Mike Ettling takes the CEO reins at Unit4

Mike Ettling, who was most recently president at SAP SuccessFactors has landed at Unit4 as CEO in succession to Stephan Sieber who remains to assist in the transition. Ettling is the third SAP alum in succession to take on the CEO's job at Unit4. From the blurbs:

Léo Apotheker, Chairman of the Unit4 board, commented: “Mike takes on this leadership role at an extremely important and exciting time for Unit4. There is great momentum within the business evidenced by a 26% growth in Global SaaS revenues for 2018 as we have deepened our focus on people-driven organisations and are expanding our value proposition across multiple key strategic verticals. Mike’s leadership, experience and passion for the application of innovative people-centric business software will be incredibly valuable as Unit4 enters the next phase of its development.

This is a big job with plenty of challenges.

Under Sieber, Unit4 made a steady run at acquisitions designed to strengthen its positioning as a vendor that focuses on people-centric businesses. Prevero in CPM, Assistance PSA, and, most recently intuo for modern talent enablement, were the main catches. During Sieber's tenure, Unit4 continued its pivot towards cloud-based services with Phil Wainewright declaring:

Now that the technology transformation is complete, the hard work begins. As in any digital transformation project, it’s the change management that turns out to be the biggest piece. Unit4 is learning to work with customers in a new manner, delivering early results fast and engaging with them so that they continue to realize value from the relationship — even if that means adding functionality and data from beyond the Unit4 platform.

This next phase in Unit4’s evolution still involves technology but a much bigger part is going to be the engagement model. That may be a larger project that the vendor has currently envisaged, but at least it has made a start and recognized that it means a significant change from how it used to do business.

But you have to wonder if all this is working. Pivoting an on-premises software firm to cloud is far from easy. Apotheker talks about 26% growth but in 2017, the company achieved 38% SaaS bookings growth. According to filings, Unit4 grew UK SaaS revenue in 2017 by 72% but this was off a small base. At the same time, however, on-prem license revenue fell  13%. Net-net, sales fell 4% but gross profit plummeted 27%.

For his part Ettling, with whom I caught up at the end of a very long first day is upbeat.

I've known Advent for a number of years and last summer they asked me to come in and look at Unit4's HCM strategy and a few other things. I saw that the sales processes could be simplified but I also saw that they've made real progress with things like the chatbot which is much more advanced than I thought. They've also done world-class work in microservices but I also  think that as the company says, a focus on people-driven businesses is the right way forward. It is a growing space yet fragmented. That spells opportunity.

My take

This is good news for buyers because you can bet that under Ettling's leadership, the portfolio of available offerings will expand significantly. Ettling is a proven leader with the sort of cloud chops that Unit4 needs now. As we discussed on the call though, there are plenty of challenges ahead. Not least that of brand presence and perception. The most common reaction I get to the name is Unit Who? That's a fixable problem but requires a different marketing mindset. It requires a CMO, which has been noticeably lacking in this case. We will catch up again once he's got his feet under the proverbial table.