QUICK READ:
- Granite Partners, a Minnesota investment firm that buys local, established businesses, is consolidating its 10 portfolio companies on NetSuite.
- NetSuite won out against Microsoft, SAP, and Epicor in Granite’s ERP selection process. It has replaced or will soon replace 11 individual business systems among Granite’s portfolio companies.
- Granite companies using the new NetSuite Configure, Price, and Quote (CPQ)(opens in new tab) tool have improved accuracy through the supply chain, reduced cycle times, and found the capacity to drive more revenue without adding resources.
- With NetSuite Warehouse Management System (WMS)(opens in new tab), Granite companies have gained more accurate and comprehensive views of inventory and have reduced fulfillment times.
- The firm is set to continue growing revenue, protecting margins, meeting rising customer expectations, and serving stakeholders across its portfolio companies.
About Granite Partners
Rick Bauerly grew up around his family’s construction manufacturing business. After beginning his professional career elsewhere, he rejoined Bauerly Companies and eventually helped sell the business to a large publicly traded company in 2001. At the time, a string of family-owned businesses in central Minnesota like Bauerly Companies were selling to larger, non-local buyers.
That sparked Bauerly’s idea to build a different kind of investment firm. He imagined a firm that would buy and hold locally owned businesses like Bauerly Companies, giving owners who were ready to move on another option beyond selling to a typical private equity firm or a large corporation. Thus Granite Partners(opens in new tab) was born in 2001 with an initial injection of capital from the sale of the family business.
“Our alternative is private and local and long-term ownership, where we buy to hold the companies,” said Bauerly, Granite Partners’ founder and CEO. “This is an important distinction. We don't sell them.”
Today Granite Partners has grown into a diverse organization that holds 10 companies, all with Minnesota roots, and a total equity value of more than $1 billion. Granite itself employs a lean team that partners with the 2,500 employees across these companies on financial and growth strategies.
Granite identifies high-fit businesses with owners who see value in this model, have a healthy and happy customer base, operate in an industry with clear opportunity for growth, and have a strong presence in their local communities. It purchases companies with the guiding objective to help these organizations succeed 100 years into the future.
Given the varying business models of these companies — they range from industrial manufacturing to software development to healthcare supplies and services — about 80% of everyday management and operations falls on the individual company’s staff. Granite looks for areas where it makes sense to centralize. For example, it handles banking relationships and credit facilities, but each company’s employees are responsible for accounting, cash management, and financial reporting.
Legacy Systems Near End of Life
As Granite continued adding to its portfolio, it realized technology was another area where it made sense to centralize. By 2020, several of its companies ran on legacy systems that were sunsetting, and COVID-19 accentuated the need for cloud technology. That year, Granite hired Deloitte to evaluate all of the systems used across these 10 companies.
“When Deloitte documented the current state, they found the hairball—individual islands of data and processes and systems that were not integrated,” Bauerly said.
The group sought software that could unify these entities on a single platform and had the functionality required to manage complete, end-to-end processes.
Granite considered several vendors, including Microsoft, SAP, and Epicor, but had seen its companies run into barriers with some of those systems firsthand. Additionally, the holding company had used NetSuite since 2002, when cloud ERP was still nascent. Its portfolio company Microbiologics had increased revenue fivefold in its decade running on NetSuite.
Unifying 10 Unique Businesses on NetSuite
Bauerly was ultimately impressed by the system’s ability to support the evolving and increasing needs of Granite’s businesses. It could automatically handle complexities like revenue recognition for project-based work and track metrics that helped decision-makers boost margins and profitability.
To date, NetSuite has replaced or is scheduled to replace 11 individual business systems among Granite’s portfolio companies, including Microsoft Dynamics, QuickBooks, Sage, and Salesforce.
Managing their complex structure — each company is a subsidiary, and many of those companies have their own subsidiaries — is far easier with NetSuite OneWorld(opens in new tab), which automatically consolidates financial results where appropriate and reconciles intercompany transactions.
Automating With NetSuite CPQ
Many Granite companies sell premium products and services with complex rules for customization and pricing. And many of them previously relied on price books, spreadsheets, and design software to gather all of the information required for compatible designs and quotes. Two organizations recently added NetSuite’s new configure, price, and quote (CPQ) tool(opens in new tab), which has a user-configured rules engine that automates many of these steps.
NetSuite CPQ has greatly improved accuracy through the supply chain and reduced cycle times to help these midsize companies compete with bigger players. Granite has early evidence in two companies that are using CPQ:
The CPQ tool has been able to handle even the most complex scenarios, and information flows in and out seamlessly since it’s part of the NetSuite platform. Two more Granite companies will soon start using the tool.
“When you look at the licensing cost for NetSuite CPQ relative to the long-term value, there's a very high return on investment,” Bauerly said.
Bauerly further explains Granite companies' use of NetSuite CPQ:
Full ‘Suite’ Ahead in Analytics, Manufacturing, Warehouse Management, and Training
Additionally, the cloud ERP system gave users a much better grasp of business performance with hundreds of saved searches, reports, and KPIs. Adding the NetSuite SuiteAnalytics(opens in new tab) module expanded on those capabilities and offered more visualization options.
NetSuite's Advanced Manufacturing module(opens in new tab) helps the product companies in Granite’s portfolio stay organized and run a more efficient production floor. The companies have also gained a more accurate and comprehensive view of inventory and have reduced fulfillment times with NetSuite Warehouse Management System (WMS)(opens in new tab).
Finally, more than 100 employees of Granite businesses have turned to Learning Cloud Support (LCS)(opens in new tab) to better understand NetSuite and discover how they can get the most out of it. Those employees have collectively spent almost 1,000 hours completing self-paced learning sessions in LCS.
Bauerly’s describes Granite’s overall experience with NetSuite – and what’s next:
Opportunities to Expand the Portfolio
While Granite Partners has built an impressive portfolio over the past 20 years, it still sees plenty of opportunity to expand. Inflationary and talent scarcity headwinds have not led to dramatic cost cutting or a shift in strategy. Bauerly points to NetSuite in helping Granite businesses identify the right prices and maintain a strong market position to mitigate the impact of inflation.
“We will continue to add companies to our family, we'll continue to bring smaller companies into our 10 platform companies,” he said. “There's just a lot of good momentum, and that will continue.”
As part of that growth, Granite is committed to investing in employees and a culture that will keep retention rates above those of competitors. This is all centered around the idea that employee health and wellbeing is the #1 business priority.
In the near future, the firm plans to invest more in B2B commerce and capitalize on the opportunity to sell aftermarket parts for many of the products its companies make.
“It's a return-on-investment analysis,” Bauerly said of why similar holding groups should consider NetSuite. “It's about investing in what we think is the best system in the world for our middle-market companies in exchange for the returns that come from revenue growth, from margin expansion, from cash flow acceleration, and from service to stakeholders that engages and delights.”
See how NetSuite CPQ can drive revenue(opens in new tab) at YOUR business.