How to Reduce IT Costs with NetSuite’s Cloud-Based Architecture

How to Reduce IT Costs with NetSuite’s Cloud-Based Architecture

In today’s competitive business landscape, companies are under constant pressure to cut costs and improve efficiency. One area that often consumes a significant portion of the budget is information technology (IT). From hardware and software to maintenance and support, IT expenses can quickly add up, putting a strain on an organization’s bottom line. However, with the advent of cloud computing and software-as-a-service (SaaS) solutions like NetSuite, businesses now have a powerful tool to reduce their IT costs while enhancing productivity and agility.

NetSuite is a comprehensive, cloud-based enterprise resource planning (ERP) system that encompasses financials, customer relationship management (CRM), e-commerce, inventory management, and more. By unifying these core business functions on a single platform, NetSuite eliminates the need for costly, disparate systems and enables companies to streamline their operations. In this blog post, we’ll explore how NetSuite’s cloud architecture can help organizations of all sizes minimize their IT expenses and achieve a lean, efficient technology infrastructure.

The High Cost of Traditional IT Systems

Before diving into the cost-saving benefits of NetSuite, it’s important to understand the financial burden of traditional, on-premises IT systems. These legacy approaches to business technology often entail:

1. Substantial upfront investments in hardware such as servers, storage devices, and networking equipment. This requires significant capital expenditures (CapEx) that can strain cash flow and limit investments in other areas of the business.

2. Ongoing operating expenses (OpEx) related to powering, cooling, and housing the hardware infrastructure. Server rooms and data centers consume vast amounts of electricity and require specialized facilities to ensure optimal performance and uptime.  

3. Dedicated IT staff to manage, maintain, and troubleshoot the systems. Skilled IT professionals command high salaries, and 24/7 coverage demands multiple team members. 

4. Frequent upgrades and replacements to keep pace with technology advancements and increasing workloads. Moore’s Law dictates that computing power doubles roughly every two years, pressuring companies to continually invest in new hardware to avoid obsolescence.

5. Complex integrations between siloed systems that handle different business functions. Connecting disparate software often requires custom development and constant upkeep to maintain smooth data flow.

6. Extensive customization to support unique business processes and reporting needs. Modifying packaged software is time-consuming and expensive, and customizations make upgrades increasingly difficult over time.

7. Redundant systems and excess capacity to handle peak workloads and ensure high availability. Companies often over-provision hardware to accommodate the highest-anticipated demand, leading to underutilized resources during non-peak periods.

8. Heightened security risks due to the need to secure physical infrastructure and push out software patches on-premises. Cybersecurity demands increase yearly, taxing IT teams as threats grow more sophisticated.

9. Inability to seamlessly scale up or down based on growth or changing business needs. Expanding on-premises systems is a linear process, making it difficult and expensive to rapidly respond to new opportunities or challenges. 

These factors contribute to the high total cost of ownership (TCO) associated with traditional IT systems. Gartner estimates that 80% of IT budgets are spent on “keeping the lights on” – maintaining current infrastructure – rather than innovative projects that could improve profitability or competitiveness. 

However, the cloud model pioneered by companies like NetSuite offers a radically different approach to enterprise technology. By shifting the infrastructure management burden to a trusted SaaS provider, companies can refocus their resources on strategic goals and value-added tasks that drive the business forward.

The Cloud Advantage: How NetSuite Cuts IT Spending

NetSuite’s cloud-based architecture provides a myriad of opportunities for companies to reduce their technology spend compared to on-premises deployments:

1. Minimal upfront costs. Because the NetSuite software runs on the provider’s servers, there’s no need for companies to purchase and install expensive infrastructure. This drastically reduces initial capital investments.

2. Reduced operating expenses. NetSuite manages the underlying hardware in world-class data centers, slashing the ongoing costs of power, cooling, real estate, and other facilities needs.  The multi-tenant architecture allows the infrastructure costs to be shared across thousands of customers for optimal efficiency.

3. No internal IT burden. NetSuite acts as a one-stop-shop for ERP, handling all the hardware, maintenance, upgrades, and support. Companies can operate with lean or even no internal IT staff, relying on NetSuite’s experts to keep the system running smoothly.

4. Always up-to-date software. NetSuite issues new releases and upgrades automatically, ensuring customers are always on the latest version. There’s no cost or effort associated with manually deploying updates and patches.

5. Seamless scalability. As a company grows or experiences peak demand periods, NetSuite can instantly scale to accommodate increased transaction volumes and users. There’s no need to over-provision hardware for the highest-anticipated workloads.

