Mike Ettling, CEO Unit4 used the start of Experience4U event to launch ERPx, the company's take on modern ERP for mid-market service organizations that are people centric. In tandem, Unit4 announced extensions to its partner program that help fill essential white spaces in supporting regulatory requirements such as sales taxes and routines like order to cash (OTC.) What's it all about?
Launching a new ERP in 2020 sounds counterintuitive. After all, there's very little, if anything about debits and credits that would qualify an organization as a special snowflake.
But very much in the mold of firms like Xero, which 10 years ago redefined bookkeeping and accounting for SMEs, Unit4 is hoping to do similar for the mid-market. It has a fair shot because this is both an underserved and highly fragmented market that arguably has seen little real innovation for 15 plus years. NetSuite will argue that its platform-based cloud offerings stand out as differentiated - true - but the underpinnings are largely unchanged since it was first launched in the 2000-1 timeframe. Microsoft will argue that Dynamics makes the same promise but again, at its heart is an old architecture that while extensible isn't so different from its original product. Unit4's ap[proach is multi-dimensional, covering changes in its approach to technology, partners and delivery.
Unit4 is in the last stages of re-engineering its core ERP, HCM and FP&A to run in a fully integrated manner. The idea is to offer a technology foundation based on a unified architecture that takes advantage of microservices. Critically, Unit4 says customers buying into ERPx won't have to sacrifice the core functionality with which they are familiar while having the flexibility to extend as they see fit. Existing customers already benefit from integrated processes - check this story from Forest Research - but it is the promised ability to consume and create fresh services for a 21st century operating model that are the appeal. Some examples help to understand the scope of what ERPx, due out early next year, is planned to provide:
Hiring new candidates often means using many systems for different parts of the process, and it can be difficult to keep track of who should be doing what, and when. Unit4 ERPx can integrate your solutions so the user feels like they are using one system. E.g. after finding and interviewing a new candidate, your hiring manager can generate a new contract, send it electronically for signature and automatically upload the signed contract into the new employee record. This actually happens across three different systems, but your user logs in only once, they access the different solutions from menu links in ERPx. The three solutions are connected using Unit4 extension and integration kit. The ERPx user experience is seamless, more automation means less for the user to do and accessing everything in one place means less frustration and more productivity.
Project sentiment analysis
It is important for project managers to get an honest and clear view of how things really are operating in a project. ERPx can send out a sentiment request to the project team and the customer at certain intervals. The engagement solution will ask relevant questions and collect feedback. Machine learning tools can perform a sentiment analysis on the feedback given and score it. Rather than spending a lot of time gathering feedback, anonymous pulse surveys help the project manager tackle important issues quickly and keep projects running successfully.
To help quickly drive an initial customer opportunity into won business, it is important that an organization's CRM system connects seamlessly with its ERP system. This will make the life of the sales team, as well as a project or account manager much easier and give a much better experience for the client. With ERPx using extensions, the system can automatically detect when a sales lead is far enough along in the sales funnel to need a project to be set up within the ERP. The system then automatically creates a new project with a sales workorder and a clear link to the right account - time savings are real money.
All this comes from Ettling's belief that:
It is our fundamental belief that ERP of the future cannot be one-size-fits-all monolith, industry-agnostic and hard to change. We have to do better.
During the analyst Q&A, I suggested to Ettling that taking this approach, which implies the ability to consume the infinite variety of content that's available to API-enabled applications provides an opportunity to rethink the pricing model. As regular readers will know, pricing is a top of mind issue for buyers. His response:
One of the things we are planning to do, as we roll our ERPx is to bundle implementation of the standard solution into the subscription pricing. So if you implementing a standard, you get it as part of your subscription. And we want to move to a model for professional services where we price the differences. So if you're changing the standard, or you're doing configuration, we'll price the differences as a project. So I think it creates an opportunity, both on the implementation cost and reframing that into much more of a straight subscription model, particularly when it's standard. I think the pay by the drink and much more flexible pricing is absolutely an opportunity. It's something I would absolutely be looking at, it's just the timing we have top consider.
That brings us neatly onto the topic of partners and how Unit4 sees the opportunity and benefit for both partners and customers. As part of the announcements, Unit4 talked about relationships with Avalara for sales tax/VAT compliance, Immedis for global payroll, and Pagero for P2P and O2C automation. These are smart moves since they recognize both the commodity nature yet horrific complexity of these essential ERP elements. Too many vendors look at these functions and mistakenly think they can build them as unique offerings and then discover just how hard it is to build what in reality are essential commodity functions that have global implications. As a corollary, taking the partner approach allows Unit4 to come to the buyer's table with a much more complete and mature solutions set while at the same time expanding its global footprint.
But what of implementation partnerships? In the UK, the company is on the G-Cloud list of recommended providers, an important checkmark for government bodies looking to procure ERP but Unit4 has more expansive ambitions. Here, the company is treading carefully. On the one hand, it is anxious to avoid the 'wild west' nature that characterizes the SAP landscape, on the other hand, it doesn't want to be too restrictive and controlling as is the case elsewhere.
We work in a middle way so if you are a new partner then we actively monitor your first five implementations and help you get through those successfully to ensure customers are satisfied.
In addition, Unit4's ERPx extensions based design enables partners to quickly develop highly localized and specialized functionality which in turn means the ability to reach into micro-market segments becomes a reality that ISVs normally have to weigh up and then often deliver short on the promise.
Reinventing ERP is not only hard but you have to ask whether it's a fool's errand. In this case, Unit4, which has been working on this topic for some years, is making a fundamental break with past thinking in the marketplace. It recognizes where its core strengths lay and where it has a market advantage while at the same time both understanding the commodity nature of back office yet essential functionality. Balancing the interests of partners and customers is always tricky yet Unit4's approach appeals as both inventive yet sufficiently controlling.
I was heartened by the fact that on the analyst call, Unit4 did not restrict itself to talking points coming from its marketers or C-suite representatives but had customers willing to take questions. This is unusual yet speaks to the confidence Unit4 has in its ability to deliver. And while customers had little to say about ERPx, after all delivery is some 6-9 months away, one customer expressed strong interest in the extensions capability as a way of improving ERP processes.
Ettling's extensive background in the people part of the ERP equation is clearly having an impact. It represents a recognition that going forward, vendors need to pay far more attention to this part of not only the expanding use cases that require people to interact with technology but also the potential for infinite consumption.
Balancing the partner equation is never easy yet we are seeing more success stories which both speaks to the value for partners and customers.
The fundamental thinking behind ERPx coupled with both robust pre-existing functions and an extensions story enabled by microservices should play well with customers who want the benefits of customizations but who don't want the accompanying technical debt burden.
All of which adds up to an ambitious play. Now comes the final hurdle - delivery.