NetSuite Founder Shares Cloud ERP Success Secrets

This transcript has been edited for length and clarity.

When did you start NetSuite as a cloud-based ERP startup?

Eons. [Laughter] It was 1998, relatively early days of the Internet.

Michael Krigsman: Now, of course, you're part of Oracle. Give us a sense of the growth trajectory of NetSuite since that time to today.

People really didn't think much about business applications running on the Internet back then and we were one of the earliest companies to do that. Back then, it was a new idea. We had early adopters. Over the course of the past 20 years, it's become the de facto standard for how you run business applications and I expect that to be true far into the future.

Michael Krigsman: What actually gave you the idea to take this business application or set of applications and run it in the cloud?

I had run, as CEO, a previous business and it didn't succeed, but I did learn a lot. I got my cliché Silicon Valley failure out of the way, but I learned a lot about running a company and the dearth of tools to help you run that company effectively. We had a smorgasbord of applications we were running.

Really, the idea came from that, kind of a fast-growing business have these tools that they can really see what's happening across their entire business. That was really the driver and the cloud--it didn't have that name back then--was really the means because the only way you could run an application that everyone in the company is going to use is, you needed professionals to run the databases and things like that. Technology, really, was out of reach out of the small companies that we were targeting way back in the day.

Michael Krigsman: The idea then was to take the sophisticated technology and separate it from the customers so that they could focus on running their business.

Exactly. Really, for us, what we were trying to deliver was a dashboard, and that's really still, to this day, the centerpiece of NetSuite. That's what you see when you log into NetSuite. It's a dashboard of everything going on across your business: in finance, in sales, if you have an e-commerce website, all of your back office, supply chain, et cetera are kind of all in one place.

Anytime anywhere is what the cloud-delivered for these geographically disbursed organizations, especially the modern organization that may have a lot of remote workers. Everybody is working off of the same playbook, the same dashboard.

Michael Krigsman: I know the software has become richer and bigger over time, but the core mission, has that changed from or evolved from when you started the company to today?

Well, certainly, we've added more sophistication and been able to deal with more sophisticated business. I think one of the largest trends is that we've been able to verticalize some of the capabilities to really make them appropriate for different segments of the marketplace.

Really, coming back into Oracle has clarified our mission and, whereas, when we were independent, we were going in a few different directions, going to larger companies; being part of Oracle, we've really, really been able to focus on our wheelhouse, which are these fast-growing businesses from startup into their hyper-growth phases across a lot of different verticals. That's been really gratifying to get back to our roots.

Who are Oracle NetSuite’s customers - are they fast-growing companies?

Absolutely. They might be 50, 100, 500 employees. They might be $20 million, $50 million, $100 million in revenue and growing really fast. They're running on software that they got when they were still operating in a garage.

Just like with my company way back in the day, things start falling on the floor as your company grows and you're not necessarily delivering orders as effectively. If you're a service company, your projects aren't going as well, and you realize that you need to tie things together within your company.

You can't do it as a personal entrepreneur. You don't know every employee. You don't know every customer any more, and that's when systems become important.

How have customer expectations changed?

We're seeing a new generation of business user. For example, here at NetSuite, we have a ton of recent college graduates. They may be business majors. They're coming in and they're helping sell, implement, or service NetSuite.

These employees, I can see from them and how they expect to use their business software, they're coming obviously having used the Internet from when they were kids and it comes completely naturally to them. They have a computer on their phone that's incredibly powerful. They're expecting to use all those capabilities in the same way as they have them in their life at home. They come with the expectation that their life at work is going to be as rich, as approachable, and as powerful.

Michael Krigsman: What are the implications of that for you at NetSuite?

Definitely a singular focus on making the best possible user experience. Again, these applications in certain occupations, they're being used all day every day, eight, ten hours a day. The amount of productivity that we can deliver by making the system easier to use, easier to learn, and that really comes from really borrowing some of the techniques that we're seeing in some of the consumer applications and also innovating on our own.

