What is NetSuite – Licensing, Versions and Editions

NetSuite licensing is one of those things that can be quite complex.  There are multiple versions of NetSuite, multiple editions, bundles that can be added on to the system both from NetSuite and from third party vendors, modules that can be added to the system, entire third party software bolt-ons and add-ons, user licenses, and more, so all of this leads to some complexity in figuring out what price you pay or will pay for the system overall.  Below I will break out what each piece of the puzzle is and hopefully shed some light on how NetSuite is licensed.  In another article that I hope to publish soon I will list the base pricing.

Version:  Because NetSuite is a “software as a service” offering that is hosted, and because all of the back end maintenance is done by NetSuite for you, the version of the system that you run will always be the latest version.  These versions are simply their releases of software; for example as I am writing this article the current version is 2014.1, which means that it is the first (of two) releases that NetSuite will do in the 2014 year.  My company was upgraded to 2014.1 from 2013.2 in March of 2014, and the upgrade happened automatically without us having to really do much at all.  Actually we did have a lot of testing to do and had to make sure that our customizations would work in the newest version, however we did not have to actually do any part of the upgrade.  These version upgrades are free, and are NetSuite’s way to make sure all of their customers are running on the most recent code base.  This makes it easier for them to support their customers in the long run since they only have to support the latest version of the software.  Actually though the rollout of the software is staggered with not all customers receiving the updates at the same time.  This allows NetSuite to use certain customers, who have selected to be included early on, as their beta customers.  This is of course after they have done extensive internal testing of the software.  The end result of all of this though is that you do not pay based on the version of NetSuite you use, nor do you have any control of the version.

Editions:  NetSuite currently comes in three editions.  Those editions are CRM (Customer Relationship Management), Standard, and OneWorld.  The CRM edition of NetSuite is tailored toward companies who would like to use NetSuite to manage customer relationships and perform functionality similar to what can be done in Salesforce.  This edition is the most limited of the three, and is designed to be an entry point to the system for sales and marketing.  As such it cannot perform most accounting functions which has generally been a strong use of NetSuite, however it comes at a lower price point than the standard edition.  The Standard edition of is the middle of the road system and is what most companies typically implement.  Standard edition has almost all of the functionality of the system, including strong accounting support, inventory management, CRM functionality and includes everything that the lower CRM edition contains.  The only real limitation of the standard edition is the ability to use multiple subsidiaries.  OneWorld is the largest edition of NetSuite and is typically used for companies who own other companies who will also use NetSuite and companies who deal with many out of country transactions or operations since the out of country transactions and/or operations will typically be booked to a different subsidiary.  OneWorld includes everything that is in Standard and CRM and is billed similarly to Standard, however you are also charged per subsidiary, thought he cost for each subsidiary typically does not carry too much sticker shock.  There are significant price differences between the CRM and Standard versions and slight differences between the Standard and OneWorld versions of NetSuite

Levels:  NetSuite has three software levels, though they often call what I am calling their software level an edition, it is different from the edition listed above.  Basically these three levels are Small Business, Mid-Market and Enterprise.  These really have more to do with how you work with NetSuite the company after the product is installed.  Small business is typically for companies from 1 to about 15 employees, and NetSuite for their part does not really pursue this market as aggressively as they did in the early versions of the software.  Mid-Market is the version that most businesses use, and is tailored for the 15 to about 1000 person organizations.  Beyond this you have the Enterprise level which is tailored for the 1000+ person organization.  These levels mostly affect how you interact with the NetSuite company itself, what types of interactions you have and support you can get, and of course how aggressively you can negotiate with them over licensing costs.

