Is NetSuite Sweet for Customers?

It’s widely agreed that customer experience is now the most important dynamic for business. Any organization that wants to retain loyal and even vocal customers should do everything possible to ensure and maintain customer satisfaction. Software companies, especially those that promise to provide CRM and effective interactions across any channel at any time, should be good examples of embracing the methods they prescribe for using their products. But do they?

Maybe our organization is not having great luck at the moment. We just went through a bad experience with Salesforce, which had a cascading technology failure (known as #NA14) of its data center and database operations that shut down thousands of customers that, like us, use its software. Of course, technology problems happen, but there is no excuse for poor communications that don’t explain a situation and provide regular updates, not to mention prompt resolutions. Customer communications and supporting processes ought to make customers feel that they and their business are important to the provider. Salesforce CEO Marc Benioff was more than communicative and listened to comments on the issues directly through social media; now we wait to see what changes the company will make in its customer relationship processes and communications.

Unfortunately, around the same time as this fiasco another one occurred, originating with the cloud-based ERP provider NetSuite. Here again there appear to be some very large challenges with its customer relationship processes and resulting customer experience. Our analyst firm tracks and has recommended NetSuite as part of our research practices and advisory services to organizations and business professionals on applications, as in this analyst perspective by my colleague Robert Kugel. In October 2013 NetSuite announced its acquisition of TribeHR,  a cloud-based provider of a human resources management system (HRMS) for small and midsize businesses. Our firm at the time and continued to be a happy customer of TribeHR but also an advocate of and reference for its efforts, as I wrote in 2012 and part of our human capital management research coverage.NetSuite Logo

After the acquisition, at end of 2015, I received an email from an individual supposedly at NetSuite billing us for use of TribeHR. I was not sure if the message was legitimate, as the usual form of business communications to a customer and did not identify the person’s position in NetSuite. As you may know, it is a common scam to send invoices and ask for payment without context; this is an issue the FBI’s Internet Crimes Division is actively addressing where individuals are asking for payments through emails and PDF that appear to be legitimate. We ourselves have been attacked by these scams though our governance processes have prevented any mispayments. I sent an email reply to ensure that the sender actually was from NetSuite and asked for the agreement for the invoice; I got a generic reply that did not identify the person or department and said only that the invoice was related to back billing for TribeHR access. I asked again for proper identification and a copy of the license agreement and terms for payment. This was the last I heard about it. I never got a call from an account manager or anyone else at NetSuite to address the situation. Of course it could have been resolved easily if NetSuite had embedded online billing and payment from within the application. Obviously this was not a satisfying customer experience for something as easy as clarifying an invoice and setting up recurring payments from our organization.

Then, out of nowhere, on April 22 our instance to TribeHR was shut down without notice. Attempts to log in by anyone in our company received this boilerplate message: “Your account is currently suspended. We are sorry for any inconvenience this may cause. Please email support@tribehr.com and collectionsteam@netsuite.com to reactivate your account or submit related questions.” I sent an email, and the HCM Customer Success team at TribeHR responded quickly to let me know they were investigating. Clearly the vendor could and should have been more proactive. We have a prominent website, I myself am easily found through social media, and most importantly I am the main contact within TribeHR where I am listed as the system administrator and human resources contact. All NetSuite had to do was use the customer information in our instance of TribeHR. Any communication at all could have remedied this situation; it was even worse since the communications with me in December were never followed up as I requested.

Next a new person contacted me for the first time, saying he is our account manager. He told me that the invoices were sent to a person who has not been with the company for seven years at an outdated mailing address. I requested that the outstanding invoices be updated and consolidated in one agreement. I signed a new agreement on May 10 and emailed it back, requesting a credit card link so we could get it paid immediately. I was told that once the order was processed we would get an invoice and payment link. This was important as the terms on the agreement I signed said that payment was due upon receipt. But the updated invoices from the beginning of the year and a link to pay them did not come.

Then on May 24, our system again became unavailable for use. In response to my inquiry our instance was reactivated and I was informed that it was not clear why we were turned off and that the invoice would be sent to our accounting for payment. I thought it weird that no one from NetSuite had called or emailed to let us know it would be turned off. Forcing customers to chase a software vendor to pay for services is certainly not a best practice.

