Most retailers reach a point at which they need to shift from the enterprise resource planning and back office systems with which they launched their businesses — often, home-grown systems that are patched together over time — to solutions that will streamline current functions and prepare them for future growth. Design Within Reach, the Stamford, Conn.-based purveyor of modern furniture, hit this point several years ago.
The company had been using a homegrown system built by a company that had since dissolved, says Bethany Kemp, vice president of technology and information systems. The system also lacked an integrated general ledger function. “We knew that it wasn’t a long-term solution,” she says.
Kemp and her colleagues evaluated numerous systems over a period of years and concluded that a cloud solution made the most sense. “Just getting rid of the cumbersome, on-premise data center and hardware was attractive,” she says. “All that time and labor could go into other projects.”
DWR also wanted the ongoing release of new features and scheduled updates a cloud system could provide, Kemp says. The company had previously needed to dedicate internal resources to fix any malfunctions and develop any new capabilities. “We wanted to take advantage of innovations we hadn’t thought of,” she says.
In 2014, DWR selected NetSuite as its core business management platform. NetSuite, a provider of cloud-based financial, ERP and omnichannel commerce suites, counts more than 30,000 companies, organizations and subsidiaries as customers; in July, Oracle announced it was buying NetSuite. DWR uses NetSuite’s core functionality in accounting, inventory and order management, says Branden Jenkins, NetSuite’s general manager of global retail.
Integrating financials
One of the most compelling changes with the move to NetSuite, Kemp says, was the integrated financials and ability to see the impact of transactions in real time. DWR could see how a sale hit the financials, and could easily view data such as updated inventory levels, average costs and margins. “We had real-time visibility to everything going on,” Kemp says. Previously, management had to wait until transactions were exported to the financial system each week to access this information.
Jenkins says the concept behind NetSuite is that it’s a system to run a business, and allows many companies to consolidate disparate IT systems. In addition to streamlining multiple functions and eliminating manual steps, DWR stakeholders are able to “see a single version of the truth — of customers, of orders — with real-time reporting and analytics.”
That real-time visibility across customers, orders and accounting allows retailers to expand their businesses, not only across channels but into new brands and internationally, Jenkins says. “They don’t have to re-deploy and acquire new systems to open a new brand.”
Another benefit of cloud-based systems: Retailers typically can launch them in months, rather than years, as there’s no software requiring installation. Moreover, once a retailer is live with the system, it no longer has to worry about maintaining and updating it.
Implementation
Retailers implementing NetSuite can call upon its catalog of online and in-person training, as well as an extensive help system. Most of the more intense training typically occurs with back-office functions, while sales associates at stores might need “cheat sheets,” Jenkins says.
NetSuite clients don’t have to undertake a complex software installation, and few want to implement every capability and location all at once; Jenkins says many retailers start by consolidating accounting and inventory records, and then add features like point-of-sale and e-commerce capabilities.
DWR did a proof of concept at its outlet center, which runs separately from the company’s primary financial system. This allowed the company to gain a feel for how the system would work. “It gave us an idea of what’s possible,” Kemp says. Next up were the ERP and financials, which went live in May 2015. The rest, including inventory, purchasing and accounts receivable, launched about four months later.
Kemp created a community of “super users,” small groups of employees from different areas within the company to help define the requirements, become experts and train their teams. DWR held numerous sessions with NetSuite’s professional services team to learn what capabilities were possible, compare them to what the retailer was currently doing and then determine the customization it wanted to focus on.
While it doesn’t make sense to stifle employees’ ideas and dreams for the system — after all, NetSuite’s configurability is a selling point — few companies have the resources to jump in with a huge customization effort. Moreover, it doesn’t make sense to customize the system to accommodate processes that aren’t optimal at the outset.
“Start small, build on it and learn the system.”
It helps that NetSuite is able to show the options available, and then let retailers know what they have found to be best practices, Kemp says. “Start small, build on it and learn the system.”
DWR has worked with NetSuite to customize several functions, including the ability to split payments. Given that DWR sells higher-end home furnishings, many customers use more than one method of payment — say, a credit card and cash — to cover their purchases. “We have enough uses that this was a requirement,” Kemp says.
She says that while NetSuite didn’t have as many retail-centric features when the companies began working together, it continues to add them. “The more they invest in retail as a vertical, the more they’ll come out with innovations,” she says.
Visibility and agility
Retailers that move to the cloud can see a range of operational improvements, a 2014 study by SL Associates found. Among other changes, online conversions increased 10 to 35 percent, repeat customer sales improved between 30 and 60 percent and IT support resource costs dropped 30 to 50 percent.
Kemp says that it’s hard to correlate the growth and success of DWR with the new system, as it is changing its business model and replacing many of its original stores, which ranged from about 2,000 and 4,000 square feet, with locations of 10,000 to 20,000 square feet; the larger size allows the locations to better handle DWR’s growing product assortment. As of mid-November, DWR had 34 locations.
“The fewer systems we have to support, the better.”
However, it is possible to quantify several benefits: DWR was able to scale down from two computer systems to one, and from four racks in its data center to three. “The fewer systems we have to support, the better,” Kemp says. The time and effort that used to go to server upkeep now can be put to other uses, for example.
Another benefit has been the productivity jump resulting from the ability to access the NetSuite system from anywhere. “We can safely and securely allow folks to access [it] from home,” Kemp says.
The most compelling benefits, however, are “how quickly we can execute change, implement new features and customize pieces of the system,” she says. “It’s the agility and real-time visibility to what’s going on with the business.”
This article was published in the December 2016 issue of STORES Magazine.