With ERPx on deck, new Unit4 North America President John Gregitis talks modern ERP, the power of verticals, and customer focus in pandemic times
- Will Unit4's new ERPx platform team take North America by storm? That's certainly the plan of Unit4's expanded leadership team. But how will older Unit4 customers respond? What will the go-to-market look like? And why the subvertical focus? That's a meaty topic list for Unit4's John Gregitis.
Some enterprise shakers-and-movers consider ERP a boring topic. I couldn't disagree more. Yes, ten years ago, the state of ERP was a yawner compared to the rise of SaaS in CRM, HCM, and more.
Even five years ago, the ERP market was a fairly boring place, loaded with incumbent ERP vendors trying to pass off lift-and-shift, hosted solutions as "cloud."
Now it's changed. We have modern ERP vendors with no on-premise install base. And for those ERP vendors that do have on-premise customers, most of them now have a cloud story at least worthy of inspection - and an industry play to dig into.
Add Unit4 to that mix. The forty-year-old, Netherlands-based ERP player always had an underrated story, without the viral attempts at shock value marketing we've seen other ERP players attempt. But the Unit4 narrative took a defining twist in April 2019, with Mike Ettling's hire as CEO. Ettling, no stranger to multi-tenant SaaS, was intent on turning Unit4 into a "true cloud company."
As my colleague Phil Wainewright reported in his interview with Ettling one month after hire, being a true cloud business is much more than Unit4's microservices ERP architecture. He quotes Ettling:
How you run a cloud company is quite fundamentally different to how you run an on-premise software company — things like community, how you let your customers engage, how you do customer success management, how you do professional services.
Last fall, Unit4 announced ERPx, a major new version of its software. Now close to the ERPx launch, Unit4 is adding notable leaders to drive their cloudy ERP ambitions. First, it was former Google Cloud and SAP SuccessFactors exec Dmitri Krakovsky. Why Unit4 and why now? For Krakovksy, it's his belief that we are entering a generational shift in enterprise software. That means a chance to build an ERP architecture that even the SaaS ERP upstarts of five to ten years ago didn't have. As Krakovsky told Wainewright:
It was always kind of gnawing at me that the next cycle is starting now ... Machine learning, microservices, the world of APIs, [were] broadly evolving the sort of composable components, where things just kind of appear/disappear on the fly. In terms of UI, digital assistants, voice, natural language, blah, blah, blah ...
All of these things were not a part of the toolset when SuccessFactors or Salesforce or Workday, whatever, started. It's just not how things were put together at the time. And so the broad thought of, 'If I were to do an ERP now, I would do it very differently from how we did it before,' was always a little bit in my head.
What does it take to do ERP differently?
If you're going to create a different kind of ERP, you need a different go-to-market also. That's especially true for Unit4 in North America - a region where Unit4 has been quietly successful in its industries-of-choice, but not nearly as visible as in Europe. Enter the next big Unit4 hire, new North America President John Gregitis. His past stints include time at Infor and Adobe. So when I got Gregitis in the interview chair, that's where we started: why Unit4, and why now? As Gregitis told me:
I got to know Mike Etling through a mutual friend first. I'm incredibly intrigued by Mike's vision for where he wants to take Unit4. Most of my career has been with strong North American technology companies that expanded over to Europe. This is actually the opposite. It's a strong European technology company that wants to come to my backyard in North America. So what I do for a living, this is kind of my sport - scaling technology businesses in North America.
Gregitis said the Unit4 executive team Ettling has built is another draw:
I have a tremendous amount of respect for Mike and what he's done in his career. I see this as an opportunity of a lifetime.
But is Unit4 serious about North America? Gregitis cites the expanded leadership presence as a proof point:
One Unit4 executive used to reside in North America; now six of us do. So there's clearly a movement towards bringing this to a more global company with footprints in APAC, North America and obviously Europe.
Since his hire, Gregitis has immersed himself in talks with Unit4's North American customers. He intrigued me by his description of a cult-like customer following. Let's face it, you don't hear that often in ERP. Gregitis:
The genuine nature of our concern for our customers is unlike any company I've been with. Every client, every vendor has customer care, customer service, etc... But I've never seen such a genuine concern for the success of customers as I've seen here in Unit4.
