaction information they need to service and sell. Customers
