What is NetSuite ERP & How Does It Work? (2024)

In the late 1990s, “cloud” was not a word most people associated with technology.It wascertainly not recognized as the future of software.

But a few visionaries saw the benefits and tremendous potential of delivering software overthe internet. One of them, Oracle co-founder Larry Ellison, convinced entrepreneur EvanGoldberg of the promise of web-based software, leading Goldberg to launch NetLedger, thecompany that would become NetSuite in 1998.

Today, NetSuite’s cloud enterprise resource planning (ERP) system gives companies alltheapplications they need to run their businesses efficiently while nurturing growth.Organizations of all sizes and across dozens of industries run on NetSuite, harnessing thevast capabilities of its applications for finance, supply chain, customer relationshipmanagement (CRM), human resources, professional services, ecommerce and more.

What Is NetSuite?

NetSuite is a software company that has developed a cloud-based business management platformused by more than 38,000 fast-growingorganizations across the globe. That platform consists of a suite of applications that helpcompanies run their business, understand the performance of their businesses and drive majorefficiency gains and cost savings.

The company’s ERP system manages core functions, including finance andaccounting, inventory, orders and procurement. Customers can add options including CRM forsales, service and marketing automation, human resources (HR) for personnel records,performance management and payroll, professional services automation (PSA) to plan and trackprojects and omnichannel commerce for both online and in-store sales. All of these modulesshare a common database. Thanks to that central data source, information from across thesystem updates in real time and is accessible to authorized users across business functions.

That gives leaders a real-time, 360° view of the business so they can see whichprocesses ordepartments are exceling and which need a boost.

NetSuite uses the software as a service (SaaS) model:Customers pay a subscription fee to access the technology but are not responsible for anyunderlying infrastructure or system maintenance, including purchasing and setting upservers, installing software or testing and deploying patches and upgrades. Oracle NetSuitehandles all of that for customers, with two new software updates per year.

Eliminating the maintenance and upgrade costs that come with on-premises solutions not onlysaves money, it frees employees to focus on the company’s mission and serve customers.

The SaaS model also provides scalability: Businesses can add functionality as they need itwithout worrying about infrastructure and staff resources. For example, a B2B manufacturermay add NetSuite’s ecommerce module after it decides to start selling online.

Ultimately, NetSuite gives businesses visibility and control through a single source ofreal-time information and the ability to add modules on the fly. That increases theirefficiency and agility.

Video: What Is NetSuite & How Does It Work?

History of NetSuite

NetSuite is often recognized as the first cloud software company.

Goldberg and a few partners launched the company, then called NetLedger — a referencetoaccounting ledgers — in 1998 in an office located above a hair salon in San Mateo,Calif.NetLedger accounting software was hosted on the web, forming the foundation for whatGoldberg envisioned as a unified software suite that could eventually replace thedisconnected systems that companies then used to run their business.

Ellison, a mentor to Goldberg, was a key early supporter — his Tako Ventures invested$125million to get the company off the ground. Other investors included venture capital firmStarVest Partners and software vendor ADP as well as PaineWebber Group, part of Swiss bankUBS.

In 2002, NetLedger became NetSuite after the company added applications for inventorymanagement and CRM. That same year, Zach Nelson took over as the company’s CEO andkickedoff a period of rapid growth, as annual revenue climbed from about $1 million to nearly $1billion over the next 14 years.

At the beginning of 2007, NetSuite made waves when famed Oakland Athletics General ManagerBilly Beane — the subject of the best-selling book and movie “Moneyball”— joined the boardof directors. That year ended with a successful initial public offering (IPO) on the NewYork Stock Exchange. NetSuite issued 6.2 million shares at $26, raising more than $160million and giving the organization a market cap of $1.55 billion.

In July 2016, Oracle announced it had made an offer to acquire NetSuite for $9.3 billion tosupport its shift to becoming a cloud software provider. After independent committeesreviewed and approved the deal, it closed that November, and NetSuite began operating as aGlobal Business Unit within Oracle.

NetSuite has continued to grow rapidly since the acquisition and has offices and employeesaround the world.

5 Core Features of NetSuite

Although NetSuite may be the oldest, it is not the only provider of cloud ERP software. Sowhat separates NetSuite from other cloud solutions? Here are five highlights:

1. Unified view of the business: NetSuite empowers any firm to run itsentire business from a single platform. It brings together finance, supply chain,manufacturing, HR and ecommerce on one system, with one database, rather than usingdisparate software for each of those functions. Employees simply log in and, with a fewclicks, monitor the status and performance of any aspect of their operations.
2. Native integrations: All NetSuite applications feed information into,and pull it from, the central database to ensure there’s only one source ofknowledge.The platform’s natively integratedmodules negate the need for third-party integrations that may be unreliable orunable to support real-time updates. This unified architecture delivers a common userinterface across all modules; that decreases training time and gets people productivefaster. This model also allows users to complete order-to-cash, procure-to-pay and othermulti-step processes from a single application without re-entering or exportinginformation.

