The Accounting Technology Lab Podcast: Oracle NetSuite Influencer Event 2024

Transcript (Note: There may be typos due to automated transcription errors.)

SPEAKERS

Brian F. Tankersley, CPA.CITP, CGMA, Randy Johnston

Randy Johnston  00:04

Today welcome the accounting Technology Lab. I’m Randy Johnson and my co host, Brian Tankersley. We had the great opportunity to be invited to the Oracle NetSuite influencer event in Austin, in February, and it was such a pleasure to be there because we learned so much about the NetSuite approach. We consider NetSuite to be one of the top 10, mid market application platforms. And frankly, with the adjustments that the Oracle management team has made of late, I’m very pleased with this. Now many people do not know I was the original NetSuite designer oversee Gen tech in other platforms. And it was like old home week, because I got to see so many the people that I worked with in the 90s and beyond. Now, Brian, what do our listeners need to know about

Brian F. Tankersley, CPA.CITP, CGMA  00:52

Oracle, NetSuite. Oracle, NetSuite is one of the more sophisticated mid market ERP platforms out there, we kind of consider it to be a tier two tier three platform where SAP is into your one and QuickBooks is in tier five. So it will handle some very sophisticated businesses. It offers integrated customer relationship management or CRM, accounting, any commerce used by 37,000 organizations, which is up from 30,000 in the previous year, with over 324,000 entities, that’s legal entities with subsidiaries, and so forth. And it’s in 219 countries. They also said that this is something that you can pull out of Oracle’s Oracle’s SEC filings is that NetSuite makes up more than $3 billion in revenue. Now, it does run entirely on Oracle Cloud infrastructure around the world, we’ll talk about that more here in a minute. There is only one version of the of the application. So they work very hard to make to get everybody on NetSuite on the latest version of the solution. They make huge efforts to make sure that that their update platform and the methodology they have for creating updates, that that when they do updates, it doesn’t break customizations and add ons. And so that simplifies things for both the customer as well as the as well as NetSuite, because they only have to support one version of it.

Randy Johnston  02:18

In fact, they required their software development network partners, to be ready to go on every one of the upgrades. Plus, they have rollback features, if needed. So this is radical management to try to get everybody into that same version. And it’s not like they have other people on old versions, it is truly everybody on the same version, which is stunning in terms of capability. Further, many of the updates can be done without taking the system down whatsoever. A lot of the technical people claimed that they were doing to maintenance windows a year, but they’re down for about an hour, and customers didn’t like me down for an hour, twice a year. So they’re working on methodologies with all of their redundant work cloud infrastructure to do the updates with no downtime. We’ll talk more about uptime here in just a minute too. Now,

Brian F. Tankersley, CPA.CITP, CGMA  03:13

they also have user base licensing. And so you need to understand that this is a high end product, and it is not going to come at a discounted price. Okay, now, Randy, you and I have thought said for years that the most expensive thing you ever bought was cheap accounting software. But pricing for a full user is 200 to 250 a month per user. However, they’ve come out with some new lower costs, CRM and warehouse management system, read only licensing so that it can be more affordable for you know, so than ever more people can use the system. Yeah.

Randy Johnston  03:48

And in fact, they really very specific about this, you could also expect licensing in other categories. But like competitors, axiomatic or Zoho, or others that want everybody on the system, they want everybody on the system now, Brian, fix me if I’m wrong, but I think they said they had 13,000 NetSuite employees and everybody on the system. But in this case, they want all their customers to have everybody on the system. So they’re trying to figure out what they can do to segment their licensing by roles to reduce the per user cost. And that’s the first time I’ve ever seen this vendor talk in that style. Now, many vendors do have full users, partial users reporting users, but that’s kind of a new thing here with NetSuite. So I’m very anxious to see the pricing on the new read only licensing. Yeah,

Brian F. Tankersley, CPA.CITP, CGMA  04:43

that should be interesting. It’ll be interesting to see what we have. Like we mentioned it does scale well. One customer has 1600 subsidiaries and another runs 160 countries. Randy heard 13,000 I you know, 13 1000s probably With the right number now that he says it, but they got a lot of people on it, okay, and you know, 11,000 users in an ERP CRM is a lot 60% of the high tech IPOs over the last five years, run NetSuite. Now one thing they do that’s a little bit different is instead of marketing to the company’s direct to mid market companies directly, they quite often market to the, to the private equity groups. And one of the reasons they do this is they can do divisional regional carve outs, where you take a subsidiary or a division and pull it out of your ERP and put it into a separate instance of NetSuite for a spin off or, or you can do things like roll ups and other things like that.