6. Global deployment. NetSuite’s web-based access allows employees to securely sign on to the system anytime, anywhere. Companies don’t need to maintain expensive VPN or remote access infrastructure to support distributed users. Built-in multi-language, multi-currency, and tax management further enables global business at a lower cost than disparate regional deployments.

7. Strong security and compliance. NetSuite provides enterprise-grade security out-of-the-box, including data encryption, role-based access controls, IP address restrictions, and robust password policies. The company also maintains numerous security and privacy certifications (SOC 1/2/3, PCI-DSS, ISO 27001) that would be cost-prohibitive for most organizations to pursue independently.

8. Business continuity. NetSuite’s multiple data centers and redundant infrastructure ensures high availability and disaster protection. Data is automatically backed up to guard against loss. Customers get peace of mind without investing in duplicate servers or remote backup facilities.

9. Vendor management savings. With NetSuite as the single provider for the full breadth of ERP/CRM/e-commerce capabilities, companies can avoid the administrative overhead and integration issues of dealing with multiple software vendors. Fewer vendor relationships to manage translates to streamlined procurement and lower costs.

10. Affordable, predictable pricing. NetSuite offers transparent subscription-based pricing, allowing companies to treat software as an operating expense rather than a major capital investment. Charges are directly tied to the resources consumed, so customers don’t pay for more than they need. 

These cloud cost efficiencies free up precious IT dollars to reinvest in growth and innovation. With a lighter technology footprint, businesses can focus on their core competencies and strategic differentiation in the market.

Optimizing NetSuite for Maximum ROI

While migrating to NetSuite’s cloud ERP platform can yield significant cost savings, companies can further optimize their NetSuite investment through several strategies:

1. Implementation rightsizing. One of the leading drivers of ERP costs is over-buying functionality. Avoid purchasing NetSuite features that aren’t essential to current business needs. The beauty of cloud systems is the ability to start lean and expand capabilities over time as requirements evolve. Work closely with a NetSuite implementation partner to define a minimum viable product (MVP) configuration.

2. Industry alignment. NetSuite offers pre-built industry solutions and leading practices for sectors ranging from wholesale distribution to software to nonprofits. Adopting a vertical edition provides a tailored feature set and implementation methodology to accelerate time to value and minimize customization needs. Companies should look for NetSuite partners with a proven track record in their industry.

3. Process re-engineering. Companies often try to force new software to fit old ways of doing business. However, one of the quickest paths to ERP failure is excessive customization to replicate legacy processes. With NetSuite, organizations should take the opportunity to critically examine current operations and adopt the system’s built-in best practices whenever possible. Reengineering processes around the core NetSuite functionality speeds deployments and saves on implementation costs.

4. Organizational change management. Insufficient user adoption is a common barrier to realizing the full value of an ERP investment. Too often, companies under-invest in training, communication, and support. Managing the people side of a NetSuite implementation is key to ensuring efficient uptake of the new system. Applying effective organizational change strategies promotes higher data quality, improved productivity, and reduced need for expensive support resources over the long run.

5. Utilization of native platform tools. NetSuite’s SuiteCloud platform provides a rich toolset of “no code” to “pro code” options for tailoring and extending the system. Point-and-click SuiteFlow allows non-technical users to automate custom workflows and approval routing. SuiteBuilder enables citizen developers to design custom forms, fields, and tables without raw code. And SuiteScript empowers experienced developers to create complex custom applications and integrations that look and perform like native NetSuite functionality. Companies should harness these powerful tools to meet unique needs without breaking the bank on third-party add-ons.

6. Rigorous integration strategy. While NetSuite’s unified architecture eliminates many integration headaches, larger enterprises inevitably need to connect the ERP system with other key applications. Integrations are notorious cost culprits in IT projects. Define a clear integration strategy upfront with NetSuite-native tools as the default. Maximize the use of SuiteTalk SOAP/REST web services for real-time communication with external systems. Leverage built-in connectors for common third-party applications like Salesforce and Shopify. Only turn to point-to-point integrations when absolutely necessary to minimize ongoing maintenance.

7. Governance and oversight. One of the benefits of NetSuite’s cloud model is enabling distributed management of the system. The business units closest to the requirements can take control of their own needs. However, this delegated administration approach demands strong governance to prevent chaos. Implement rigorous usage and data standards to keep NetSuite relevant and accurate as a single source of truth. Establish cross-functional steering committees to roadmap the ERP development aligned with evolving organizational goals. Strong management practices keep the focus on value-added activities that generate return on the NetSuite investment.

8. Continuous improvement. Just as NetSuite issues regular upgrades, companies must apply a mindset of continuous improvement to their ERP system. Best practices for the finance function implemented this year may not suit next year’s supply chain processes. Post-implementation is not the end of the ERP journey. Regularly re-evaluate how NetSuite is being used based on changing business conditions. Assess the costs and benefits of newly-released modules. Continual refinement maximizes the long-term value of the cloud deployment and controls total cost.