Modules:  Modules are one way to extend the functionality of NetSuite, and there are quite a few of these.  As of this writing the list of modules include (Advanced Billing, Advanced Financials, Advanced Inventory, Advanced Procurement, Advanced Project Accounting, Charge Based Billing, Custom Checkout Domain, Dedicated Sandbox, Dedicated Server, Demand Planning, EBay, Electronic File/Software Distribution, Incentive Compensation, Issue Management, Job Costing, Light Manufacturing, Manufacturing Work In Process, Multi-Book Accounting, NetSuite Ltd for JCurve, ODBC, Payroll, Payroll Service, Resource Allocations, Revenue Recognition, Send Purchase Card Data, Shared Sandbox, Shipping, Site Builder, Site Builder Analytics, SuiteCommerce Advanced, SuiteCommerce Multi-Site, System Status and Two-Factor Authentication).  Obviously this is a long list of modules, and while I may later write an article about them, and even an article about each of them, I will not be going into detail here.  Each of these modules though represents an extra cost, though they are not all needed for every company and you can mix and match as you need.  Typically when scoping out a NetSuite implementation you will actually be given a few of these modules for free based on your business model and what you will need to implement NetSuite successfully.  All of these modules have a cost to turn on, but for most of them that cost is independent of how many users you have in NetSuite.  So for example if you want to turn on Job Costing it does not matter if you have 20 users or 2,000 users, the cost is the same and all users gain access to the feature.

Bundles:  In addition to all of the modules you can enable in NetSuite there are also a number of bundles (also known as Suite Apps) that you can install.  These bundles extend NetSuite’s functionality in a similar manner to the modules that you can install, however whereas the modules are all written, maintained and deployed by NetSuite, in addition to being either directly in the code base or closely tied to it, the bundles are not.  Some modules are written by NetSuite, however many more are written by external companies.  Some of the modules are free, whereas some have a licensing cost.  NetSuite actually has a division of their company called Suite Labs that produces a number of interesting bundles that are free and offer some really cool and business worthy features.  As of the time of this writing there are over 4,000 bundles available, however most of them are highly specialized and have very few users.  There are only 5 bundles with over 1,000 company installs, and only about 60 that have over 100 installs.  This is odd, since bundles aren’t that new, however they are an area that many people (NetSuite Administrators included) do not really use that often.

Third Party Applications:  There are many add-ons, bolt-ons, or third party apps that connect directly to NetSuite.  In fact a whole cottage industry has sprung up to fill the void in key areas where NetSuite has lacking functionality.  While in general I think most people would agree it is disheartening to hear that the software you have or are looking at has areas where functionality that is lacking, general purpose software that is built to run almost any type of business is bound to be huge and it would not be possible, or even desirable, for one company to write one piece of software that does this for everyone perfectly; this is where those areas come into play.  Add-ons, bolt-ons and third party apps really refer to pretty much the same thing and the terms are synonymous and used interchangeably.  Because this software is made by a third party, the pricing and licensing for the software and the way the pricing and licensing is calculated varies greatly.  For the most common functions there are generally several provides that can fill in the gaps, however for some more specialized items there may be only one provider available.  I recommend browsing through the list of vendors that have attended the latest SuiteWorld conference to get a listing of what is available; however there are some vendors that do not attend that convention.  As a side note I would also say that I believe that SuiteWorld offers a tremendous value for those companies that run NetSuite, I have also been to it several times.

User Licensing:  For each user you want to have log into NetSuite you must have a NetSuite user license.  There are basically two types of user licenses, a full (or standard) user and an employee center user.  They serve different purposes and have different costs.  A full user license is what you will need for most people who use NetSuite for their day to day work, for example your accounting staff, your sales reps, your support reps, and the like.  If you have employee data in NetSuite such as payroll and would like to give your employees view access to that data or have employees who need only basic functionality such as entering time and expense reports in NetSuite, then the license type you will want is the employee center license.  Without any discounts each full user license is about $100 a month and a pack of five (they are only sold in packs of five) employee center licenses is also about $100 a month.  If you run an ecommerce store, or offer a support portal, then the people who purchase from you or log support cases with you are also technically users, however there is a different type of licensing model that they fall under, and there is not really a cost to you other than the cost for the support portal or the ecommerce site.

Sandboxes:  Sandboxes are NetSuite’s test environments, and if you are going to be doing any type of customization in NetSuite you will need a sandbox, and if you are going to be doing a lot of customization using development teams you may need more than one sandbox.  Sandboxes are priced based off of your current NetSuite pricing and are figured at 15% (per sandbox) of the cost of your NetSuite license.  When using a sandbox you can be sure that all that you do only affects that environment, meaning that if you corrupt all of your data you simply request a refresh of the sandbox from production or it’s origination point, and you are back in business.  For most companies a single sandbox will suffice, however some reasons you may need more than one sandbox include needing to have a development and QA environment, or needing to have an internal sandbox with all the data in it and an external sandbox with the data scrubbed that can be used by an outsourced development team, among the many other reasons.  As a final note sandboxes come with 12 refreshes per year, however more can be purchased.