Gregitis contrasts that with a "harshness" that can emanate from Silicon Valley:
I do think that's part of our European heritage. We're a company founded in an area where there's a very, I would say, gentle, but a deep concern. Again, as we go up and down Silicon Valley, where there's a harshness, sometimes, to enterprise software companies that doesn't exist in Unit4... We're not just driving by for an order or an upgrade or for, "Hey, you're up for renewal." We really are genuinely concerned for the goodness that our products can bring.
Gregitis pointed out something else: in the industries Unit4 serves, you better come through. These organizations are dedicated to service; they don't have deep pockets to endure ERP project missteps. Gregitis:
The industries we serve, nonprofits, health care and education, these are not industries that are brimming with funds that can be wasted on projects. So there's also a high priority in being efficient. And we are one of the most efficient companies in the ERP space I've ever seen... I think that really resonates.
ERPx launch - will it appeal to old school Unit4 customers?
No matter how fabulous your next-gen ERP is, if you have an on-prem install base, a chunk of them are going to be resistant. For some, it's because your current software is doing what they need. For others, their transformation plans are focused elsewhere. Resistance to change - we all have it. So how does Gregitis intend to address this?
Obviously, in every customer conversation I have, I measure the reception we've had to ERPx. Don't forget, you're talking to a sales guy, so you have to buffer that a little bit, but it's been phenomenal.
We have a portfolio of clients that are rolling out ERPx now, as our first wave. And we're in dialogue today with each and every customer about that journey. Some are ready to jump in. Some want to take a step approach. But I can share with you that every one of them is eager to hear the story, the vision and the journey to ultimately getting to ERPx.
When your own customers are ready to let go of their on-prem customizations, and embrace a different model, that's a good sign. That's what Gregitis sees:
[Most of the Unit4 customers I talk to] see that multi-tenancy and that ERPx architecture is part of their future. The thick, heavy customizations of the past - they don't want to be part of their future.
No surprise: the pandemic has shaken things up.
As this pandemic has taught us, when you challenge people, when you challenge operations, when you challenge customers to operate in a different model, it's amazing how nimble and adaptive they can be.
Gregitis noted that all new Unit4 deals are ERPx conversations. So how will Gregitis and his team go to market in the U.S.? Short answer: verticals, baby, verticals. Or, make that subverticals:
We're modeling out these subverticals, if you will. Our approach to industry models, our approach to workflows, our approach to understanding the pains and challenges of these industries - it's much more important than actually the technology itself.
Gregitis says his team has prioritized about six subverticals for their North American push - "and then scale from there." For each one, they want to have the right combination of functionality, expertise, and service partners in place:
We want to have domain expertise; we want to have the right consultants with the right partners. For example, banking, or healthcare or other next-generation subverticals.
Gregitis declined to specify the exact subverticals his team will target first. Fair enough - it wouldn't be interesting to cover a company that didn't reserve some mystery for us to ferret out.
Many cloud ERP companies speak in terms of next-gen architectures these days - "intelligent" platforms, multi-tenancy, workflow automation, low code and such. Alas, some still use glossy language to cloud-wash legacy architectures. Or they talk of "private cloud" solutions even your grandmother wouldn't host.
I tend to believe, however, that in the longer view, modern ERP architecture will be table stakes, a requirement for vendors to compete. Will Unit4 be able to stay out in front of that? Perhaps - if they pursue their microservices-based automation plans with vigor (only a handful of ERP vendors are talking microservices right now). I won't detail that technology here; the recent Unit4 pieces on diginomica (linked above) do a good job of laying that out.
If ERP vendors don't ultimately win based on modern architecture, then how will they excel? I believe the ERP winners circle of the future will be all about vertical niches. That means providing software that not only runs your back office, but your industry software - without undue functionality compromises when you move from your proprietary industry software. With the industry software silo eradicated, you can really get serious about automating processes, pulling analytics, and layering AI and collaboration tools on top of that. You can hardly call that kind of ERP "back office." It's now your business backbone. But pulling that off also means assembling advisory, services partners, customer success teams, and, eventually, user communities around each subvertical. That combination just doesn't exist in many industries and microverticals today.
That strikes me as pretty close to what Unit4 intends to do - including Gregitis and his North American team. I'll be eager to see what unfolds. Sounds like Gregitis is ready to roll:
As we become a very service-based economy, and you look at where we are focusing, on this underserved slice of the services world, I think you're going to hear great things about Unit4.