At this point I thought it would be worthwhile to make sure that the CEO of NetSuite, Zach Nelson, knew about our problems and poor customer experience, so I put it on Twitter to elevate the situation: “Looks like @NetSuite just shut off @TribeHR customers from access to its HRMS – not a good signal to HR & biz for them! #FAIL @ZachNelson” and then “@NetSuite @TribeHR @ZachNelson and email my rep and it is turned back on! When do sales control customer access to apps?”

Five hours later I got Zach’s response: “Should we be mailing the collection notices to someone else in your company?” I responded “@ZachNelson @NetSuite @TribeHR you are really out of touch! I asked your sales rep to get our accounting team an invoice to pay & waiting!” and “@ZachNelson @NetSuite @TribeHR if you would like emails to your team I am happy to provide! Instead of accusing me / get the facts!” and “@ZachNelson @NetSuite @TribeHR or use your new online billing / subscription system with online payment for your own business! Free advice!”

A basic email to our account rep, who by the way has been more than easy to work with, by Zach would find out that we are trying to pay for services and have been shut down twice because of NetSuite having old information and are still waiting for a payment link. Not one to get falsely roasted on Twitter, I responded, “When did CEO of your SaaS provider trying to falsely roast you on Twitter become customer best practice? Ask @netsuite @ZachNelson #FAIL.” I expected it would be obvious that roasting a customer and industry analyst was not necessary when a simple response to request a call or direct message on Twitter could resolve it. But Zach responded on Twitter, “If sending 4 email notices between December and April is considered ‘No Notice’ then the answer would be yes,” which is a response to my asking, “Do you turn off your customers with no notice?” These were my next responses to Zach: “not difficult to see your org/process made mistakes multiple times – I signed agmt & waiting for invoice” and “an apology is easy to give a customer/analyst on your mistakes not mine if you looked at what happened.” and “been a happy customer of TribeHR and supporter of your efforts! Not sure dishing on me makes any sense!” and “@ZachNelson and for the record, been a fan of @TribeHR read  https://marksmith.ventanaresearch.com/2012/11/15/building-your-workforce-into-a-strong-tribe/ … then became a customer & reference – ask @josephfung.” This turned into a late-night rant because I was concerned that our instance would be turned off again. And all of this for invoices that do not add up to more than $500 USD.

As an industry analyst and chief research officer covering the spectrum of applications, tools and technology for business (and the overall top-ranked enterprise software analyst in 2011), I was hoping for more courtesy in these communications. We do get much communications from analyst relations like we get from other vendors to help us recommend NetSuite unless we diligently pursue it. I noted in listening to the keynotes from NetSuite SuiteWorld16 along with announcements about new offerings like SuiteBilling, which it announced on May 17 and demonstrated, that if it is as advertised, it should resolve such issues as billing and payment for subscriptions. NetSuite could even embed this system directly into TribeHR or provide it to customers through a secure login. If NetSuite is using its billing applications for subscriptions it should process bounced emails and develop professional business communications to effectively engage with customers. Any of these is a better approach than emailing PDFs to customers –manually sending invoices is a worst practice. As we have written, the subscriber experience impacts recurring revenue. It is amazing that NetSuite’s people cannot even look up customer information in the system it rents to customers and doesn’t bother to go to the customer’s website and call them if they can’t get information from their own system. Instead its CEO roasts the CEO of their customer and head of an industry analyst firm that recommends NetSuite on Twitter without proper investigation. Let me just say that it does not take long for bad customer experiences to impact future business, as word travels fast today.

If NetSuite is in the business of serving small businesses, which was the backbone of its growth, then it should know that asking them to print and mail checks for a low monthly subscription of less than $200 is not a best practice and impacts their efficiency. Asking small businesses to wire money is worse because as anyone knows it could cost a small business $15 or more, which is 5 to 10 percent of this invoice and amounts to a penalty to the customer. Software companies like NetSuite should progress like those in other industries that service small businesses, such as healthcare, insurance and other recurring payments; they allow a customer to use ACH for recurring invoices and eliminate manual or costly methods for payment especially if you do not allow credit card payments online. Also, applications like NetSuite should have accounting and billing contact information so that the information is updated by the customer and easy to access and email or even make a phone call. Also, any issues related to the use of the software should be notified to the administrator or in this case also the head of human resources. Since the business is renting the software, the courtesy of contacting them is an industry best practice. These are my recommendations for NetSuite and any software-as-a-service provider, including Salesforce, for which I also provided recommendations in its communications and the billing and payment processes.

