Social media strategy and ERP-commerce explained.BoxFreeIT caught up with NetSuite CEO Zach Nelson at the inaugural user conference held in San Francisco in mid-May. In this edited transcript, Nelson discussed the background thinking that lead to NetSuite’s social media strategy and his evolutionary idea for e-commerce.
BoxFreeIT: A lot of people were interested in the behind-the-scenes story with Yammer. In particular what NetSuite’s position is with social media and its partners – who it uses for what.
You got up and talked about SuiteSocial and it looked great and the date for that is Q3, but then Qontext got up the next day and showed all this integration that you can do with NetSuite right now, and it seemed to be quite heavily committed on that front.
There was quite a lot of discussion as to why Yammer had got the go-ahead instead of Qontext, and some confusion too.
Why did you choose Yammer and how do you explain NetSuite’s position on social media in general?
<!–:sh–>Zach Nelson:<!–sh:–> I’m really excited about what we’re doing in social media. We actually have spent a lot of time, probably the last year thinking about social media. Even before that I felt that social media was going to have a major impact on business but the company as a whole really began thinking about it a year ago.
SuiteSocial was originally our own – effectively what you saw in Qontext but built by NetSuite, so we sort of did a prototype within NetSuite and began to experiment with that. And then we went to the marketplace as well. And as we went through that we realised a couple of things.
The first conclusion was that there was no way that NetSuite was going to pick the winner in what was ultimately going to be the social tool of engagement. Especially in larger companies because they use lots of different systems.
In general a system of record like NetSuite is so different from a system of engagement like Yammer that we just felt we needed to think of a different strategy than owning the whole strategy ourselves – having both systems, if you will. Which is a big thing for NetSuite because NetSuite’s strategy is to build everything. For us to say that we’re not going to build, that is actually a very big strategic decision for us.
So then we said, since we’re not going to pick the winner in the system of engagement world how are we going to work with many winners? There are many different ways to apply these social tools in the enterprise. That’s when we came up with the idea for SuiteSocial – let’s enable any system of engagement because there may be new systems of engagement beyond Yammer some day, right?
Let’s enable any system of engagement to be able to bring NetSuite records in as a part of the social infrastructure of that company. So that’s great, let’s take a look of that. Obviously you want to partner with the biggest guy in the marketplace from a media standpoint and that’s Yammer if you look at their penetration, number of users, and so on.
Then we go the Yammer product and we’re like, Oh yeah, we would never have built this. There is no way that we could have built a fully functional social media client the way Yammer has done it. So we thought, number one we made the right decision, this is a very different beast and so this socialisation of our media is a great strategy. That’s how we connected with Yammer. Then Qontext came to us.
BoxFreeIT: After Yammer?
Nelson: Around the same time Qontext came to us. They wanted to put social media in the system of record, they want to have contextual data within it. And so great, that also works with our strategy. You’ll meet a lot of mid-size companies (NetSuite customers) where the system of record everybody uses NetSuite. In a lot of our customers in Australia a social tool like Qontext makes tons of sense, because they don’t need two systems.
BoxFreeIT: To clarify – mid-size companies tend to have a higher percentage of users on NetSuite?
Nelson: Yes. They are using it for ERP and CRM, so basically everyone is transacting on the record. In that context it would make great sense to have the social media system within the NetSuite application. And that’s exactly where an application like Qontext applies.
In the larger context, in the Fortune 80 and large companies, not every user has a log in to NetSuite and so there’s no way that NetSuite is going to be a social UI (user interface) for them. They will use something like Yammer.
I think the fact that you saw two solutions is exactly our strategy. There are going to be many social tools in the enterprise. Some of those social tools like Qontext will be perfect for our mid-size customers who use Netsuite everywhere. Some of those opportunities like using SuiteSocial with Yammer are great for using social media with NetSuite everywhere but still want to see that data as part of the social discussion in the company.
So I think what you saw – I’m sorry it was confusing – but it really is our strategy, that is to socialise the data within NetSuite, whether that’s to another tool or to a tool that’s built into NetSuite itself.
BoxFreeIT: And just to clarify – you built a prototype of SuiteSocial that was pretty much Qontext?
Nelson: Yeah. No, it was very limited functionality. It was basically the ability to send messages around and that sort of stuff. I think I talked about it when I was in Australia, I said we were going to have something like SuiteSocial and at that time it was our own social client and then the strategy changed from there to become ‘let the enterprise pick the winner’.
