Businessmodel of NetSuite

Customer Segments

NetSuite has a segmented business model, with customer groups having slightly different needs:

Most Organizations: The company’s offerings are used by firms coming in a wide variety of sizes and industries. That said, some of its products are most ideal for certain categories:

• NetSuite – The company’s main solution, which has core business operation capabilities. It is targeted at mid-size firms and divisions of large companies.
• NetSuite OneWorld – A solution that offers strong international capabilities such as support for over 20 languages, transactions in over 190 currencies, and customizable compliance for over 100 countries. It is targeted at global firms and large company divisions operating in multi-subsidiary and multinational environments.
• NetSuite CRM+ – A solution that offers customer relationship management capabilities. It is targeted at both mid-size and large firms.
• SuiteCommerce – A solution that offers integrated commerce capabilities. It is targeted at retail and business-to-business firms. Professional Service Organizations: The company offers NetSuite OpenAir PSA, a solution designed specifically for professional services organizations. Its primary clients are large organizations.

Value Proposition

NetSuite offers four primary value propositions: convenience, customization, cost reduction, and brand/status.

The company’s software platform creates convenience by providing an integrated solution. All components of the suite share the same transaction and customer information, enabling smooth business process automation across departments. It also facilitates the dissemination and monitoring of data in real-time. While its “all-in-one” nature is a benefit, users also have the option of deploying individual applications (ERP, CRM, PSA, etc.).

The company’s solution offers customization through various features. Users access it through a dashboard that is role-based, meaning that the interface delivers application functionalities that are specific to the user’s role responsibilities. For example, a salesperson’s dashboard would include functionalities for managing leads, contacts, and forecasts, while a warehouse manager’s dashboard would focus on capabilities for handling item receiving, shipping, and returns. Beyond job role, NetSuite also provides industry-specific configurations for the following sectors: retail, wholesale/distribution manufacturing, software, services, and nonprofit. Lastly, the solution makes it easy in general for users without software programming skills to configure its features, and maintain those preferences with the release of new versions.

The company’s suite offers a low total cost of ownership. It reduces costs by incorporating the functionality of several applications. Additionally, its ease of configurability and general use limits the need for dedicated IT personnel. Moreover, NetSuite’s subscription fees are much lower than the usual upfront costs of buying perpetual licenses, and its on-demand delivery model removes ongoing upgrade and maintenance charges typically associated with on-premise hardware and software.

The company has a strong brand, in part a result of having a long history and being well-established. It bills its suite as the #1 software-as-a-service (SaaS) offering, and its products are used by over 30,000 companies in more than 160 countries.

Channels

NetSuite’s main channel is its direct sales team, whose members primarily acquire customers through phone sales calls. The company also relies on indirect sales through channel partners.

Its methods for promoting the business include Internet and search engine advertising, web seminars, e-mail campaigns, product launch events, industry event and trade show sponsorship, and referral programs. Furthermore, it offers complimentary public training courses and training videos.

Customer Relationships

NetSuite’s customer relationship is primarily of a personal assistance nature. The company’s technical support group offers assistance 24 hours a day, seven days a week. Its system facilitates time zone-based and skills-based routing of questions for maximum effectiveness. For direct customers, it provides tiered customer service programs in which the extent of support varies by the needs posed by their suite deployments. The programs are offered through contracts that last a year. Users who buy NetSuite’s solutions through resellers receive primary support from those individuals.

Despite the high level of personal service, there is a self-service component, as NetSuite’s website includes an “Educational Resources” section featuring a wide variety of white papers, webinars, product demos, data sheets, and articles containing information about its various solutions.

Key Activities

NetSuite’s business model entails maintaining a robust software platform for its customers.

Key Partners

NetSuite offers the following partner programs:

Solution Providers – This involves business application experts who provide end-to-end services, from selling NetSuite licenses to offering implementation assistance and general support. They maintain expertise in one or more of three areas: CRM, Accounting/ERP, and eCommerce. Specific categories of partners include ERP resellers, Cloud consultants, and accounting firms that have technology practices. Specific partners include Inscio, McGladrey, and Explore Consulting.

Systems Integrators – This involves companies that offer specialized consulting and financial services that enable NetSuite customers to obtain more value from their software. They maintain expertise in their industries, allowing them to assist users with topics ranging from process optimization to regulatory compliance. They also have a strong comprehension of NetSuite’s solutions. Specific partners include Accenture, Capgemini, Deloitte, Grant Thornton, and Tata Consultancy Services.

Developers – These companies are part of NetSuite’s SuiteCloud Developer Network. They extend the firm’s suite with third-party “Built for NetSuite” applications designed for vertical industries or specific processes such as marketing, HR, shipping, and sales tax automation. Specific partners include Arena, LeanLogistics, Dell Boomi, Box, Klugo, Infinet Cloud Solutions, and Insperity.

BPO Partner Program – This involves companies that provide Business Process Outsourcing (BPO) services and Business Process as a Service (BPaaS) offerings based on NetSuite. Specific partners include Moss Adams, tempCFO, and Accretive Solutions.

Referral Partners – This involves companies that promote NetSuite to potential customers and in exchange are given a referral fee. Many of these partners become experts on the platform and earn additional money by offering account services. Specific categories of partners include IT/Management/Marketing Consultants, Web Designers, and Investment and Venture Capital Firms.

Accountants – This involves accounting firms whose clients use NetSuite. The program offers the companies the tools and resources they need to offer quality service and bestows a number of perks, including referral benefits and significant training discounts.

Key Resources

NetSuite’s main resource is its proprietary software platform used by over 30,000 organizations. The company hosts its suite from its data center facilities in California, Washington, Massachusetts, Ireland, and the Netherlands.

Other important resources include the technology staff needed to maintain and upgrade the application suite and customer service staff utilized for both its 24/7 support operations and dedicated user service.

Cost Structure

NetSuite has a value-driven structure, emphasizing a premium proposition through significant personal service. Its biggest cost driver is sales/marketing expenses, a fixed cost. Other major drivers are in the areas of product development and administration, both fixed costs.

Revenue Streams

NetSuite has two revenue streams:

• Subscription and Support – This consists of fees customers pay on a quarterly or annual basis for usage of the software; amounts vary based on the types of solutions deployed and the number of users.
• Professional Services and Other – This consists of fees customers pay for usage of various services associated with their accounts, including consulting and training.