Integration is a massive unsolved IT headache for most companies today. No wonder mid-sized businesses are increasingly looking to integrated software platforms to avoid the overhead of connecting across multiple applications. But even then, there are still many edge cases where data and processes sit outside of the core platform. According to research carried out by midmarket ERP vendor Unit4, a typical company spends around a million euro ($1.2m) a year paying for staff to manually transfer data across those gaps. Yesterday it unveiled an alternative — Industry Mesh, an extension to its ERPx platform, which packages up those integrations and delivers them as a service, tailored to the specific needs of people-centric industries. The initial release in January will offer packages tailored for IT and software consulting organizations, with others to follow, including public sector. Dmitri Krakovsky, Chief Product Officer at Unit4, explains the rationale:
A thousand-person company might spend, I don't know, $200,000 a year on an ERP. And then they spend a million dollars a year on people doing stuff manually. It's just bizarre.
Our ... question was, can we take this million and shrink it to like, $50-60,000, or something like that? Can we compress that spend capacity, and [with] software automate this?
In contrast to conventional iPaaS (integration Platform-as-a-Service) solutions, which provide connectors and toolkits but leave the setup and maintenance to their customers, Industry Mesh is an actively managed SaaS offering. Unit4 takes responsibility for providing ready-made integrations and keeping them up-to-date as each application evolves. The offering includes common integrations between third-party applications as well hub-and-spoke connections with Unit4's own platform, hence the term 'mesh'. Tailoring the solution to specific industries is what allows it to take this extra responsibility, says Krakovsky. Whereas an iPaaS provider understands how to connect to the various APIs, it doesn't look into the business content that flows across those connections. Industry Mesh delivers those pre-built data flows, as he explains:
What they don't do is the content that says, if you are an accounting company or business services or IT company, and use CRM, here's how you use it ...
We know what data to get out of what system, and what this data means and how it maps to the data in another system, and in what way — and what kind of data to pass through and what kind of data to leave alone and ignore because it doesn't need to go from one place to another. A lot of that really has to do with content and understanding of the business processes in these specific industries, and what matters to them.
The initial release of Industry Mesh, designed for service- and project-focused businesses, includes a standard set of general data flows. These connect with popular applications such as billing and invoice related flows to Salesforce and Microsoft Dynamics CRM, exchange rate data from Oanda, credit ratings from Dun & Bradstreet, collaboration flows with Slack and Microsoft Teams, and calendar updates with Outlook. In addition, there are many other integrations to automate data flows around commonplace operations such as tax filing, e-invoicing, banking, document management and credit card transactions.
Cost of swivel-chair integration
It's these more mundane but still crucial integrations that often get overlooked or aren't budgeted for around a typical ERP implementation, says Krakovsky. This is especially the case when companies may be operating in several different markets. He explains:
The common example we see all the time is like credit checking, or collections or company data look-up. There's a system that does it in every country, and they're all different ... So at some point, [companies] say, 'Okay, the big ones will connect,' and the little ones, 'We kind of stick our head in the sand' and hope that problem somehow goes away.
The problem obviously doesn't go away. The solution to this problem is, somebody sits down on a Friday afternoon in Norway, and for half an hour does credit check manually in the credit checking system — looks up what's happening there, and he inputs it into some other system.
The cumulative impact of all this swivel-chair integration, the "control-C, control-V middleware" of manual data transfer, is what adds up to that $1 million-plus annual cost found in the Unit4 survey for a typical thousand-employee company — lost productivity not only when transferring the data manually, but also in resolving the inevitable unnoticed errors that creep in. The company's pitch talks up the potential savings from automating these manual processes by instead spending much less on a subscription to its integration service. Krakovsky:
There's a cost of implementation. And there's a cost of friction — friction of doing stuff manually over and over again, in a long tail of these applications.
Changing the economics
Industry Mesh is built on the underlying architecture of the ERPx platform, taking advantage of very granular APIs and a no-code orchestration layer that reduces the work required to create flows and connectors. This changes the economics of building and maintaining potentially thousands of integration flows, which prompted Unit4 to move ahead with the Industry Mesh offering. Krakovsky says:
As we're deciding to go or not to go, that was the question, can we build thousands with the right economics? If you have to write code for thousands, the answer would definitely be 'No'. With this new tooling, now that it takes a few days to create a new flow, we concluded that we can. That's the reason we finally pressed the button and are going for it.
Customers can still substitute their own custom integrations or add extensions if the out-of-the-box integration doesn't meet their needs. "We're not forcing you into this, we're accelerating you into this," says Krakovsky.
By focusing on specific industries, Unit4 can limit the number of variations it has to keep track of in order to keep integrations and data flows up-to-date with changes in APIs, data schemas and needed transformations, across all of the countries its customers operate in. This enables it to offer these integrations just like any another product feature, which Unit4 continues to maintain and evolve throughout the life of the subscription. Krakovsky sums up:
We take the responsibility for implementing it, maintaining it, improving, evolving, adding to it — adding additional flows over time. So to all intents and purposes, it becomes a product feature. Whereas in the past it sat outside in the services realm, we're bringing it into the footprint of a product. [Our] engineering [team] product-develops it, maintains it, adds to it, improves it, and guarantees it's going to work.
This is quite a remarkable proposition from Unit4. While it's fairly routine these days for an enterprise application vendor to offer ready-made connectors and integrations and industry-specific configuration templates, Industry Mesh goes much further. Unit4 is actually offering to take responsibility for making sure those integrations not only work, but also deliver the data flows that matter to the customer's business — and that they will continue doing so throughout the lifetime of the subscription, accommodating inevitable changes in functionality and business need over time. In other words, it's taking the SaaS philosophy of ready-to-run capabilities with ongoing updates and applying it not only to its own software but also to a patchwork of connections to third-party applications and services. That's quite an undertaking.
It's a daring vote of confidence in its own architecture that Unit4 believes it can deliver on this promise and still make a profit. Obviously an important element of keeping this realistic is that the vendor is able to control the scope of the integrations that it takes responsibility for managing, both by limiting the proposition to specific industries and by offering a package of integrations that it has consciously selected. This allows it to achieve economies of scale. Just as a SaaS vendor will only build in functionality to its product that it believes will appeal to multiple customers, so its supported integrations will be those with similar appeal. But it clearly intends to listen to customers and accommodate their needs as a group, even down to supporting integrations to country-specific services, an important consideration in the European market and other regions outside of the more homogenous US market.
In summary, then, customers need to carefully check out the package of integrations on offer and see to what extent it's a match for their own circumstances. For some industries, it may be a while before that becomes clear — Unit4 will need to take time to map each industry's specific integration and data flow landscape. But I suspect many businesses of this size will conclude that there's little downside to junking their own collection of homegrown integrations (and manual workarounds) for one that's curated by a vendor of Unit4's size and market reach. Particularly if Unit4 is able to make its pitch to the CIO's colleagues on the company's board and drive home its message about the business cost of all those clunky workarounds.
When I spoke to Mike Ettling, Unit4's CEO, the other week, he spoke about a value proposition of "if you buy our ERP, you don't have to buy all this other stuff." At the time, I hadn't grasped just how much of that 'other stuff' the vendor was planning to displace. We'll be looking to see the first proof points of how well Industry Mesh is fulfilling its promise, because this could set a new standard for midmarket cloud ERP platforms that will leave other vendors playing catch-up.
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