Unit4 half year update; looking good but plenty to do

SUMMARY:

Unit4 checked in for an analyst session. They’re making decent progress and yes there are gaps to be filled. But the message is one of pragmatic progress for a customer base interested in modern technologies.

biz results H1 2018 Unit4

 

I recently attended a Unit4 analyst update fielded by Jeremy Roche, Chief Product Officer at Unit4. While there was plenty to be cheerful about, the company recognizes it has significant challenges ahead as it seeks to capitalize on SaaS market momentum while broadening out the solutions portfolio.

As is customary, the company kicked off with a highlights slide (see above.) Two things stand out; the SaaS momentum and vertical market strengths. The verticals are traditional markets for Unit4 but even so, running above 40% and seeing bookings growing around 50%, albeit from a relatively small base, is encouraging, especially since that growth is tied to its two most competitive markets. Interestingly, the company reported that it is

…seeing some of our existing customers stepping up and into the move to the cloud. We’re seeing that driven by a number of things, digital change, digital transformation…in North America, we’ve seen a big take up in higher edcation and we’re now starting to see a fast uptake in professional services. In the UK, we’re seeing higher education, government and prfoessional services as well.

The company shared some of the new logos under non-disclosure, and while I am prohibited from naming names, the list was impressive both in terms of recognition and breadth. That suggests Unit4 can meet the needs of both medium-sized businesses in US terms as well as larger UK customers.

A relatively new moniker among software vendors is the idea that they are building platforms for people. That may sound obvious in a service-centric world, but it is surprising how few vendors understand what this means. Unit4 is endeavoring to distinguish itself by focusing upon the reduction of manual processes such that organizations can concentrate resources upon adding value in their environments. Front and center is Wanda, Unit4’s much talked about robotic capabilities. Today, the company has delivered on five use cases:

  1. HR Assistant
  2. Purchasing Assistant
  3. Time Assistant
  4. Travel Assistant
  5. Approval Assistant

As you can see, these are all internally focused, something we have seen elsewhere among customers who are pursuing RPA initiatives. That approach represents a relatively low-risk way of trying robotic assistants to assess both impact and the learnings that can be gleaned. Unit4 says there is much more on the roadmap, but did not talk about those robotic assistants that might be outwards facing, e.g., chatbots or partner facing assistants.

On the vertical market front, Unit4 has identified how it can best go to market. It mentioned the following sub-verticals, all of which take advantage of core capabilities of the PSA suite and which are subsequently tweaked with vertical-specific functionality.

subvertical unit4

In each of the verticals, Unit4 is looking to use both its acquired technologies and in-house developed AI/assistant capabilities as a way to augment back-office operations with front office and customer-facing service solutions. It is early days, but you can see the general direction. For example, as it relates to integrating Wanda and Student Management, the company said:

We have a solid working prototype of Wanda with Student Management. We are using this to consult with customers on use cases we might include in future releases.

While it is doubtful in my mind whether customers are ready for a dose of AI-infused applications or, for that matter, integrating much by way of third party data sources, the company is keeping options open:

It is already possible to integrate third-party data for predictive forecasting. In 2018 we will do research in the field of using AI/Machine Learning to automatically include and use third-party data for predictive forecasting

On progress with provero, the acquired BI technology, as we expected, the company talked about integration to a variety of reporting and budgeting style applications but for the future, the focus is on:

  • Student Management BI Add-on for student admissions, reporting.
  • PSA Add-On for PSA Suite (BI-tool on top of UBW and PSA data)
  • Risk & Opportunity Management
  • Business World On! BI Add-On

So nothing dramatic there.

My take

The final slide in Unit4’s presentation provided no surprises – it’s all about execution and playing to the company’s identified strengths. This will be familiar territory to Roche given he spent some years building up the FinancialForce market, also with a PSA focus.

While the company does well in the UK, the US is a different market. Here, Unit4 is up against some formidable competitors and especially Workday in the more significant HE transactions. Unit4’s problem has always been about visibility and traction. The two go hand in hand, and following the company’s acceleration inside sub-verticals, solid references will be critical to success in 2018. It’s something of a chicken and egg situation. I would have liked to hear more about go live. We know that winning customers is the easy part, getting them live and then thoroughly adopted inside an organization is altogether different.

Today, the company doesn’t mention CODA, one of the original products upon which Roche cut his teeth and which was swept up in the various Unit4 acquisitions. Instead, the focus is on Business World (aka Agresso) and the cloud/SaaS solutions. In that sense what we’re seeing is another transition, albeit under the cover of private equity ownership.

Overall I like the way Unit4 is approaching the world today. It is operating at a pace that’s sufficiently ahead of customers to keep them interested in innovation without drowning the customer base in buzzword bingo. The use cases for Wanda and AI are pragmatic, something that is often absent from the fantastical slide decks of those who want to appear cool but which, when you scratch the surface, are really doing nothing much more than anyone else.

My one concern rests with the Microsoft relationship. Unit4 takes advantage of the relationship to use Microsoft CRM, integrated to its own offering. Nothing wrong with that except that Microsoft has become a heavy hitter in the SaaS space. Will Microsoft allow Unit4 to split the goodness or will it parachute in its own Dynamics wonks to try steal deals? We cannot know, but right now the story is all about sweetness and light between the two co-opetiers.

Image credit - via Unit4

Disclosure - Unit4 and Workday are premier partners at time of writing

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