Recently, Gartner published a first-of-its-kind analysis on “Cloud Core Financial Management Suites” as part of its Magic Quadrant series. In case you aren’t familiar with Gartner’s Magic Quadrant it’s a series of market research reports that demonstrate market trends, direction maturity and participating vendors.
The report, which discussed the market’s shift from traditional on-premises software to cloud-based deployments, examined solutions that offer core financial management suites targeting midsize, large and global enterprises (Annual Revenue: $50 Million – $5 Billion), including the core functional areas of:
- General Ledger (GL)
- Accounts Payable (AP)
- Accounts Receivable (AR)
- Fixed Assets (FA)
- Project Costing
- Project Accounting
- Project Billing
Gartner’s definition of Core Financial Management Suites also included financial analytics and reporting and basic indirect purchasing functionality. Although it was noted that many systems do include a broader set of features, Gartner focused exclusively on financial capabilities for this analysis.
The Market Shift for Cloud-Based Financial Management Management Software
Gartner described the conditions of the market as having “been static for many years,” but also that in the past 12-18 months “cloud core financial management suite have matured to such an extent that they have disrupted this static market.” This was attributed to the increased adoption of postmodern ERP strategies. Gartner explained “Postmodern ERP is that deconstruction of suite-centric, monolithic, on-premises ERP deployments into loosely coupled applications, some of which can be domain suites (such as core financials or HCM) or smaller-footprint applications that are integrated as needed.
In other words, businesses are moving their financial systems to the cloud at breakneck speeds!
Given this “market reality,” as Gartner puts it, the report focused only on those core financial management suites that are sold and marketed on a stand-alone basis and delivered as cloud services. These include those solutions that are “born in the cloud,” “New Generation” solutions, existing solutions that have been re-architected as cloud solutions, as well as existing solutions delivered as public cloud SaaS.
NetSuite Recognized as a “Challenger” in Cloud Core Financial Management Suites
Gartner classified NetSuite as a “challenger,” which it can be described as “A vendor in the Challengers quadrant participates in the market and executes well enough to be a serious threat to vendors in the Leaders quadrant. They have strong products, as well as sufficiently credible market position and resources to sustain continued growth. Financial viability is not an issue for vendors in the Challengers quadrant, but they lack the size and influence of vendors in the Leaders quadrant.”
NetSuites recognition in the Magic Quadrant as a challenger demonstrates its ability to compete and win both in the Mid-market and Enterprise space. The report states “NetSuite is a Challenger in this market because it has a strong cloud service record, good financial functionality, and cloud services that are open and extensible. With this being said, the recent acquisition by Oracle will no doubt reposition its customer focus primarily to the Small and Mid-Market space while leaving the Enterprise space prime hunting grounds for Oracle Cloud Financials.
Gartner also highlighted the following NetSuite strengths:
- NetSuite has a proven track record as a vendor of cloud services.
- NetSuite’s partner program is extensive, allowing for enhanced customer support.
- Financial management capabilities are highly functional and include the ability to manage multinational operations.
- Recognized by NetSuite customers for “ease of use and flexibility,” which is said to improve financial processes as a result of moving to the cloud.
- Expanding international capabilities present potential to expand business in EMEA and Asia/Pacific
One of the cautions by Gartner mentions that NetSuite may be overlooked in a Financials led deals due to its broader ERP Suite focus. I’ve witnessed this scenario first hand when competing against financials only software vendors like Intacct, where the client feels they only need a Financial Management Solution (e.g. QuickBooks Replacement) not a full blown ERP solution. Further, Gartner does suggest that there has ben confusion in the Oracle sales channel especially in the US where NetSuite is being excluded from some financials-led deals by Oracle’s sales team. I can say from first hand experience this is being addressed by better market segmentation and alignment with the various sales channels. With an acquisition of this size these types of things take time to work themselves out.
Gartner’s inclusion of NetSuite in its Magic Quadrant as a “Challenger,” cements its place in the market and reinforces that NetSuite should receive serious consideration to those looking to implement a cloud-based financial management solution, particularly for midsize companies looking for robust financial management capabilities.
This blog post focuses exclusively on Gartner’s review of NetSuite. To read the entire report of all vendors.
