NetSuite Teams With Informatica To Sync ERP - InformationWeek

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3/3/2011
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NetSuite Teams With Informatica To Sync ERP

Customers want low-cost ERP at the subsidiary level. Cloud-based integration keeps satellite, two-tier deployments in sync with headquarters.

NetSuite and Informatica announced this week that they have partnered to deliver a cloud-computing-based approach to deploying two-tier ERP systems.

In two-tiered deployments, customers stick with incumbent on-premise ERP systems at headquarters while opting for lower-cost alternatives at divisions and subsidiaries. The incumbent at HQ is typically SAP or Oracle, but many customers of these applications giants are actively moving or considering moving away from using their expensive flagship ERP systems throughout the company, according to report by analyst Ray Wang of Constellation Research.

In a tracking survey conducted over the last two years, Wang found that interest in two-tier ERP has steadily risen from 21% of IT leaders in third quarter of 2009 to 32% in the first quarter of 2010 and 48% in the first quarter of 2011 (in all three polls, Wang surveyed more than 200 executives). The expense of traditional software was the number-one reason executives said they were considering a two-tier approach, followed by specialized needs at the subsidiary level.

Microsoft, with its Dynamics ERP portfolio, and NetSuite, which delivers ERP in a software- as-a-service (Saas) approach, have both actively promoted two-tier deployment, and Wang says it's a strategy that's working.

"When you do a cost-per-user calculation, a lot of companies are realizing it doesn't make any sense to strive for a single-instance deployment, particularly when customization and localization are required at the subsidiary level," Wang explains. Single-instance does make sense, he says, when companies are highly centralized and have homogonous needs that "don't pull them in a dozen different directions."

NetSuite says its OneWorld ERP is used in two-tier deployments not only for cost reasons but because its SaaS-based ERP application can be deployed more quickly and easily than conventional on-premise software.

The key wrinkle in two-tier deployment is integration, but that's where Informatica comes in. As the industry's largest independent data-integration vendor, Informatica brings to the partnership its cloud-based data integration options, which include data-integration services, a cloud integration platform, and a cloud edition of its flagship PowerCenter software.

Relying on the clout of the Informatica brand, NetSuite is seeking to assure customers that they can count on consistent and reliable data migration and data synchronization from divisional and subsidiary "spoke" deployments and the "hub" ERP system at headquarters.

SAP, for one, has taken note of the two-tier trend. In fact, it says demand from customers led it to hasten the introduction of a financial integration option for its SaaS-based Business ByDesign suite. The integration will enable subsidiaries running ByDesign to sync financial data with conventional SAP ERP deployments.

How do Business ByDesign and NetSuite stack up against each other as a second-tier ERP alternative?

"They are fairly close in pricing, with the suite prices running somewhere between $100 and $150 per user," Wang said.

NetSuite executives counter that while OneWorld is already proven in hundreds of two-tier deployments, SAP's ByDesign option is hardly out of the gate.

"I have yet to hear of a global Business ByDesign deployment, whereas NetSuite OneWorld is proven in global consolidation and subsidiary management," said Paul Turner, a senior director at NetSuite.

NetSuite ERP is $99 per user, per month, plus a $2,000 per-month fee for the OneWorld module. Informatica cloud platform services costs are additional and are said to provide rapid integration between NetSuite and SAP, Oracle, JD Edwards, PeopleSoft, salesforce.com, and a variety of other ERP systems.

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