When we help our clients define their digital strategies and evaluate potential technology options for their digital transformations, Salesforce and Netsuite are two of the most common options that we evaluate. This is partially because they have such a large market share in the space and also because they're relatively flexible products that provide a lot of capabilities that many businesses want to see. However, many organizations aren't sure how these two products compare to one another or what criteria they should use when comparing them.
What we want to do today is talk about a comparison between Salesforce and Netsuite, including some of the similarities and differences between these two products. It's worth noting that my team and I at Third Stage Consulting are not affiliated with either of these software vendors; we're completely independent and agnostic. Therefore, this comparison is meant to provide an independent view of how these two systems compared to one another.
Before we dive into the differences between these two products, it's helpful to first talk about the similarities between these two solutions. Part of the reason why so many organizations end up comparing these two solutions head to head is because there are a lot of similarities. First and foremost, they're both SaaS-based, cloud-based solutions, and they were built for the cloud to be multi-tenant cloud solutions. In other words, while many software vendors in the marketplace today are migrating their old technologies from on-premise systems to the cloud, both NetSuite and Salesforce were built for the cloud. The decades of R&D and functionality enhancements that these two companies have made over the last couple of decades are still intact, whereas a lot of the incumbent software vendors in the space are playing catch-up, trying to migrate their on-premise solutions to the cloud.
Another similarity is the fact that both systems have built an ecosystem of third-party developers and bolt-on applications that can support the core applications. Finally, another commonality between these two solutions is the pricing model. Generally speaking, the SaaS and subscription pricing model of these two solutions are similar when you compare similar scopes and functionality. But, as we'll discuss throughout this article, there are some distinct differences between scope and functionality that might present somewhat of a difference in cost. But if you're comparing apples to apples, generally speaking, your per user per month sort of fee is going to be very similar for similar capabilities.
It's worth diving into what some of the differences are between these two solutions. One of the core fundamental differences between Salesforce and NetSuite is the fact that Salesforce was built originally to be a CRM or a customer relationship management type of solution. In other words, it was meant to help automate sales activities and help provide better pipeline management and help manage territories and commissions and things of that nature. So, at its core, Salesforce is a CRM system. But as I'll talk about here in a moment, it also does a lot more than just CRM. On the flip side, NetSuite was built primarily as a financial and accounting-based system. So, its strength as a core solution is really your basic ERP types of functionality related to financial recording, financial reporting, accounting, GL, and even dashboards, metrics, and reporting. Those are some of the strengths of NetSuite. So, two very distinct differences: the solutions were ultimately built from different strengths, or they started from different origins. Over time, both products have expanded the functionality to become broader and deeper in a number of different areas, and we'll talk about some of those differences throughout this video as well.
One of the most compelling differences between these two products is that one of them was built to be an application, while the other one was built to be more of a platform. It has become more of a platform, and let me explain what that means. So, let's start with NetSuite. NetSuite is an application; it's an ERP system that does financial management, accounting, inventory management, reporting, warehouse management, retail point-of-sale, and other such capabilities provided by an application.
Salesforce, on the other hand, has built a core CRM system, and what they've done is they've also built a platform, though it's called theforce.com platform. This platform allows third-party developers to take the Salesforce system and essentially customize the software to meet different needs, different industries, and different functions. For example, you have FinancialForce that does financial and accounting management, and you have Rootstock that does manufacturing capabilities within the Salesforce platform. These are just two examples of third-party applications that were developed on the force.com platform that bolt nicely onto the Salesforce CRM core application. But it allows a lot of flexibility and a lot of innovation that perhaps other providers aren't able to provide.
The key here is to evaluate these two options against your business needs and requirements. Just know that when you're evaluating Salesforce, you might look at Salesforce CRM, but you might also be looking at third-party bolt-ons that help complete the picture and provide more comparable functionality across the entire enterprise that NetSuite is able to provide out of the box. And then one last caveat on the platform discussion with Salesforce is that when you have third-party bolt-ons, that just puts more pressure on you as an IT organization to be able to integrate and make sure that these solutions tie together, the data is flowing the way it should be, and that you have cybersecurity tightened up. So it does create some additional technical complexity. But if that Salesforce ecosystem provides greater functionality and capability than NetSuite might out of the box, then perhaps Salesforce is the way to go.
