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Businesses being transformed by cloud ERP and CRM

By Chee-Sing Chan Jun 19th 2014

What do the government of Texas, catering group Jollibee and a Chinese state-owned media group have in common? The answer is they are all running ERP or CRM in the cloud in ambitious initiatives to grow and transform their businesses.

All three examples are customers of NetSuite, a cloud ERP/CRM provider that is transforming the way businesses operate their core transaction systems as they face new challenges in changing customer needs and a need to accelerate growth plans regionally and globally.

What do the government of Texas, catering group Jollibee and a Chinese state-owned media group have in common? The answer is they are all running ERP or CRM in the cloud in ambitious initiatives to grow and transform their businesses.

All three examples are customers of NetSuite, a cloud ERP/CRM provider that is transforming the way businesses operate their core transaction systems as they face new challenges in changing customer needs and a need to accelerate growth plans regionally and globally.

CIOs, CFOs and CEOs of industry-leaders such as those above stood on stage at this year's NetSuite World conference and talked about how technologies from the ERP provider had transformed their business or enabled them to venture to new markets at speeds and in ways not previously imagined.

Focus on engagement

NetSuite's CEO Zach Nelson declared to San Jose audiences earlier in May, "the clean lines where a company used to operate within are no longer applicable, product companies are becoming services companies, retailers becoming software companies like Amazon and now even financial players."

He noted that more and more companies today are being born in the cloud and that cloud technologies will continue to change business models and business natures.

During a discussion with Asian media Nelson declared that traditional systems of record such as ERP are now coming together with and driving systems of engagement (customer touchpoints and channels). He noted that while businesses have always desired these two systems to exist as one, the reality is that due to the way software has developed and limitations in architecture, there exists today's current separation.

This split is a significant challenge today as businesses need to get better access to the data that resides on the systems of record in order to enable optimal engagement with customers and partners.

CIOs facing legacy challenge

This was predicted by best-selling author and futurist Geoffrey Moore, who noted two years ago that "enterprise IT has moved into a new phase, an era of digital engagement in which the focus is on how employees communicate with one another and with customers," he wrote in a Wall Street Journal column in 2012. "That's a big change from the last decade, in which the focus was on systems of record -- essentially any technology that contains a database," noted Moore.

He added that whether CIOs host these systems of engagement inside the firewall, in a private cloud, in a public cloud, or in some hybrid of the above, they must architect interfaces to systems of record in order to support the next generation of line-of-business requests. "This is at best an awkward and at worst a terrifying prospect, and it is incumbent on all IT vendors who seek to serve the enterprise to step up and lend a helping hand, like right now."

And this is exactly what NetSuite has been doing in recent times.

Nelson noted that systems of record have been hard to access and users had to call and request IT to get at the required data. This data in most cases relate to transactions and customers which are essential to today's business leaders and front-line business users.

Aggregate and conquer

As companies, such as retailers in particular, develop multiple new channels of commerce they are often building new systems for things like e-commerce, mobile, social etc. and often running on multiple systems of record. "So driving a single system of record is becoming a very powerful concept," said Nelson.

Leading businesses today like Google, Facebook, Linked-in are all very powerful today as they can aggregate all their systems of record data and quickly feed that into their systems of engagement. "This is exactly what people are talking about when they predict the potential of big data -- this is where you start to realize the value of effective aggregation of data and driving customer engagement," said Nelson. "Every business has this opportunity to aggregate this data abut they haven't yet been able to build the systems to do this effectively."

He also took a swipe at the traditional players in the ERP/CRM space for not addressing customer needs in this transformation. "Microsoft doesn't get the cloud," said Nelson, "they have said in the past that they haven't seen anyone do ERP in the cloud end to end."

SAP was also highlighted for its cut-backs in development of its cloud ERP suite SAP BusinessbyDesign, which were revealed at the end of 2013.

Cloud taking effect

What is occurring in many cases is that legacy ERP systems are still going to be run in many large and traditional businesses, but for new developments, new initiatives and new startups, cloud-based ERP such as NetSuite is the more likely choice.

"These legacy systems will be around for some time, but the innovation is happening on different platforms and businesses are realizing that this change is necessary to get to the next level of business success," said Nelson.

The government of Texas, the second largest in the US in population and in economic might with US$ 1.4 trillion in output in 2012 that would place it 13th in world GDP charts after Australia, has placed its whole procurement platform on the NetSuite cloud.

Every item that every agency purchases is processed via the cloud from pencils to cars and according to its CTO Vijay George, "it's all about enabling the Amazon experience for the government."

Shaw Industries Group, founded in 1946 and a Berkshire Hathaway company last year made a bold expansion into Asia by running its whole ERP for international operations in the cloud.

Shaw has opened a new 210,000 sq ft manufacturing facility in Nantong, China, and is also running 10 international subsidiaries in countries including China, India, Luxembourg, Hong Kong, Singapore and Australia.

US retailer Williams Sonoma also expanded rapidly into international markets on the back of leveraging NetSuite ERP and CRM in the cloud. Without the cloud, these business-changing initiatives would not have been possible at the required speed, cost and functionality.

Chinese ERP not suited to international expansion

Clearly businesses seeking to develop Asia have benefited from running systems in the cloud, but likewise for businesses in Asia such as China, the case for cloud is equally compelling.

According to Reginald Singh, vice president of Asia, NetSuite, mainland businesses and many others in Asia are leveraging NetSuite technology to launch beyond their domestic markets across the Asia Pacific region. "Chinese businesses are seeking us to replace their home-grown systems as they are finding they are not suitable for international markets," said Singh.

The different currencies, varying market and legal requirements are not easily handled by the mainland-developed software packages, which are leaving many mainland businesses to seek alternatives as they grow beyond China.

Singh pointed to a state-owned media company with extensive operations outside China as one of many that had adopted the NetSuite cloud platform to support growing operations, despite using on-premise ERP in the past.

Source: Computerworld Hong Kong

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