Sunday, February 24, 2008

Software as a Service - NetSuite

Being a software engineer and an entrepreneur, I am a big proponent of Software as a Service (SaaS).  SaaS works great for a micro-multinational like Heaven Fresh for several different reasons and the main ones are as follows:

  1. A cash-strapped mmnc does not need to make a huge up front investment for purchasing expensive software licenses and maintaining in-house technical infrastructures.
  2. Since the SaaS is Internet based, partners and employees across the globe can seamlessly use one software platform to share their time and talent among various offices.
  3. The service provider can quickly update the software to incorporate new features and latest trends.
  4. It is much easier to implement or find plug-in modules for a well designed software service.
  5. Due to the vast number of users sharing the cost, the service provider can maintain a robust server pool which benefits all the participants.

When Heaven Fresh grew out of the Quick Books and home grown MS Access/Excel applications phase, we desperately started looking for a business management software that could help us streamline our processes, improve collaboration among various offices, outsource the routine jobs to the developing countries, and unify various data banks in one place.  There are many expensive ERP (Enterprise Resource Planning), CRM (Customer Relationship Management), POS (Point of Sale) and accounting packages in the market but not having the luxury of large budget for the software system, we wanted to get one without having to pay an arm and a leg for it. Naturally, the very first thing that came to our mind was 'Open Source'.    Therefore, we embarked on the journey of researching the available open source solutions. After looking  at various systems such as Tiny ERP (www.tinyerp.com), Open Pro (www.openpro.com) and Compiere (www.compiere.com), we found Compiere to be the one offering most comprehensive set of desired features (at least in theory).

With years of extensive software development experience under my belt and with other friends around me, with degrees in computer science, willing to help customize Compiere at the cost of taking them out for dinner, I was confident that we will have Compiere up and running in no time.  But this dream of acquiring an extensive business management software platform for "free" was shattered as we dug deeper into the customization and commissioning of Compiere. To cut the long story short, after struggling with Compiere for three months, we abandoned the project with a candid realization that it would be way more expensive in the long run to deal with an Open Source package than to go for a commercial software. If any one is interested, I will be more than happy to discuss in detail the issues and the reasoning behind our decision in a separate post.

After the eye opening experience of open source, we started investigating the propriety software packages that were being touted for small business. We  explored software such as Microsoft Dynamics, Sage, Distribution One, OpenBox and a few others and rejected them one by one because either they were very cost prohibitive, did not have the required functionality or were too difficult to integrate with other applications and customize. A half decent business software package can easily cost anywhere between $50,000 to $100,000 in just license fees not including the consulting costs from the vendor and the cost of any equipment to run it.

At that point in time, we had already been looking for a software platform for few months and it was getting more and more difficult to manage the daily affairs of the business. Disappointed and under pressure, we decided to signup for OrderMotion (www.ordermotion.com) that offered some major functionality instead of the comprehensive feature set for a monthly subscription plus a per transaction fee.  The price was right (about $500/month) and we were happy to have the core functionality as a stepping stone until Heaven Fresh was in a stronger financial position to opt for a more comprehensive software package.

As soon as we started using Order Motion, to our dismay, it became apparent that the software was very US centric. It could not handle multiple levels of Canadian sales taxes (GST, PST, QST, HST) and any permutations of them as required by the Canadian law. We could have used Order Motion for Heaven Fresh US but were not very keen on training existing/future personnel on multiple systems as it can be quite a daunting task to get people up to speed on these complex business management software systems.  Since the sales department had falsely assured us about the software's ability to handle Canadian taxes, Order Motion acknowledge the mistake and refunded our money.

Frustrated with the lack of software choices for a micr0-multinational company, we stumbled upon Net Suite (www.netsuite.com). The Net Suite looked like a good choice as it had most of the functionality that we were looking for and we had the luxury of paying in quarterly installments.  Although Net Suite could cost us more over the years, our rationale was that  NetSuite would help us grow with minimum up front investment and as more operating cash becomes available we could potentially switch to other solutions down the road.  Initially we implemented Net Suite both for the Heaven Fresh US and Canada offices and eventually started using it for Heaven Fresh UK operations. Without a doubt, Net Suite software has helped us tremendously in running the business over the last year and a half.

Although Net Suite has made life much easier for us in terms of managing the daily operations, implementing it has not been a breeze. There is a huge time investment involved for moving the historical data to Net Suite as well as getting the employees trained to use it even though most of us at Heaven Fresh have a strong technical background.  Then there are software bugs as well, but having developed the large software systems myself, I know well that software bugs are inevitable in any new system. However, it seems that Net Suite development team is quite responsive about fixing the broken functionality in each upgrade.