Randy Johnston  05:42

And you know, later we’ll talk about the new reporting engines, but one of the new features to arrive later this year, is the ability to have split ownership interests, which will actually allow entities to do roll up reporting based on their percentage of investment, and that that facility could be used for family office operations in that style as well. So the reporting that’s emitted or partially delivered now, actually will promote that even further. And they’ve been to this private equity pursuit for 10 plus years. So they’re heavily embedded in that they gave percentages which they said were confidential, so we can’t report them to you in terms of how that strategy has worked for them.

Brian F. Tankersley, CPA.CITP, CGMA  06:29

Yeah, and they did say that their customers are growing significantly doing 20% more sales transactions in 23 versus 22. Like we mentioned earlier, this runs on the Oracle Cloud infrastructure, which is Oracle’s data centers to compete with Microsoft Azure, and Amazon Web Services and other things like that. And so that gives NetSuite complete control of the platform. So as an example, for their field service technologies, they use Oracle maps instead of Google Maps so that they’re not sharing location data that can be inferred into customer data, through the map calls that are made through those applications. They have 28 data centers in 13 regions, and on Black Friday, they had 9 billion application requests in 2.9 billion customer business. Yeah,

Randy Johnston  07:17

I want to call out something on the Oracle Cloud infrastructure. They run on a lot of their own hardware, they did disclose the redundancies and so forth. And the person who’s in charge of that as Gavin, they were Brian Chesky. Now I’ve known Brian a long time, because he came to NetSuite, when it was still net Ledger in 1999. And he helped with a lot of the evolution of the product until he left to build his own deal for security in about 2002 or four, I don’t remember the exact year there. But he sold that security platform to Hewlett Packard, after enjoying the proceeds of his work. He rejoined NetSuite in 2012, actually, Oracle in 2012, to build the Oracle Cloud infrastructure, this guy Gnosis security, he knows his performance, and he’s technically competent. And those of you that know me know that I admire technical competence. And I poured technical enactments Brian chest is smart dude. And he has built this Oracle Cloud infrastructure over this last 12 years or so. And it is amazingly good all Oracle. NetSuite now runs on the Oracle Cloud infrastructure as opposed to their own separate infrastructure, which they did pre acquisition in the 1617 type of timeframe. And so all big Oracle and all NetSuite now runs on Oracle Cloud infrastructure. And that is a competitive advantage. They referred to as a public cloud. It is, but it really is more of a private colony, by definition.

Brian F. Tankersley, CPA.CITP, CGMA  08:56

And I will tell you that I would echo Randy’s praise for Brian chess. I was, I was, you know, we had about an hour and a half of a presentation from him. And it was amazing. The depth and the breadth of the things he covered. And, you know, I never heard that. You know, normally when I hear a presentation, I hear something every once in a while to go read sure that’s right, that everything he said was right on. So it was he’s really really sharp dude.

Randy Johnston  09:26

Yeah, it was cold home week for me because I got to see Evan Goldberg, which I had not seen in a while and I won’t drop a bunch of other names. But I probably saw half a dozen people that I’ve worked with over 20 to 30 years or longer. And these are good people.