BoxFreeIT: So having separate applications is more of a nod to enterprises that are more likely to have separate applications than integrated?
Nelson: Right, exactly. For smaller guys, the Qontext stuff is fantastic, it’s built right in. It will be a great functional fit.
And again let’s face it, in terms of social media in the enterprise we are at version 1.0. This stuff is going to evolve radically over the next decade and it’s really hard to predict where it’s going to go but I think we’ve got a great strategy for the many directions it could go.
BoxFreeIT: I had one question from one of the analysts, whether Yammer has filters?
Nelson: That’s the beautiful thing when you look at Yammer, and (Yammer CEO) David (Sacks) talked a little bit about it. It has all the corporate features you need in a product like that. The ability to store the records so you can audit them later for whatever purposes.
The filtering, I don’t know what that was exactly relating to, but David talked a little bit about what he’s going to be doing next with the NetSuite feed and other business feeds. That’s his thing, he’s going to be opening it to other business feeds which is fine by me.
A NetSuite record and a group of NetSuite records will create a significant amount of social activity because there is a lot of stuff happening. The next step that David will have to do with Yammer is to filter that, have an intelligent algorithm that says these activities are important to me, these activities aren’t, so elevate these activities to my home Yammer page and keep these back in the activity stream. So there’s going to be a lot of evolution of the the filtering of the feed that is going to come.
But what I heard at the conference, when I showed the admin console for NetSuite the ability to say here are the things that I want to see about these records, I’ve been told even that capability far outstrips what Chatter can do today. So what NetSuite is doing with SuiteSocial and the ability to filter data coming out of SuiteSocial into Yammer I think that will be another place that’s going to be important.
And you saw that by subscriptions is a way to filter at least
e source what’s being put into Yammer, and then Yammer will put another layer of filtering on top of that to say ‘you really want to know about this’, promote that to the MyFeeds page instead of it having it be in a separate activity stream page which is where they had it today.
BoxFreeIT: So Yammer doesn’t actually have filters today?
Nelson: No. Next week they are doing a big announcement on their API. Their API is a very cool thing, you’ll be really interested in what that is. But keep your eye on the news for that.
BoxFreeIT: ERP-commerce as a development of e-commerce is something you touched on and I really wanted to hear more about it. With e-commerce there are companies of all sizes doing it. When you add ERP to the equation most people think that’s mid-size or larger. What do you mean by ERP-commerce and does that apply to every little e-commerce company?
Nelson: It really does. We always say we replace something when we sell NetSuite. But the one market where we tend to be brought in at the first sale is e-commerce companies. It’s because e-commerce is the ultimate real time application. When a customer comes to your website and they buy something, you want to make sure that it’s in the inventory, you want to make sure they’re getting the right thing, it’s the ultimate real-time transaction experience.
If that’s not intimately connected with your actual system of record you’re not going to deliver a very good customer experience. You will be sending emails saying, I thought it was in stock but it’s not in stock.
The minute you start having that experience with a website you never go back. So e-commerce has always been one of those applications that always requires an application like NetSuite. What I say by ERP-commerce is the notion that prior to NetSuite you had to build this funky little side system to do the e-commerce capability.
Because none of these ERP systems had any understanding that the internet existed, you couldn’t expose your system of record to the web. You had to build a separate ancillary system and when you did that you couldn’t synchronize the data between the systems, all the complexity with that.
Now when you have a business system like NetSuite – let’s not call it an ERP system, let’s call it a business system, because the CRM aspects are as important as the ERP when you look at e-commerce – when you have a business system which is seamlessly integrated with the internet there’s no reason to have a separate system.
You just put a thing called a website as a user interface to your ERP system and suddenly they are transacting directly in your operational system. And that’s – it’s going to kill it.
It’s going to be the next generation of e-commerce. Particularly because of all sorts of new user interfaces that people want to transact through. It’s not just your website, they want to do business on Facebook.
I always look at these flash sales sites and I’m like, why wouldn’t they just turn their Facebook fan page into their own flash sales site and just sell stuff there? That’s going to start happening.
You’re going to have mobile devices, you’re going to have a user interface on that but you want it to go to the same business system. So I’m very excited. We already do fantastically well in e-commerce today but I just think it’s going to get bigger and bigger as people understand how important this is.
Disclosure: Sholto Macpherson travelled to the NetSuite conference SuiteWorld as a guest of NetSuite.