3. True cloud: NetSuite was born in and built for the cloud. In contrast,many “cloud” ERP systems are actually hosted or hybrid cloud —essentially, on-premisessoftware retrofitted for access through the internet. Such solutions suffer from many ofthe problems that plague traditional systems, like version lock, slow upgrades and lackof scalability. NetSuite is a multi-tenant, vendor-managed cloud solution with endlessroom to support growth.
4. Deep reporting capabilities: The vast amount of data flowing fromdepartments and business units into the NetSuite platform fuels its extensive reportingcapabilities. Users can pull reports on everything and anything they may want to measureor understand, thanks to the system’s built-in reporting tools. NetSuite also hasrole-based dashboards that quickly give employees, managers and executives theinformation they need to make informed decisions.
5. Built-in flexibility: NetSuite can serve a broad array of industriesnot only because it comes with impressive functionality, but because it can adapt tomeet the requirements of different businesses. The platform can be customized toaccommodate your processes and corporate structure through SuiteCloud apps and tools,whether you’re a multinational brand with six subsidiaries or a startup stillbuildingits first product.

Products Overview

NetSuite can adapt to meet the needs of diverse businesses because it has a wide array of modules dedicated to criticalbusiness functions and processes.

Finance

Financial Management: NetSuite’s financial management solution handles manybookkeeping tasks by automatically updating the general ledger, tracking accounts receivableand accounts payable and submitting invoices. This module speeds up the monthly close andsimplifies the creation of key financial reports for regulatory and statutory reporting. Itsupports complex revenue recognition standards and easily consolidates financial statementsfrom subsidiaries — including business units in other countries — with real-timecurrencyconversion.

Global Business Management: NetSuite OneWorld allows multinationaland multi-subsidiary companies to manage their entire enterprises in one system. It canhandle the diverse needs of global businesses via support for diverse currencies, languages,tax laws and reporting requirements. OneWorld offers financial roll-ups at the regional,country and global level, so decision-makers can get as broad or as focused a view of thebusiness as they desire.

Planning and Budgeting: NetSuite Planning andBudgeting gives business leaders everything they need to create detaileddepartmental or companywide budgets and forecasts. The module also provides financialanalysts with access to statistical models that allow them to run what-if scenarios thatproject revenue, expenses and more based on different possible outcomes.

Billing: NetSuite SuiteBilling helpscompanies manage invoicing and billing. It supports transaction, subscription, usage-basedand other billing models, reducing the complexity of managing financials for many modernbusinesses. SuiteBilling records revenue in compliance with current revenue recognitionstandards. This module helps businesses stay flexible and profitable.

Operations

Inventory Management: NetSuite InventoryManagement provides a single view of inventory across all channels and locations,automatically updating levels in real time. The inventory management module can use salesdata to set reorder points and alert purchasing managers when it’s time to placereplenishment orders. It also manages cycle counts. All of this functionality helpsbusinesses keep the ideal amount of stock on hand and avoid both out-of-stocks and excessinventory, boosting cash flow and profitability.

Order Management: NetSuite Order Managementhandles the complete order lifecycle, from receipt through delivery, at each stage —asthey’re placed, released, shipped and settled with the customer. This module canautomateorder processing and manage fulfillment across channels based on predefined rules. All ofthis leads to faster, more accurate fulfillment that reduces shipping costs while increasingon-time delivery rates and customer satisfaction.

Procurement: NetSuite Procurement canimprove the complete procure-to-pay process to save businesses time and money. Customers cankeep a list of approved vendors, collect quotes and automate purchase orders whilegranularly monitoring performance and spend and enabling vendor self-service and expeditingpayments.

Warehouse Management System (WMS): NetSuite WMS builds on thesystem’sinventory management capabilities, adding functionality for putaway, order picking, barcodescanning and returns authorization. The WMS module can run on mobile devices to directwarehouse employees through receiving, picking and cycle counting. The application, whichalso reports on warehouse activity, boosts warehouse efficiency and helps companies fulfilland ship orders faster.

Manufacturing: NetSuiteManufacturing is built for companies that make or assemble products. The modulehelps with production planning and scheduling, shop-floor management and monitoringproduction to reveal insights and improvement opportunities. It ensures you have all theright supplies and parts in the right place at the right time and allows managers to build,release and track work orders. That visibility into the entire production process can ensurequality, reduce costs and increase on-time delivery.