Michael Krigsman: Evan, I know that, in the early days, you were the product designer and even in recent days. To what extent do you still have hands-on with the product design?

Well, still, I view my most important is to make sure that we're delivering the best possible service, and that starts with the design of the product. Now, we have incredible people. They're trained in design thinking and they follow a methodical process but also use their creativity to come up with great solutions.

Still, I like to keep my hands in it and one of the things that's most important for NetSuite is all of the pieces work really well together. Having that overarching view, also having the interaction with customers that I do, I feel like I can continue to add value working with the team and that's certainly, probably my favorite part of my job is to just digging in and looking at how we're going to solve customer problems with the new capabilities that we're adding into NetSuite.

How much time do you spend with customers?

I spend a decent amount with customers, both obviously visiting them, but just in interactions in the user group, on email, et cetera. That's incredibly important. It's important for everybody in the company, really.

Obviously, the people that are selling it and implementing it, they're living with the customer day-to-day. The people that are developing the service, the people that are delivering the service in terms of the data center, all of them benefit from seeing how NetSuite improves the working lives and the success of these entrepreneurs that are using it on a day-to-day basis. It helps them succeed.

Michael Krigsman: In a broader kind of strategic or trajectory sense, how do you take this customer input and then make the decisions; we need to go here or we need to go there?

You're not just going to follow the list of things that customers are asking for. They're not privy to all the kinds of things that you could possibly do. I think it's really a collaboration and it's a synthesis of the things that they are requesting from their use of the product and the ideas, innovations that you have. This is especially true when there are new technologies available like machine learning.

You won't necessarily get a lot of customers saying, "I wish you were able to tell me which projects were at risk," because they don't even know that it's possible. It's really a synthesis, but when we have an idea that we think is great and we think that we're sort of skating where the puck is going -- we like to use those Canadian analogies -- we certainly need to kind of corroborate that information by going to customers and saying, "Here's what we're thinking about. Do you think that would help you?" Then, obviously, collaborate with them on the design of new capabilities.

Michael Krigsman: As a product designer for decades now, can you shed any insight on what you've learned that makes customers want to adopt a new version or features?

That's what design thinking is all about. It's about empathizing. It's about really looking at the personas that are going to be using it and thinking about the big picture for them. What are their pain points? If you go to customers and they tell you, "This is my pain point on a day-to-day basis," you keep your focus on that and making that easier.

Then, of course, you want to astonish them with how you make it easier. That's about creativity. That's about using the latest capabilities on the iPhones, just everywhere there are these powerful new technologies, machine learning.

Ultimately, you're bringing all that to bear on the customer problem and staying focused on the problem we're solving. Who has this problem? What are we trying to do for them? How do we want them to use it? Staying focused on that the whole way through the design process and really realizing that design is a means to an end not an end in itself.

Michael Krigsman: It's a combination then of the functionality married to the user experience.

Right. That's a much more pithy way of putting it than I had. [Laughter]

How does Oracle NetSuite make product investment decisions?

This especially becomes challenging when you're working in lots of different segments, lots of industry segments, lots of different verticals. We have very powerful capabilities for product companies, and we have very powerful capabilities for service companies.

We do a lot of analysis of where our fit is already good and can be better, where there's a lot of need. Obviously, again, we can look at our customer base. We have an enormous amount of data about our customer base, how they use it, and they're feeding that back to us.

They really are, generally, data-driven decisions and, again, there are so many great tools now to analyze data. We have so much data to analyze, picking the right questions. If you pick the right questions, you can get some great answers.

Michael Krigsman: Evan, you mentioned earlier that the focus is on fast-growing companies. What does that imply for the evolution of the NetSuite product?

Well, the good news is, I expect they'll always be fast-growing companies, [laughter] so there's no end to that. I think there are a lot of different trends, technology trends that are important; ever-increasing access to data, ever-increasing computing power to do machine learning.

I think that, again, keeping the focus on the problems that users are trying to solve and, as companies grow, they get more complex. They find other areas that they need to automate. Again, especially in specific vertical markets.

