Recently, Netsuite announced a strategic partnership with Informatica that will enable the development of a two-tier ERP solution for global enterprises. This development will enable larger companies running legacy on-premise applications (such as SAP R/3) to tightly integrate with Netsuite’s leading cloud ERP solution. The benefits of such a solution will, without doubt, lead to a significantly faster and more cost effective ERP deployment in new markets.
As someone who has spent much of the last 6 years working with those organisations deploying ERP systems in emerging markets, this development provides further validation of a growing trend that I have personally witnessed from the beginning. Working closely with customers such as Jollibee and NBTY, both of whom have adopted and executed on such IT strategies, it is easy to see how this development makes so much sense on so many levels.
Since the recent global economic slowdown, developing markets such as Asia/Pacific have been gaining interest from those fortune 500 companies that are finding it harder than ever to make a dime in their traditional North American and European markets. There is a shift towards these potentially lucrative new world economies, and with that shift they are looking to IT systems that can both move quickly and provide future-proof scale.
Until the advent of cloud technology, and products such as NetSuite OneWorld, it was impossible to find business management systems that could offer the best of both worlds. Taking SAP R/3 as an example, when opening up a new market you could quite easily spend millions of dollars on the software and a further 3 years deploying it. Then you have to pay people to keep the servers running and an army of consultants to manage the upgrade for you, quite often before you even get the system live. Economically this simply doesn’t stack up if you are deploying to an office of 200 people in Vietnam.
Jollibee, the Philippines’ leading fast food chain (www.jollibee.com.ph) faced a similar problem and, with NetSuite OneWorld, were able to deploy a live ERP solution to their Vietnam operation in 3 months. They then took this same model and applied it to other new markets. The result is that their legacy ERP investment is protected, whilst giving them an elegant, agile and efficient solution for their emerging Tier-Two markets. They can now look at acquisition targets in new markets without the threat of IT costs spiralling out of control.
With 36% of large organisations (greater than 1000 employees) now looking at cloud software solutions1 we should expect to see many more companies recognising the benefits of a two-tier ERP strategy using Cloud ERP such as NetSuite OneWorld and this latest partnership of NetSuite and Informatica will only add fuel to that fire.
1Springboard Research. August 2010