Demand Planning: NetSuite Demand Planning can help plan future demand forthe products and services you offer based on historical data, existing opportunities orimported sales forecasts. The module can plan using the moving average, linear regression orseasonal average methods. Demand planning also helps with supply planning, automaticallycreating purchase and work orders based on the demand plan.

Customers

Customer Relationship Management: NetSuite CRM presents a 360-degreeview of customers. Sales force automation features help manage leads, quotes and sales tospeed up the lead-to-cash process. Forecasting tools review sales data to more accuratelypredict future sales. The CRM application also improves customer service by combining allimportant data, like sales history and active support cases, in one place. Marketingautomation tools in the CRM help companies manage campaigns and segment customers so theycan be targeted with more relevant messaging.

Commerce: NetSuite SuiteCommerceallows retailers, distributors and manufacturers to create outstanding omnichannel shoppingexperiences. The application allows companies to launch and manage mobile-friendly ecommercesites with user-friendly tools. Multi-channel, multi-location businesses can connect alltransactions and visits by unifying SuiteCommerce with the SuiteCommerce InStorepoint-of-sale application. The result is better customer experiences on the front end and aseamless order flow on the back end, with all payment and customer information automatically flowing into the ERP.

Additional Capabilities

SuiteApps: SuiteApps are avast catalog of applications developed by Oracle NetSuite and partners that extendthe capabilities of your NetSuite instance, whether through additional functionality orintegrations with other SaaS solutions. There are SuiteApps for all types of industries andbusiness needs, and most of them run within NetSuite.

Payroll: NetSuite Payroll automatescalculations of earnings, deductions, taxes, bonuses and paid time off, accounting forvariations in taxes across the United States. With the module, businesses can pay employeesvia direct deposit or print checks, file payroll taxes and create tax forms (like W-2s and1099s) for employees. The payroll solution reduces the time spent processing payroll andensures compliance with oft-changing employment laws and regulations.

Human Resources: As NetSuite’s HR system, SuitePeople weaves human resources data throughout thesuite. This solution stores personnel information, guides new hires through onboarding andtracks promotions and compensation changes. It gives employees self-service tools to requesttime off, view directories and org charts and publicly congratulate colleagues, whileallowing managers to conduct and track performance reviews. SuitePeople lets employeeshandle more tasks on their own and helps organizations retain top performers.

Professional Services Automation: NetSuite PSA solutions aredesigned for services companies or services divisions within product companies. This systemprovides project and resource management, billing, time and expense management and projectaccounting capabilities. OpenAir can track time and expenses in detail, then automatecustomer billing based on project milestones or a set schedule. The module delivers betterresource utilization, a higher rate of on-time projects and increased profitability.

Analytics: SuiteAnalytics harnesses all the data in theNetSuite platform to provide deeper insights, from summary to transaction levels. TheSuiteAnalytics workbook enables users to build on saved searches and reports with customfilters and visualizations. Employees can get answers to pressing questions with simpledrag-and-drop tools — there’s no need for coding or complex queries.

How Does NetSuite Work?

All NetSuite solutions are delivered through the cloud in a subscription model. NetSuite wasa cloud pioneer and remains fully committed to that deployment model — it does notoffer anyon-premises options.

It’s a multi-tenant cloud solution, meaning all customers run on the same version ofthesoftware and its back-end infrastructure and regularly receive updated versions,automatically. Each customers’ data is stored and secured separately. This createseconomiesof scale because everything runs on the same code.

Users access the platform securely through a browser from any device, whether a laptop,smartphone or tablet. This flexibility empowers decision-makers to track the performance oftheir business and be alerted to any problems regardless of where they are, so long as theyhave an internet connection. Role-based access gives authorized employees the informationthey need to excel in their roles without viewing data not relevant to their jobs.

NetSuite users access all ERP modules, and the functionality within them, through a singlesign-on portal — all the key information and tools needed to run your business are inoneplace. Customers can use simple drag-and-drop tools to personalize their home dashboard withthe metrics, charts, graphs, reminders and shortcuts that are most critical to their roles.

The same is true for all real-time dashboards throughout the suite.

How NetSuite Can Be Customized to Meet Your Exact Requirements

NetSuite’s SuiteCloud platform allows customersandpartners to extend the system’s capabilities and tailor it to their exact businessneeds.This gives customers the flexibility to meet the shifting business challenges of today andtomorrow. There’s no threat of version lock, as all customizations automatically carryoverwith platform upgrades.

Here’s a quick breakdown of SuiteCloud applications and developer tools:

Customizations: This tool makes it easier for developers to create customfields, forms, records and roles. With SuiteBuilder, companies can tweak the system toreflect their organizational structure and terminology.

