NetSuite finds a sweet spot with OneWorld

NetSuite has found a sweet spot for its on-demand business management software. Today, the company introduced OneWorld, which adds real-time management and consolidation capabilities for companies that are multinational or have multiple subsidiaries.

Targeting midsize companies, OneWorld is the biggest architectural change to NetSuite since its inception, according to company CEO Zach Nelson. "Within a single instance, you can effectively run multiple companies in real time. The subsidiaries have complete local control that automatically consolidates into any hierarchy they have in real time," he told me.

NetSuite CEO Zach Nelson

(Credit: Dan Farber)

"OneWorld enables our customers to run their global businesses in real time with the click of the button," Nelson said during the launch event in San Francisco. It solves the "hairball" problem, he explained. Companies with global businesses don't have to cobble together data from different vendors and applications to get a consolidated P&L or sales forecast across countries or subsidiaries.

OneWorld allows users to function locally but to have real-time visibility into the big picture

(Credit: NetSuite)

So far, NetSuite has 32 customers running OneWorld. The software supports 170 currencies, but local tax codes are pre-configured only for the United States and the United Kingdom, with Japan expected to be added by mid-year, Nelson said.

NetSuite OneWorld offers a compelling solution--less costly and simpler to deploy--for the "flat" world of business in the cloud computing era. Priced at $1,999 per month in the U.S., OneWorld applies across all the NetSuite modules, including accounting/ERP, CRM, and e-commerce. For example, the NetSuite CRM module can manage multi-currency quotas, forecasts, commission payments, sales taxes, and reporting for each location in their own language and currencies and as a consolidated entity.

(Credit: NetSuite)

Microsoft's Dynamics GP has some consolidation capabilities, and Oracle's Hyperion and SAP can consolidate financials across complex multinational and subsidiary hierarchies but at a higher cost than OneWorld, Nelson said.

"Our pricing is cheap if you look at the number of services we are replacing. It would cost $100 million to solve the multinational and multi-subsidiary management and consolidation issue if you implemented SAP on a global scale," Nelson said. "We see companies trading out their existing ERP systems to get this feature. Switching ERP systems is a big deal, but the price point and functionality is compelling."

NetSuite is also the only on-demand business suite that offers the multinational and multi-subsidiary consolidation solution, he added. SAP has been developing Business ByDesign for more than four years, with 2,500 developers. It is also targeting midsize companies (100 to 500 employees), and will cover all major industries and functional areas, according to the company. Given SAP's legacy, it will offer similar consolidation capabilities to NetSuite's OneWorld. Business ByDesign is still in private beta and is expected to be generally available later this year or early in 2009.

Currently, NetSuite has about 5,600 active customers, with the majority in the U.S. For 2007, NetSuite had $108.5 million in revenue, a 62 percent increase year-over-year. The net loss for the year, on a GAAP basis, was $23.9 million. For 2008, NetSuite is projecting revenue of $153 million to $156 million. OneWorld should help the company meet its goals in its first year as a public company.