For us, a huge trend is understanding, at a deeper level, these micro-verticals, not product companies, not manufacturers, but apparel manufacturers or food and beverage distributors and getting down to that level. It may seem a little mundane, but it's exactly what our customers want. They want a product that's designed for them and that really looks and feels like what they expect, in their particular mode of business, a product to look like.

How do you design products for micro-verticals?

A lot of how we built our organization over the past few years has been bringing in industry experts, subject matter experts, some of whom have worked in the industry themselves or have been working with that industry for a long time. It's great. The engineers love it because the precision that they can specify the problem is great. That's definitely been a trend, and it's across the organization and the people that implement.

We do that on a vertical basis. We have experts in your industry that are going to be implementing NetSuite for you and understand your pain points and what makes your company tick.

Michael Krigsman: That's the core of your strategy going forward, these verticals and then narrowing down into the micro-verticals, as you described it.

Absolutely. I think that and then continuing to deliver a world-class user experience across all these different verticals, I think those are the two major trends that will drive us. In the larger sense, what's driven NetSuite is, again, the fact that everything works together. As people may start implementing NetSuite to do their accounting and financials, soon they'll branch into supply chain. They may adopt our HR capabilities, SuitePeople. They may go into commerce.

As they use more of the suite, they get exponential value because of all the great connections we make between the different parts of the system that mirror all the connections you have as an actual functioning organization that may be at risk of becoming siloed. With systems like NetSuite and using discipline, you can keep your business processes, that tend to cross departments, working really smoothly. That's the other major area that we've always focused on and will always continue to focus on. We call it Unlocking the Suite.

Do enterprise buyers have resistance to cloud software in 2019?

No, and we saw the tipping point several years ago. I used to have these discussions. People that implement NetSuite often are driven by CFOs, potentially who are inherently conservative.

There was another cloud product, a company that started a few months after us, that had a lot of success in sales. Inherently not quite as conservative, willing to put their business information on the Internet, and I always found that humorous that CFOs didn't want to put their financials on the Internet. Yet, they seemed to be comfortable with all of their customer information and sales information going on the Internet. [Laughter] I'd have that discussion.

Now, I don't have those discussions anymore. I think it's the last remaining on-premise vendors that now have to have the discussion, "Why would I want to maintain my own data? Why would I want to have to deal with making sure I've done the latest patch of my database?" et cetera. There definitely was a flip a few years ago and it's not a conversation we really typically have anymore.

Michael Krigsman: This cloud thing seems to have worked out pretty well.

It seems like it's going to stick.

Michael Krigsman: [Laughter]

I don't know if it's going to be a thousand years like Larry Ellison predicted, but I think it's going to do pretty well for a while.

What advice do you have for successful ERP implementations?

Our customers get the sales and implementation of their product through something called SuiteSuccess, obviously, the goal being success. What that entails is the fact that when we're demoing the product initially to the customer, they're seeing exactly what's going to get implemented.

There might be some small tweaks we make for their company, but we've made these SuiteSuccess editions for going down to micro verticals like apparel, and so they're seeing a product that's already tailor-made for their industry. Not every company is alike, but they are a lot alike once you go down to that level of industry.

My advice would be to make sure that what you're being shown is tailored to you, is right for your type of business. That's what you're going to get at the end of the day when all is said and done. You can see a lot of shiny bells and whistles and then not realize them when the day comes, that first day that you turn it live and your users see it for the first time. That's something that we're really focused on; delivering solutions through SuiteSuccess that are right for your business and that what you see is what you get.

Michael Krigsman: That close fit between the software and your business is a crucial dimension of smooth success with implementation?

Right and we've implemented hundreds, sometimes thousands of companies within a particular segment. We're taking all that learning about these segments and building it in, so there really is a collaboration.

What we find with customers is they really appreciate getting those best practices built-in, not having to reinvent them. Then, of course, the last mile is making sure that it gets tailored, and NetSuite is incredibly flexible. It's really easy to tailor. Taking those industry best practices and then tailoring them. Really make it right for your business. That's, I think, the secret to success in that daunting ERP implementation.