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Analysis

NetSuite OneWorld takes financial consolidation from stale snapshot to slo-mo real-time replay
Martin Banks By: Martin Banks, Associate Analyst - Datacentre & Mainframe, Bloor Research
Published: 21st May 2008
Copyright Bloor Research © 2008
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The spreadsheet is a valuable tool, of that there is no doubt. It has become so valuable, in fact, that it is now used for tasks that are, arguably, beyond its remit. One such is to be the ultimate consolidator of many-a-major corporation's global results, as it is the only practical tool in which to deposit and massage together the numbers from subsidiaries scattered around the world, all operating in different currencies, different tax legislation regimes and a host of other local requirements. The same fundamental issues can be found with any business on an active acquisition trail, where the need is to get the figures from separate business management systems into a single set of results.

Despite the importance of such numbers, however, many of the biggest companies still end up taking data from a range of other applications, such as ERP and accounts management systems, and consolidating them in a spreadsheet, obtaining at best a snapshot of a single moment in time for the business as a whole.

One of the problems is that the bigger the company, the more applications become components of the core infrastructure. The greater the number of applications then the more complex the integration between them becomes until the point is reached where the company realises it has created, in the words of Zach Nelson, CEO of SaaS specialist, NetSuite, the equivalent of a ‘hairball’ of interconnections. In practice it becomes impossible to extract, across such a hairball, the data needed to construct any meaningful consolidation.

In the process, Nelson contends that such companies can spend significant amounts of time and money trying to get a more comprehensive, better integrated view of the business and yet nearly always achieve very little. He recently claimed that the typical spend on finding consolidation solutions that work with the hairball is some $100 million or more, spent over a typical five year period. The results still usually came down to a spreadsheet-based approximation.

Nelson was speaking at the recent launch of NetSuite's new OneWorld service, which sits on top of the core NetSuite SaaS-delivered business management suite to provide a consolidation capability for company financial results, sales operations, marketing, service and more. His claims about the money and time invested in existing alternatives could easily have been taken as hype except that Dan Beuttin, Chief Financial Officer of software company Domin8, confirmed it. He was speaking as an early adopter of OneWorld and as a past owner of this very problem with a large multinational organisation. He confirmed the money spent, the time taken and the fact that it only achieved what he called "dead information stuck in time." Drilling down into the results to obtain any sense of context then required the employment of specialist financial analysts.

What OneWorld brings to the consolidation party is more than just consolidation itself, though this capability is impressive. It also provides the ability to consolidate results far more frequently than either annually or quarterly. It can now approach an on-demand consolidation capability should that be required. It also allows users to drill down into the results, not only across the company as a whole but down into any individual subsidiary or division, in either local currency or that of the overall business, in order to identify and rectify specific business problems.

OneWorld is a new code addition to NetSuite's functionality and runs on top of the existing NetSuite business management services. The key is that it is based on developing and maintaining just one model of the business, its processes and service requirements. This model can then be applied to all the subsidiaries, not only in their own language and currency, but using the particular tax regulations and other country-specific compliance factors that are relevant to creating usable financial results. At launch, NetSuite has engineered OneWorld for 12 different languages and some 170 different currencies. This approach gives added power to the overall management of a business as a global entity. For example, many global businesses are keen to maintain a consistent global approach to deliverables, from the website through to customer interfaces and even product packaging. This single model approach allows that consistency to be set once and rolled out to the subsidiaries in their own languages and currencies.

Perhaps the most important aspect of OneWorld is that it is a SaaS offering. This means that it is both extremely cost effective—at $1,999/month on top of other NetSuite charges—and very flexible. Though one of the core components of OneWorld is an updated version of NetSuite's database—and for some CIOs and IT managers it could therefore hold out a perceived risk of users facing a technology lock-in—it actually offers considerable flexibility since all that is required is a web browser to access NetSuite OneWorld from anywhere, anytime.

And perhaps there is a small measure of irony in the fact that the spreadsheet, as the original ‘killer application’ that launched the PC onto several million business desktops, is, for now, still the key consolidation tool for even the largest of global businesses. Yet the best it can provide is a single snapshot of the figures at a point in time and normally outside of any context. This is at a time when business managers need the equivalent of real-time video with slow-motion replay, which is what OneWorld does seem to offer. It is possible to conjecture that this alone could make it a ‘killer’ service capability for SaaS.

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