Brian F. Tankersley, CPA.CITP, CGMA  09:41

Now, NetSuite has a lot of capabilities for a single solution. You have Enterprise Performance Management or again, budgeting, budgeting forecasting, so forth. HR management payroll,

Randy Johnston  09:52

If I could interject something there. We’ll talk more about Enterprise Performance Management in a moment. But the guy who manages EPM for NetSuite I’ve known for a long time coming from SAP. And he was in their division as well. And the two major announcements that we’ll talk about towards the end of this podcast, the guy who’s managing knows his stuff. So I just want to call that out. Because it’s not, not your father’s Oldsmobile, I guess, as the old phrase goes of Brian, because yes, you can use NetSuite with maybe Hyperion if you want to do that. But this new stuff that they built is pretty stunning. Yeah, it’s

Brian F. Tankersley, CPA.CITP, CGMA  10:31

very clear. They’re building out a platform. And speaking of platforms with HR management payroll, they’re actually trying to now actively push people, if you they’ve, they said in that one of their catchphrases was if you have less than 200 employees, we want you on NetSuite to payroll, which is a pretty significant shift, cash management payments, bi consolidations, lot of add ons 500, ISV, 600 in the product marketplace. One important thing for our public practitioners to know is that you can join the suite accountants program through through NetSuite, and for your clients that are on NetSuite, they will give you a free license to access their clients net that your clients NetSuite instance, they also have a PPO program, which is kind of like a calves program. My impression of it is it tends to go further up market tends to be bigger businesses as opposed to smaller businesses, like some of the other mid market applications of targeted.

Randy Johnston  11:27

Yeah, and Brian, I still admire your thinking on this. You know, if we break it up a cast, we break client accounting services up to three layers, bookkeeping, controllership, outsourced CFO, this seems a lot more outsourced, CFO focused, but there were discussions around how to modify NetSuite to become cast centric, and the payroll evolutions are interesting, too. So I’m anxious to see our discussions as the year progresses.

Brian F. Tankersley, CPA.CITP, CGMA  11:55

Yeah, it’s gonna be very interesting to see where they go. Yeah, they have a wide range of industries they cover. These are the verticals that they highlighted their sales materials. So I just wanted to put them in here, you can see it’s a good combination of nonprofit manufacturing services, consult professional services, retail, restaurants, you know, Oracle owns Microsoft, Microsoft point of sale system, it’s used by many of your friends, a squirrel system that are owned by many of your many used by many of your full service restaurants. And they’ve got a big push into government, which I thought was interesting. So you know, a lot of different industries in here. Yeah.

Randy Johnston  12:36

Now, the other thing to keep in mind is they have worked on well brands words, again, digital plumbing, to connect their applications to NetSuite. And they are trying to make those seamless where you click into turn it on, click Turn off, they’re doing that with their AI approach to so when they say they’ve got applications in a particular vertical area, I’m far more optimistic about working correctly with NetSuite, then it was it was it was good, but it’s much better now. And promises to be much better as they continue to integrate big Oracle purchases into NetSuite services that can be turned on with a click.

Brian F. Tankersley, CPA.CITP, CGMA  13:19

Now, some new features, they’re getting into the clothes management world to compete with the work that folks like Flo cast and others like that. So they actually have a new automated back bank reconciliation and tool for managing the tasks associated with your mundane clothes and your enclosed. They have AI based generation of parked descriptions and other routine items, which I thought was really cool, you could put in two or three attributes. And then it would generate the the description or the name, and it would use kind of a similar similar layout or schema to the ones that the that the other folks had. So that way things would be more consistent. They are going after healthcare and government, both in a pretty heavy duty way. And so they have a compliance manager that’s gonna let them do HIPAA compliance into the financial part of the suite later in 2024. One of the things about that they said was that was that this tool would allow you basically to do the medical billing through NetSuite. I don’t know if they’ve got I don’t know if they plan to get everything hooked up to to all of the all of the different systems they’d have to to do that. But it’s very clear that they want the compliance side to be ready to handle privacy regulation, which Randy doc both believe is

Randy Johnston  14:35

coming. Yeah. And it turns out that many of us listeners wouldn’t know that I actually wrote papers, claims in healthcare and taught people about HIPAA when that first came out. So I’ve been around a healthcare a long time.