We at Ventana Research know that recurring revenue challenges finance, accounting and billing departments as we have written, and that it is easy to say that you should use the software you sell for your own business. We understand that engagement throughout the customer life cycle is the largest recurring revenue challenge in 55 percent of organizations, according to our recurring revenue research. As a negative, example as administrator of our TribeHR instance I have not received updates on the direction of the application. This is a concern for us when we hear the loud partnering communications from NetSuite about a competitive approach from UltimateHCM and are not clear on the future of TribeHR. Our research also finds that payment processing and account management are two of the top five capabilities desired by organizations for a recurring revenue system. In addition our research finds that customer renewals are the largest expected recurring revenue challenge. So we have empathy for NetSuite in this situation. Our research and clients show that improving vr_Recurring_Revenue_04_key_capabilities_of_recurring_revenue_systemscommunications in the billing and payment cycle along with the operation and improvements to the software are essential for long-term success and to customer retention. This improvement is part of what we have articulated is critical for customer experience in 2016 using digital technologies.

The customer experience I have described suggests many areas in which NetSuite needs to improve its communications, contracts, billing and payment processes. Right now it is not so sweet for customers of NetSuite, and its leaders should take to understand the issues in its communications and customer processes to ensure that situations like ours don’t happen again. NetSuite has been operating since 1998 and providing applications in what is known now as cloud computing and should have these processes well defined and refined. TribeHR was acquired in 2013 and by this time should be better integrated as a business and technology into NetSuite and its customer relationship processes so there should be no excuse for what our organization has experienced. We suggest that other small or midsize businesses should re-evaluate any further use of NetSuite and place on hold any evaluation of NetSuite until the company improves its customer and subscriber experience and communications.

No one is perfect, including our company, but I am standing by for a public apology for the clear mistreatment and abuse from CEO Zach Nelson and NetSuite. He could have passed this issue down to the customer service team (and hopefully customer success team) to resolve. Remember our organization was not the cause of this bad customer experience and lack of customer relationship processes. As you see I have documented the experience well, and those who want to see what not to do, just contact me.

Regards,

Mark Smith

CEO and Chief Research Officer

Workday Rising while Oracle Sleeps in the Clouds

As Workday held its annual Workday Rising conference this week, it’s a good time to note the accomplishments of the company and to provide a fair and balanced coverage that has yet to be spoken by my industry peers for some reason. Co-founder and co-CEO David Duffield, who founded PeopleSoft, champions a set of core values in its culture and leads a workforce that has built a new generation of ERP applications for deployment in the cloud computing environment. The suite brings together human capital management (HCM) applications to manage absence, benefits, compensation, goals, performance, succession and career planning, along with payroll; accounting applications for general ledger, accounts payable, accounts receivable and cash management; and spend management applications for procurement and expenses including labor. Workday prides itself on the innovative design of its application technology, compared to the on-premises approach of PeopleSoft (now part of Oracle). It has received significant financial investment to support development, including $85 million in recent Series F financing, which indicates support for its approach.

Workday initially established itself with its HCM applications. It has been expanding to financial and spend management, along with talent management, including performance, succession, goals and career development. Workday has been elusive in having more hands on application specific reviews which raises more questions than answers. For example in compensation are they able to compete with other providers we have evaluated in our total compensation management value index. These advances encroach into the market where ADP, Cornerstone OnDemand, PeopleFluent, SuccessFactors, SumTotal Systems, Taleo, Ultimate Software and many others. Workday has gaps in its applications in areas, particularly learning and recruiting, which hinder it in meeting HR teams’ complete needs. Workday has decided to partner with other providers so as not to lose out in evaluations that consider these applications critical. Since there are no real stand-alone providers left in these areas after many have been acquired, Workday has been announcing partnerships for a select set of cloud-based applications it can manage in accounts and will need to complete further user and data integration with its own suite. This week the company announced a partnership with Cornerstone OnDemand, with which it has significant competitive overlap, and with JobVite for recruiting and Saba for social learning, which have more complementary value for companies evaluating or using Workday. Workday has navigated the same tricky partnering path with ADP, Ceridian, Kronos and Taleo who partner and compete with them and also appears to be seeing the opportunity to take on the workforce management applications market. The new analytics-based performance management provider Tidemark has unveiled a new generation of capabilities that are available on tablets and smartphones. Workday is partnering with Zuora for subscription billing and commerce makes it easier for Workday to help its customers onboard and bill their customers.