Process Automation: Developers can build custom workflows for differentbusiness processes with SuiteFlow. They can use an intuitive user interface to automateprocesses like lead nurturing and approvals for purchase orders and sales discounts.

Platform Development: Developers and NetSuite administrators can buildalmost any new application or process they can dream up with this tool. They do this throughJavaScript application scripting, and SuiteScript can debug their code.

Integration: SuiteTalk enables developers to build custom integrations sodata flows smoothly from NetSuite to outside software applications. It does this through afew different integration tools.

Application Distribution: This tool helps both customers and partners bundlecustomizations and applications they develop for faster, easier deployment. SuiteBundlermakes it easier for partners to send out new versions of these applications and forcustomers to apply customizations to different accounts.

Internationalization: Create an environment for end-users and administratorsthat feels completely natural no matter which local language, currency, or tax andaccounting rules apply to your global company or offshore subsidiary.

Performance Monitoring: Performance health dashboards provide visibilityinto systems health to maintain optimal performance and stability of your NetSuite accountto ensure business continuity and keep users productive, and include integrated tools torapidly identify root cause issues affecting product experience.

What Type of Businesses Use NetSuite?

NetSuite has become the industry leader in cloud ERP because it can address the needs ofbusinesses of all shapes and sizes. That includes early-stage startups up to household-nameenterprises, products- and services-based organizations and companies that sell to otherbusinesses, consumers or both.

The more than 38,000 customers that useNetSuite operate in a variety of industries, including:

• Advertising and Digital Marketing
• Apparel, Footwear and Accessories
• Campus Stores
• Consulting
• Education
• Energy
• Financial Services
• Food and Beverage
• Health and Beauty
• IT Services
• Manufacturing
• Media and Publishing
• Nonprofit
• Professional Services
• Restaurants and Hospitality
• Retail
• Software and Technology
• Transportation and Logistics
• Wholesale Distribution

NetSuite supports employees across various departments and roles within these companies, fromthe C-suite down to sales reps and HR professionals. In addition, the software supports morethan 190 currencies, 27 languages and automated tax compliance in 100-plus countries.

How Is NetSuite Implemented?

SaaS ERP systems typically are implemented quickly when compared with on-premises systemsbecause there are no servers to set up or devices to configure.

NetSuite builds on that advantage with its SuiteSuccess implementationmethodology, an approach that no other software vendor offers.

SuiteSuccess, launched in 2017, tailors the implementation to the business based on itsindustry and size. NetSuite offers SuiteSuccess editions for 12 verticals: agency, appareland footwear, food and beverage, IT value-added reseller, manufacturing, media andentertainment, nonprofit, publishing, retail, software, solution provider and wholesaledistribution. In addition, there are product-specific editions for financials, planning andbudgeting, SuiteCommerce, SuitePeople and a starter edition for small, fast-growingcompanies.

The SuiteSuccess approach leverages industry-leading practices NetSuite has developed morethan two decades of experience to deliver faster deployments and rapid time-to value,resulting in increased employee adoption — and more success for customers. The systemcomeswith preconfigured KPIs, reports, dashboards and reminders. Many companies have gone live onNetSuite in 100 days or less thanks to the SuiteSuccess methodology.

While SuiteSuccess is designed with established best practices, the platform can beconfigured and customized to meet a company’s exact requirements. NetSuite was builtwithflexibility in mind and has a team of consultants ready to help customers get the most outof the solution.

How Much Does NetSuite Cost?

Companies subscribe to NetSuite for an annual license fee. That license is made up of threemain components: core platform, optional modules and number of users. That annual licensefee stands in contrast to the large, one-time payment businesses are charged for a perpetuallicense to use on-premises systems as well as ongoing maintenance and support.

Accounting, inventory management, order management and tax management capabilities areincluded with the core NetSuite platform. NetSuite’s modular pricing design meanscustomerspay only for what they need, when they need it. As a business grows, it can easily activatenew modules and add users — that’s a key upside of cloud software. 

Because every module is different and delivers unique capabilities, license costs vary. Thereis also a one-time implementation fee for initial set up. To receive a more detailed quotespecific to your business needs or to simply learn more about NetSuite, schedule a free consultation.

There’s a reason so many business owners and leaders trust NetSuite to manage theirmostcritical processes and information. It’s a proven, reliable platform that helpsorganizations of all kinds grow and reach their goals. Having all key business informationin a single system leads to more informed decision-making and allows leaders to resolveproblems before they cause major disruptions.

Simply put, there is no replacement for drawing insights into your operations and runningyour entire company from one source of data, in one interface.