Brian F. Tankersley, CPA.CITP, CGMA  14:49

That’s, that’s why you’re going back to the 80s or 270s. Wow. Okay. So as

Randy Johnston  14:53

it turned out, and I actually did some late night, late 60s as well, right. But it turns out out that they have interfaces into Cerner and into epic to the providers in the hospital world, and more to come. But they were very clear about staying all of the encounter systems they didn’t think they get to, but they can handle all the other items. And so that compliance manager is a great big deal because many, many products do not have HIPAA compliance. But let’s pick on Intuit QuickBooks is a great example, which has never had it. And they will sign BAA agreements, which is also critical in this particular area. So watch for the compliance manager to do some pretty phenomenal things in this product.

Brian F. Tankersley, CPA.CITP, CGMA  15:40

Yeah, now, in the rest of the world, we have value added tax. And one of the things that many of the many of the forward leap forward thinking countries are doing now is requiring you to do electronic invoicing. And so they’ve actually got a partnership with Abba Lera. To facilitate that, in those European countries and others that require there is an Oracle Business Network integration Starting with version 24.1. They seem to have had a kind of a realization that they want to have, they want to be involved somewhat in payments and invoice presentment and other things like that. So there, they’ve actually got that setup, that we talked about the licensing, there’s also a big UI refresh going in, there’s a thing called the Oracle red with design experience that is a standardized set of UIs that are very clean and easy to work with. They’re consistent with the products that come from their parent, big Oracle, and that product fusion. And so this UI Refresh is a very big deal. Now because it’s going to it’s going to have everything in here now, where we’re just since I mentioned fusion, I want to I want to contrast fusion versus NetSuite. First off, fusion is more like buying a Lego kit. And you can build anything you want with it, you really it’s like when you buy an SAP a workday a, an Oracle Fusion, you’re really buying a toolkit and a platform that you can use to build your enterprise architecture. with NetSuite. There are role based role based capabilities and role based customizations. But everybody has the same basic experience in it. And so that’s a significant difference in that it is not as it’s, it’s more structured. And again, as you would expect, with a tier two, tier three, application.

Randy Johnston  17:37

Now, there’s two more critical things I’d like you to know about this work, well read book design experience. And you know, I love going places to hang out with smart people, because I always learned something new. And here’s two things that I think I learned from this. First, the design experience can provide multiple different UIs for users. And so if you think about accounting user versus a Sales User versus a warehouse user, that needs are different. And for decades, I’ve recommended a clean, friendly UI. But everybody uses the same UI. That’s not the way it works in Oracle Redwood design experience. And they demonstrated very directly different UIs presented by the UI tool, based on your role. And so the same code, but he completely changed the way it works. So for example, in scheduling, they had a calendar view, and a Gantt chart view. And a grid view, it was stunning, because it’s exactly the same data. And the UI was morphing the data in real time that is different than coding the UI. So that’s a big deal. But number two, they’re going to roll this out, in a call it drips and drabs where you can push it out or roll it back. So they’re not going to force the UI change out immediately everywhere. But they’re going to turn it on, they’re going to implement it and turn it on where it can be turned off in different areas. So the rollout strategy is smart. The UI is stunningly beautiful. And you know, we’ll encourage you to listen to the Zoho, a podcast where we talk about their new stunningly beautiful UI too, because, frankly, I can’t believe how impressed I was. And as an old school programmer, I actually concluded, I think I’m wrong on this UI experience and the Oracle Redwood design experience and the way that Zoho is approaching it. I think they got a leg up on their competitors in this particular area. So I don’t want to be too much on this topic, but it’s amazing and you heard me use the word study. And Brian knows how rare I use

Brian F. Tankersley, CPA.CITP, CGMA  19:55

words like that. Randy uses hyperbole, pay attention Okay, so they announced a couple of things in here, Randy, you want to go through, I’ll