Suite Cloud Developer Network: If you have a large enough development team or are developing applications that will be sold to other businesses you may be interested in joining the SuiteCloud Developer Network or SDN.  There are several levels of access available for the SDN.  The lowest level is the community edition which provides a single, nonproduction license to the NetSuite product for free.  I would actually encourage every NetSuite administrator who will be doing anything more than just the most basic tasks, such as creating users and managing permissions, to go out and signup for one of these free accounts; whether you have a sandbox or not, it is a great tool to use for both learning NetSuite, including developing for NetSuite, and to use for testing what you plan to deploy or use in a production environment.  Beyond the community account, there are select and premier account levels, though these are typically for very large companies, or companies who will be developing software for the NetSuite platform as part of their revenue generating activities.  You do get some cool benefits from joining such as longer term access to the NetSuite roadmap and access to partner only materials, but the programs are really not designed for everyone, and if your goal is to just run your business on NetSuite then you probably do not need either of the two for pay services.  My recommendation would be to search NetSuite’s website for “SDN” or “Suite Cloud Developer Network” if you want to learn more about these developer programs.

Billable Components:  There are a number of other places where charges can begin to stack up for the software and one of these is in the billable components section of the NetSuite product itself.  NetSuite is not designed as an all you can eat buffet, actually it is closer to an a la cart type setup.  For example you can send email from NetSuite using campaigns, which allows you to automate some of your marketing, and while the standard licensing provides you with over a hundred thousand emails per year, if you do a lot of email marketing it is not hard to burn through all of these.  Other examples of billable components are your file cabinet storage size and your database size.  The following is a full list of all of the items that make up the billable components as of this writing: (Advanced Partner Center, Bill Payment, Bulk Merge Email Volume, Campaign Email Volume, Direct Deposit, EFT, Employee Center, File Cabinet Size (MB), Full Access User, Integration Units, Offline Client User, QuickBooks Upload, Retail User, Sandbox Refreshes Count, Secure Customer Domain, Site Builder Site Count, Subsidiary Count, Suite Cloud Plus License, SuiteCommerce Advanced Site Count, Total Storage Size (MB), Two-Factor Authentication User, Web Order, Web Store Item, eBay Order Import).  While some of these may not be important to you now and maybe never will be, it is at least important to know that NetSuite does bill based on how much you use the system, which is actually a good thing since it makes it more fair to everyone on a shared system, and for the most part, most of these components are not that pricy, but it is still good to know they are there.

Localizations:  There are multiple localizations of NetSuite that your business can use based on what country it is located in, however these typically do not change the cost of the system.

Discounts:  NetSuite’s base prices are rather high, however discounts are available, but are based on your ability to negotiate.  Unfortunately your ability to tell or know what constitutes a good discount can be rather limited since the contract that you sign with NetSuite will prevent you from disclosing your discount, and so will every other companies contract.  This means that when no matter who you talk to, they are really not allowed to disclose the discount rate they received when purchasing NetSuite.  One real world recommendation I can make is to be sure you are looking at several other solutions while you are looking at NetSuite.  NetSuite want’s your business, make them earn it and make them work for it, and if you cannot get to a discount you want then be willing to walk away.  As much as I like NetSuite I will be the first to admit they are not the only game in town, though they will try to say they are, and will continually talk down about their competition; companies such as Workday and Sales force with their financial force module, offer very competitive offerings.

Contract and Terms:  NetSuite is pretty good about how they do their contracts for service.  After you sign a contract with them and have implemented the system you will no doubt at some point need to add additional licenses for the system.  The additional licenses can be user licenses or modules or pretty much anything else.  NetSuite for their part however does prorate all that you order during your contract, and all add-ons are coterminous so they all renew at the same time, the date your NetSuite contract renews.