Real-World Results: NetSuite Cost Savings Case Studies

The positive impact of NetSuite’s cloud architecture on the bottom line can be seen through numerous customer success stories:

1. EcoBox: This supplier of moving equipment saved $150,000 per year in IT costs and accelerated financial close processes by 20% after switching from QuickBooks and other disparate applications to NetSuite.

2. Lindemann Chimney: By replacing an on-premises enterprise system with NetSuite, the manufacturer reduced IT costs by more than 50% and redeployed those savings to fund two strategic positions in the company.

3. Kiva: The microfinance non-profit standardized financial management for its 20 field offices in 80 countries on NetSuite’s cloud platform. This single global instance saved hundreds of thousands in IT infrastructure and personnel costs compared to on-premises options.

4. Imagine Learning: The educational software company tripled its revenue and expanded its customer base tenfold, all without adding finance headcount by running on NetSuite. The cloud solution’s scalability enabled rapid growth while controlling back-office costs.

5. Qsource Networks: This provider of global connectivity for scientific research saved $1.5 million in implementation costs and $75,000 per year in licensing by choosing NetSuite over an on-premises ERP. The subscription model accommodated seasonal spikes in transaction volumes without huge upfront expense.

Future-Proofing Finance with NetSuite’s Cloud

The business environment is only growing more unpredictable, with disruptions from economic uncertainty to natural disasters to public health crises. Legacy on-premises systems lack the agility to adapt to rapidly-changing conditions. Cloud solutions like NetSuite are emerging as essential for organizations to remain resilient and competitive.

With its flexible, scalable architecture, NetSuite empowers companies to quickly pivot as market demands shift. Adding new subsidiaries, business models, revenue streams, and product lines is accelerated by the nimbleness of the cloud platform. Netsuite’s twice-yearly upgrades deliver a steady stream of new cutting-edge capabilities, without the pain of traditional on-premises updates.

The cloud also aligns IT spending more closely with actual consumption, providing greater financial predictability. Companies only pay for the resources used, rather than extensive excess capacity. IT teams spend less time “keeping the lights on” and more time partnering with the business on strategic initiatives.

NetSuite’s cloud delivery enables seamless remote work as well. As organizations embrace more distributed workforces, anytime/anywhere access to a single source of company data and standardized processes grows increasingly vital. NetSuite’s cloud model ensures secure, reliable connectivity to core systems, without cumbersome VPN or remote desktop infrastructure.

By future-proofing their business with NetSuite’s cloud ERP, companies can redirect savings to growth initiatives. Whether through organic strategies like new market entry and product development or inorganic tactics like mergers and acquisitions, funds previously earmarked for on-premises system maintenance can now drive expansion and innovation. The IT function transforms from a cost center to a profit driver.

Conclusion

The era of cloud computing has unleashed new possibilities for companies to operate with leaner, more cost-effective IT infrastructures. Gone are the days of siloed departments struggling to integrate fragmented systems and data. Gone are the massive capital investments in depreciating hardware and expensive software licenses. The cloud offers a better way.

As a pioneering provider of cloud ERP, NetSuite has been enabling organizations to significantly reduce their IT costs for over two decades. The unified suite approach avoids the expenses of connecting disparate systems. The SaaS model eliminates onerous spending on servers and data centers. Anytime/anywhere access minimizes network infrastructure requirements for remote workers. Automated and centralized upgrades slash the internal resources needed to maintain the software. And consumption-based billing aligns technology costs with actual usage.

Whether through retiring legacy systems, simplifying the IT landscape, or reducing the burden on in-house staff, NetSuite’s cloud architecture offers extensive opportunities to trim technology spending. More importantly, those savings can be redirected to value-added work that propel the company forward. Business insights gleaned from NetSuite’s real-time, singular data spur continuous improvement. Process automation enabled by NetSuite’s powerful workflows boost employee productivity. Mobile access to NetSuite’s CRM expands sales and service capabilities. And innovative product lines managed through NetSuite’s omnichannel commerce draw in new revenue streams.

The positive financial impact of NetSuite comes from not just lowering IT costs, but optimizing business operations and decision-making across the enterprise. Future-ready organizations run on the efficiency, visibility, and agility enabled by this leading cloud ERP platform. The question is not whether you can afford to switch to NetSuite, but whether you can afford not to.

Don’t let escalating technology costs slowly erode your competitive edge. Partner with an experienced NetSuite provider to start quantifying your potential hard-dollar savings today. With NetSuite at the core, your business will be primed to weather economic headwinds and seize new market opportunities for years to come.