One last note I'll make about NetSuite is that they are moving in the direction of providing more of an ecosystem or more of a platform-based approach by encouraging others to develop products and bolt-ons that can tie into the NetSuite core application. So I suspect that over time, this might be somewhat of a neutralized comparison point. But for the time being, Salesforce has more of the platform focus with third-party developers, whereas NetSuite focuses more on providing out-of-the-box capabilities.
Now, flexibility is another consideration for a lot of organizations. In addition to evaluating the systems against their own business requirements and functional needs, organizations will commonly look at how flexible these products are. Will these products be able to keep up as our business changes in the future? Both products are fairly flexible, but I would say that Salesforce has an advantage in that it provides more flexibility for a couple of reasons. One is the comments I made a moment ago about the overall platform of Salesforce. Because there are different third-party developers constantly innovating and providing new capabilities and functions within the Force platform, that provides a certain amount of flexibility that allows you to grow into the system in different directions and ways than you might need right now.
The other reason that Salesforce provides more flexibility is that it's built to be more extensively configured than Netsuite. In other words, we have Salesforce developers and technical types that can configure and even customize the software in ways that Netsuite typically can't. Now, to be clear, you can configure and personalize Netsuite, but it's somewhat limited when you compare the ability to customize the software for your needs. You're somewhat limited with Netsuite when you compare it to Salesforce. However, even though that's a strength of Salesforce, that could actually be a weakness of Salesforce if you're looking for standard business processes, repeatable business processes, vanilla off-the-shelf processes. Then Netsuite gives you more to work with there because it's a little bit more standardized in the way it works off the shelf and out of the box. So it really comes down to what's important to you. If flexibility is more important, then Salesforce might have a slight edge. But if you're looking for standardization and common business processes, then Netsuite might have the edge as well.
Defining the right set of implementation expectations around time, cost, and resources is one of the biggest challenges with digital transformations in general, not only for Salesforce and NetSuite but for any other sort of technology implementation. However, we find that NetSuite implementations typically have more trouble in terms of not having realistic implementation expectations. Part of this is because NetSuite sells an idea called "Sweet Success," which they sell as a methodology. But I would argue that it's just an idea or a utopian vision that typically doesn't happen. The reason for that is because Sweet Success is meant to be an accelerated way of implementing technology. But the problem with technology deployments is that it's not just about the technology; it's also about implementing process improvements and making sure that people can ultimately use those new processes and technologies. While Suite Success does potentially speed up the technical deployment of NetSuite, it does not speed up or create cost optimization for the overall implementation because the hard part of implementation is really related to the people and process sides of things. For that reason, a lot of times customers of NetSuite go in with unrealistic expectations of what an implementation is going to cost.
Salesforce has similar issues, but for different reasons. Implementation expectations are typically not set well with Salesforce implementations, but more because of the complexity of deploying these different applications within the force.com platform. So it creates a whole host of additional challenges or different challenges than what you experience with NetSuite because now you have to worry about integration, architecture, data flow, and things of that nature that you may not have to worry about as much with the NetSuite implementation. In both cases, you are going to struggle with implementation expectations and making sure you have realistic expectations. But just note that it's worth understanding what the differences are between the reasons for those implementation expectation differences.
In this video, I talked about Salesforce and Netsuite as binary options in your digital transformation, but I have a third option for you - the best of breed option. This option essentially means deploying both systems, which may sound crazy at first, but many organizations do it because the systems have distinct strengths and differences. In many cases, they find that the two systems combined can complete the picture of what they are looking for and better address their business needs, requirements, and functionality needs.
Typically, this approach involves using Netsuite as your core ERP system that manages your financials, accounting, inventory management, and other related tasks. You may use Salesforce for more sales and customer service-related business processes and functions, specifically more of the customer-facing side of things. Keep in mind that it's not just CRM - there are other customer-facing technologies within the Force platform. Using the example of Rootstock from before, Rootstock is a manufacturing system built on the Salesforce platform. Sometimes, manufacturers will say they want the Rootstock Salesforce solution but want to bolt that onto the Netsuite finance and accounting system. This is largely because the strength of Netsuite is in accounting, financial management, and inventory management, some of the core ERP capabilities. On the other hand, third-party systems on the Salesforce side, like Rootstock, provide additional breadth of capabilities in the manufacturing space.
I hope this comparison or starting point comparison has provided you with a good understanding of how these two systems compare. Ultimately, which system or which option is best for you depends on your business needs, priorities, and overall strategy and direction.
If you are looking to strategize an upcoming transformation or are looking at selecting an ERP system, we would love to give you some insights. Please contact me for more information eric.kimberling@thirdstage-consulting.com