Randy Johnston  20:05

take these, Brian, because of the NetSuite planning and budgeting, you know the FPGA capabilities that are now being built into the product will encourage you to be more inside the systems now. Larry Ellis basically says, Look, we want every NetSuite user on our NetSuite planning and budgeting tool. And they’re going to do that in part by the pricing position, the product comes to three different levels. But most people can get by with the entry level, which is $17,000. Sounds like a lot, but it comes with 50 users. And if you priced budgeting tools, you know that’s bloody cheap. And the integration is unbelievable. Now, again, I’ve taught planning and budgeting for decades. You know, the forecaster Microsoft forecaster, in my mind was one of the best tools and he got bought and buried by Microsoft is like, what were you thinking boys. But inside here, they demonstrated rolling forecast, the ability to do annual budgets with backfills percentage drivers, the ability to let’s say, create the cost of a flight to determine how many flights there are, and so forth. I mean, the driver bases are good. They do, they can do bottom up budgets, they can do top down budgets, or combinations thereof, they have an XL interface with a whole menu for their ad hoc planning. And they call it keep only in Excel, they can attach to legacy Excel sheets and read the data in, they can adjust the Excel sheet and roll it in, they can adjust in the planning tool and roll it out to excel. And they can do all the reef forecasting with AI. And if you’re doing with cast budget monthly, they can handle that. I mean, this thing had every feature that I could think of that I’ve seen in all the tools that I’ve taught through the years. And you know, those of you who do budgets, know that it isn’t a very pleasant month, two months, three months, six month process, this thing, I think you could forecast a reasonable budget in a matter of a few hours. And it’s $17,000. I can’t imagine not purchasing the product. Now it’s a little over the top statements. But we will be teaching this in our K two courses this year. And we are super happy to have this type of a planning and budgeting tool to expose. Now, the other thing that I want to mention is the NetSuite analytics warehouse. This particular product is very traditional extract, transform load type of technology, they use their whole data warehouse, but they have about 20 pre built connections and about eight prebuilt visualizations, don’t quote me on those numbers, but that’s about what’s there. The ability to modify is amazing. And they have drill down capability everywhere. But the other thing that was like over the top Wow to me was they could read in legacy data from almost any other bit market system into the data warehouse. In effect it convert your old data as a safe deposit warehouse, safe deposit box. See, in the old days of doing this, what I recommended to most people who converted off mid market systems is that they created virtual machine and kept a permanent legacy copy of all this. And sometimes you had to pay for licensing all that. With this new technique. You can read the transaction late level data in even if you’re remapping account numbers, and it can do comparative reporting over an extended period of time, let’s say 20 years, it was amazing. And you know, when I think about reading it from different systems, most of the ones that you might consider would be available. And the question was raised, could you do proprietary systems? And the answer was yes. And, again, I I’m not easily impressed. This is a very impressive piece of technology. Well, Brian, I know that you and I just had a great day. I mean, you know you don’t

Brian F. Tankersley, CPA.CITP, CGMA  24:27

anytime you get to go to Austin is a

Randy Johnston  24:29

good day. Well, it’s a good day, but this was a great day because we get every presentation one after another. It’s like whoa, whoa, that was good. Well, I was gonna don’t very often get that type of experience and then to chat with the other people who were there doing the analysis work as well, plus many of the partners and you and I both had to talk to a nice construction partner out of Toronto. Again, we’ll talk about those on other days in the accounting technology that other party does, Brian, you

Brian F. Tankersley, CPA.CITP, CGMA  24:58

know, I think I think you Have to remember the distance the 800 pound gorilla, okay? So this is the NetSuite is the is kind of the leader in the in the mid market space okay, now does it fit for everybody you got to remember we think about accounting software the same way we think about spouses, one person may want one thing and a spouse, you know, want to go run five miles a day, another person may like a spouse that likes to read a lot. You know, there’s all kinds of all kinds of different things here. I think when you’re looking at NetSuite, I think I think it’s one of those products that must be considered, because it’s such as such a market presence, and it is it kind of sets the standard for cloud accounting. So, you know, it may not be the right one for you. But you ought to at least see it and know what’s there. If you’re picking that market application.

Randy Johnston  25:50

Yeah, that’s a good way to think about it, Brian, in fact, you know, we’ve had NetSuite in our top 10 SAS products since its inception. And my opinion, frankly, improved, notably, based on the developments over the last two to three years. I know you’ve been attending these events I’ve attended in the past too. But you know, this year was like, Wow, you guys are on steroids. And you’re running fast and hard. You’re really customer focused. You’re doing a lot of smart and right things. It’s worth that. So we appreciate you listening to us on the accounting Technology Lab. I hope you got an idea too about NetSuite. Have a great day.

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