I’m very fortunate in my role at ISG because I get to spend time developing relationships with firms that are shaking up the traditional sourcing business — companies that look at the services business in new and creative ways (which usually involves really cool software).
NetSuite is one of those firms.
Chuck Simmons, global BPO lead for NetSuite, agreed to talk with me about the firm’s growth, as well as his thoughts on platform-based BPO. Chuck was also kind enough to participate in a market disruptor panel with Steve Hall and me at ISG’s recent Sourcing Industry Conference (presentations here).
Here’s our conversation:
Hi Chuck, thanks for agreeing to talk with me. Can you tell us a little bit about your background?
Thanks for the opportunity to visit with ISG and your community. My background is in global high tech, both in large corporations and start-ups backed by venture capital, with my most recent being the Global Lead for BPO at NetSuite.
As industry observers, we at ISG see some pretty impressive numbers from NetSuite: revenue growth above 30 percent, a market capitalization nearing US$7 billion and a slew of new employees. What’s driving this growth? Is it sustainable?
It is an exciting time at NetSuite. Our business continues to grow dramatically as evidenced by our second-quarter results, which included our first US$100 million quarter and total revenue of US$101 million, representing a 35 percent increase from the same period the previous year.
We believe this is sustainable based upon our continue success in the SMB market and our movement into large enterprise accounts through global system integrators (GSIs). This growth in the enterprise is demonstrated by our average sale price rising by more than 20 percent.
Our flexibility, our agility, our extensibility and “pay as you go” consumption model continue to be compelling for businesses. Large enterprises are now accepting cloud-based platforms for mission-critical business applications.
NetSuite has been really busy lately building alliances and partnerships. The ones I’m specifically interested in are with Capgemini and Oracle. How do these alliances benefit customers?
To support moving upstream it’s critical we partner with trusted GSIs like Capgemini, Accenture and Wipro that can provide the necessary skills, processes and infrastructure required to deploy complex and global projects.
The Capgemini relationship is critical to NetSuite because they have made a commitment to NetSuite as their global cloud BPO platform — we are working together on numerous opportunities in North America and Europe.
The Oracle relationship is focused on NetSuite’s desire to deliver a complete solution to the enterprise, including human capital management. The relationship includes an integration effort between the two platforms and enables NetSuite to sell Fusion HCM as part of its suite of applications.
Where does NetSuite see growth? What’s so appealing to finance and accounting customers?
One of our biggest areas of growth has been around our ability to provide a finance and accounting BPO solution for companies growing through mergers and acquisitions. As a platform BPO solution, we have given CFOs the ability to accurately budget each of their acquisitions, accelerating the integration of these acquisitions and enabling a BPO provider to run these entities on a single platform with standard processes. Additionally, all the disparate acquisitions running NetSuite roll up into the corporate instantiation via s single real-time interface for financial consolidation.
Let’s talk platform-based BPO. Can you describe what this means in layman’s terms? Is it the same as business process as a service?
That’s a great question, because there is a significant debate around this definition today. From our perspective, platform-based BPO is a cloud-based, multitenant, role-based “always on” suite of applications delivering a standard set of processes that meet the demands of clients and empower the service provider community.
Platform-based BPO offers a client not only lower cost but also noiseless deployment, analytic insights and increased business value with industry-specific variations. It also provides increased visibility and collaboration with the firm’s BPO vendor.
From a provider perspective, platform-based BPO enables two new revenue streams: 1) innovative edge solutions at large enterprises and; 2)a shift in downstream revenue potential to the US$1 billion to US$5 billion accounts. This is based upon lower development and implementation costs via our “bundling” concept that allows service providers to re-use their assets across an industry.
At NetSuite we believe BPaaS is a subset of platform-based BPO with the key differentiator of extending the shared platform and processes to the resources providing the transaction processing. In a BPaaS environment, the service provider deploys “shared processors” providers across multiple customers, reducing their costs in delivering the service and enabling them to move downstream to US$1 billion to US$5 billion revenue accounts
Where do you see platform-based BPO headed in the next three to five years? Who will be the winners?
Platform-based BPO will continue to evolve during the next three to five years in terms of depth of solutions for the enterprise, support of microverticals by providers and support of unified billing to support new billing models, including subscription-based billing. The winners will be those enterprises and service providers that embrace this approach to drive business agility, create value by harnessing the power of social media and mobility and make effective use of business analytics to outperform their peers.
What about outcome-based pricing? Again, we hear about this quite a bit, but finding customer examples can be difficult. Is this something that NetSuite is driving toward?
We’ve participated in several outcome-based pricing contracts this year, including proposals around renewals and order-to-cash (O2C). In the renewals area, the gain-share approach was based on incremental revenue created by our solution that 1) provided unique abilities around recurring billing and 2) presenting up-lift and cross-sell opportunities to the renewal agent.
The O2C outcome-based pricing is based on improved cash collection and the reduction of credit and associated interest to support the business.
And the most important question of all: Will SuiteMan make an appearance at SuiteWorld again next year?
SuiteMan, our Evan Goldberg, will definitely make an appearance next year and continue his crusade to “change the world” by bringing innovation and delivering “cool technology” that delivers business value to our partners, our partners’ clients and our midmarket clients.About the author
Stanton helps enterprise IT and sourcing leaders rationalize and capitalize on emerging technology opportunities in the context of the global sourcing industry. He brings extensive knowledge of today’s cloud and automation ecosystems, as well as other disruptive trends that are helping to shape and disrupt the business computing landscape. Stanton has been with ISG for more over a decade. During his tenure he has helped clients develop, negotiate and implement cloud infrastructure sourcing strategies, evaluate and select software-as-a-service platforms, identify and implement best-in-class service brokerage models, and assess how the emerging cloud master architecture can be leveraged for competitive advantage. Stanton has also guided a number of leading service providers in the development of next-generation cloud strategies. Stanton is a recognized industry expert, and has been quoted in CIO, Forbes and The Times of London. You can follow Stanton on Twitter: @stantonmjones.