Workday’s advances in its application suite culminated in the recent announcement of Workday 15, which includes integration with Microsoft Outlook and Salesforce.com Chatter, as well as growth in:

  • talent management, with reviews and careers, 
  • global payroll support of Canadian customers and a data connector, and
  • financial management, with transaction reporting and a release of its server called Object Management Server. 

The advances look substantive, although Workday has postponed any details to the industry until after the new software was announced at the conference; I would like to see better communication from the company on its applications and access to its products.

Recognizing the importance of mobility with tablets and smartphones, Workday recently announced its Apple iPad application. While the app is available for download in the Apple App Store, it is protected with a secured login, and the company has not provided a freely accessible demonstration environment for potential customers or analysts. Here, Workday follows in the footsteps of Oracle, which does not want potential buyers to see its software without sales intervention. Workday will have to open up access to further promote its applications on tablets that are now becoming the cool new focus of many providers in human capital management. 

In fact, Workday has been elusive in giving analysts any opportunity for hands-on review of its applications, which only raises questions and most coverage is still what I refer to the Workday love factor. For example, in compensation, can it compete with other providers we have evaluated in our Total Compensation Management Value Index? Workday seems to avoid interacting with anyone from whom it expects serious scrutiny that I can see and very select on who they have a collaborative and more detailed dialogue. The company has many cloud computing competitors for servicing HR and finance with its ERP in the cloud computing environment, including Oracle with its new Fusion application suite in HCM and Financials, SAP with BusinessByDesign, NetSuite and even now coming slowly forward is Infor and Microsoft. Workday has been successful in avoiding detailed public comparisons by many in the analyst community and their partners and competitors have let Workday gain a substantive position in the market. This is great for Workday.

There is genius in Workday’s approach. It is rebuilding the PeopleSoft mojo of a decade ago, while its nemesis Oracle has done little to protect the customer base it acquired with PeopleSoft. Oracle could have been more aggressive in its product, sales and marketing advancements in the last five years with the Fusion applications, a business unit that happens to be mostly led by PeopleSoft alumni who worked for David Duffield, but it has stood by while Workday has grown consistently. It is clear that Oracle’s energy is not focused on the applications business, as my colleague Robert Kugel pointed out as it is on its appliances and database business. That’s why I think its future is cloudy in this area of business providing Workday plenty of room for growth. Oracle on its part with its recent public cloud advancements is getting anxious for faster growth in its cloud computing approach with Fusion and recently announced its planned acquisition of RightNow for bolstering its presence in customer service. This only places more focus on who they might acquire in human capital management to gain customers and experience in selling rentable applications to business. Oracle lacks a strong business spokesperson for its focus with applications and cloud computing to challenge David Duffield and others in their continued migration of Oracle on-premises application customers to their cloud-based application environments.

Companies using Workday will find moving to the next generation of ERP in the cloud helps them become more agile and offers lower IT overhead for their business needs. I personally see the unique elements of its application are around the process and workflow and less on the focus of the applications or that they are provided in software as a service (SaaS) manner since most of ERP has been around for many decades or longer. Many find more value in using applications in the cloud than in continuing to pay maintenance on in-house software, especially if they have not been able to deploy and use it sufficiently. Workday is building a better version of PeopleSoft the second time around, and its private club approach clearly is working for the time being and has not been seriously contested by Oracle. As it converts early adopters to its unified ERP in the cloud approach, it will find the next group more difficult to recruit, since the use of cloud computing for HCM, financial and spend management is not new and there are plenty of other providers today already servicing business. We expect advances by large providers Oracle and SAP to create more challenges as they wake up and address this feisty and new provider but expect to see more growth in the rising of Workday.

Regards,

Mark Smith – CEO & Chief Research Officer