Despite the shortcomings of Net Suite, it is the best of the worst systems in the market today for micro-multinational companies and we have been quite happy with it until the latest episode that has flipped our perception of the company. It has nothing to do with the system itself but the Net Suite's treatment of its customers. I would characterize it the worst customer treatment I have ever experienced. In a nutshell, due to some technical issues in Net Suite accounting, some of our payments were not recorded and our credit card was over charged and also our invoices were not sent to us in a single combined format that we had been promised. When we contacted them to investigate the issue, we encountered a very rude behavior.  We had expected it to be a simple matter but instead we started receiving repeated threats to block our access to the system. That's when we realized how vulnerable we were by leaving our business data and software in some other company's hands.  After months of back and forth communication, Net Suite only backed off and and decided to investigate our complaints when we told them that we would hold them responsible if there were any damages caused to our business due to the lack of access to the system. And sure enough, they found their mistakes. If this was done to us due to a a glitch on Net Suite's part, I cannot imagine what would a customer experience who happens to be on the wrong side of the fence.

This incident made us lose our confidence in Net Suite.  It left such a bitter taste in our mouth that if it was a simple task, we would have moved to another system the very next day. Net Suite is very well aware of this dependence and for some reason they have chosen this power and responsibility to black mail their customers and make them feel like a hostage.  Net Suite has the edge with a relatively decent product in their hands at this point but I am sure that this edge will not be there for long. Since the software system itself is not unique, it is just a matter of time before other companies will be competing with Net Suite. I believe that a vendor offering SaaS should use a threat to disconnect the service to a business only and only if the world has turned upside down.  Secondly, we are paying about $36,000 / year to use Net Suite for the Heaven Fresh US, Canada and UK offices. We were very keen on implementing the system for our other offices as well but the current Net Suite pricing model is more cost effective for up to 3 countries. When combined cost of more than 3 international offices is compared,  the other higher end business management software systems start looking more lucrative.  Unless Net Suite drastically changes its customer treatment culture and the pricing model to accommodate a micro-multinational, we are very unlikely to expand our business relationship with the company or even continue the existing one.  It is a pity that a company can develop a good product but can lose customers due to utter disregard of its customers' satisfaction.

2 Comments:

Anonymous Bill Freedman said...

Let me add some thoughts from Compiere. Every day our engineers, partners and community members are working to make ERP easier. We are inspired by the community input on how to improve our solution. Thank for sharing your views on how we can improve.

I appreciate your frustration around deploying Compiere (and the other solutions you mention) on your own...without assistance from a skilled implementation partner. Compiere addresses complex business issues regarding how your business is organized and managed. Solving the business issues and implementing them in technology remains a highly valued skill, even with open source software.

I understand that your expectation is that the software is free. Indeed Compiere Community Edition is available from sourceforge.net under a GPL V2 license at no charge to you. Over 1.3 million people have downloaded Compiere over the past seven years and many thousands run their businesses with our software.

While the software is available without an upfront licensing fee, many successful Compiere users purchase additional services from Compiere Authorized Partners to ensure that the software tailored to their business processes. It is true that many succeed without partner assistance, but it is because they've put time into self-education on ERP business processes and Compiere software. Importantly, the choice between self-implementing or working with a partner belongs to you, the customer.

If you are interested in self-implementing Compiere, a number of resources are available to help you at http://www.compiere.com/support/community.php .

Bill Freedman
Compiere, Inc.

February 26, 2008 2:40:00 PM PST  
Blogger Raphaël Valyi said...

Hi Iram,

Thank you for sharing. I think this is very informative. The company I'm working in is a software integrator and I add to do all my best to convince people I had SERIOUS DOUBTS about the maintainability and ease of Compiere customization past the trivial data structures and windows customizations.

This was all the mode difficult that people tend to hide them behind the "it's rocksolid J2EE" buzzword. It's not! Let's face it, it's only a shitty Java SE monolithic platform glued with 20 year old stored procedures.

I can't believe stored procedure is an aceptable way to go in 2008. They should be expecionnaly, not the rule. They are totally unreadable, undebuggable and unmaintainable. I think the same goes for OpenBravo but since they do it more openly, at least, we can hope they find other ways to customize their ERP with their "Green Platform" arround 2009 (not before unfortunatley). At least also their web interface is free.

So we want for TinyERP instead. I won't tell you can deploy it blindly in large companies yet, but in theory at least the database would perform more or less the same. And it's already a pleasure for small companies.

Contrary to the Compiere familly, my (deep) software experience tells me that TinyERP ISN'T such developper nightmare. Set up your Eclipse + Pydev and you can put breakpoints everywhere in thee code, understand everything and tweek whereever you think is necessecary. Finally you package your customization in a true OOP inherited modules. Easy and not invasive. Worth learning a bit of Python actually.

OK, so thank your for sharing. Hope there will be more and more alternatives to Compiere in the future and we can afford competitive open source ERP solutions more often. First it's bad you almost need to rely on a "partner" to set up and evolve the ERP, second it's far too expensive to blend to all your needs. Better solutions are technically possible by now.

Cheers,

Raphaël Valyi.

March 22, 2008 11:23:00 AM PDT  

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