At the recently held SuiteWorld18, Oracle+NetSuite’s annual user conference, I was struck by the focus on machine learning, a capability NetSuite promised would be a major part of its upcoming technology.
I’m sure that many of you know about NetSuite, and that it was acquired by Oracle in 2016. For the few who aren’t familiar with NetSuite, it was the first Cloud-based ERP system, and continues to be a major player in that market. More than 7,000 extremely enthusiastic NetSuite employees, customers and potential customers gathered for three days in Las Vegas for SuiteWorld. There were keynotes by most of the senior executives, a short video appearance by Mark Hurd, CEO of Oracle, and for me, several one-on-one meetings with the top brass.
I came away impressed with how NetSuite continues to develop. But one particular thing struck a chord with me — both Jim McGeever and Evan Goldberg, executive vice presidents of the company, mentioned that NetSuite is working on incorporating machine learning, a facet of artificial intelligence (AI), into future releases.
AI is a term that’s been bandied about a lot these days, but the technology is used in a diverse range of applications. We’re all familiar with the assist aspect of AI — “Alexa, turn on the light” or “Hey Google, phone the restaurant and make a reservation for two at eight o’clock.” Granted, having an AI assistant actually interactively make a restaurant reservation is pretty awesome. And having vendors incorporating voice response into the user interface of applications such as accounting and tax is just a matter of a short time.
What interests me more is the analysis side of the AI equation. Most accounting software currently offers at least some modicum of analysis, whether it’s comparing profitability from month to month or year to year, or for a factor such as inventory turnover. AI is able to do more extensive, and deeper, analysis, for example doing a Pareto Analysis of client profitability over the past 60 months. This is a function generally not offered in most accounting applications, through I’ve seen it very occasionally in ERP software. If you’ve never come across the term, the Pareto Principle assumes that 80 percent of results come from 20 percent of the causes. Pareto Analysis is used in business process analysis, but it can also be used to point out which clients are providing the lion’s share of your revenue.
How I see vendors like NetSuite adding value is by providing the ability of their software to do predictive analysis that can aid in decision making. One of the examples demonstrated at SuiteWorld was a stock-out condition where the software analyzed conditions in other warehouses, estimated the costs and time of incorporating stock from another warehouse into the overall shipment, advised the user that it made financial sense and provided the ability to fulfill and not backorder the shipment. To be honest, this isn’t anything that can’t be accomplished by a competent accountant. But providing an application that can sense the condition, then propose a solution, is taking the application a step further than usual.
Even more impressive is incorporating machine learning into the mix. With machine learning, the software watches how a problem is attacked, and builds an algorithm to apply the user’s solution in the event that the situation repeats itself in the future. One application that was discussed briefly during a roundtable was providing NetSuite with the capability to build workflows from an analysis of steps take to accomplish a task. This is something that several ERP systems let you do manually, but having the application analyze your task steps and build a workflow for you is something that, as far as I know, does not yet exist, although NetSuite says that these kinds of features are currently in beta test. In our discussions at SuiteWorld, they declined to say exactly what features are in beta, but that makes sense, as they don’t want to set expectations for a feature that may not make the cut after beta testing.
But this, and other next-gen features, are just around the corner. The technology exists, and it’s a sure bet that you’ll soon see it in applications, not just from NetSuite but from other vendors as well. And when it comes, it’s not going to put the MBAs out of business, but it is going to give the technology-sophisticated user a lot of the analysis and predictive techniques that are taught in stochastic and quantitative analysis courses. And, of course, raise clients’ expectations about the kinds of decision-making they expect their accounting software, and accountants, to be able to provide.