After the shocks of the past few years, every enterprise leader is on high alert for the unexpected. While technology and automation plays a part in supporting this state of readiness for the unpredictable, organizational culture and engagement are even more important, believes Mike Ettling, CEO of Unit4. And he adds another source of uncertainty that many may not have considered — the growth of the BRICS economies. As a native South African, he has been watching this phenomenon closely. He says:
The most significant thing which is shifting the dynamic is the fact that the middle classes in the BRICS are now big enough for BRICS and aligned BRICS countries to trade with each other, and not need the US market or the European market.
The resulting change from a world dominated by a single continent to a more multi-polar global economy has no modern historical precedent. It's an example of the completely uncharted waters businesses increasingly find themselves having to navigate at the moment, he believes:
It's not in people's memory, what happens in that dynamic. I think companies have to prepare — and leaders have to prepare their companies — for anything, whatever the dynamic is. It's getting their people in the mindset of, when things happen, you won't know or have experienced what's happening. So how do you deal with it? How do you cope with it?
The BRICS effect on localization
For Unit4 itself, growth in the BRICS regions has meant a change in how the cloud ERP vendor approaches localization of its products. Professional services organizations (PSOs) make up a significant portion of its customer base, and the two big trends in that industry at the moment are globalization of delivery and a switch from traditional billing to subscription models. These customers are now growing their presence in BRICS countries, as Ettling recounts:
We've seen traditional PSOs, in Germany, France, UK and US, going down a path where they will have more people in BRICS and BRICS-aligned countries, in a year's time, in two years' time. You've seen that in the big players like Accenture and that, but now you're seeing it in a 1,000-person PSO, a 5,000-person PSO, that with technology today and remote working, they can make those shifts incredibly fast and quickly.
This has a knock-on impact on Unit4's product management, both in how localization is rolled out, and also what aspects are prioritized. Whereas localization used to mean having everything in place to file statutory accounts in each country, today the focus is much more on operational reporting and being able to get a global view across different lines of business. He goes on:
It changes the whole way you've got to think about localization in the product. Because localization now, to say, 'Well, I can do everyone in the EU, in the UK and Europe,' when 60% of the workforce is in India and the Philippines, doesn't really help.
But there's also a different shift as well, in how companies are run ... It's all about, how do you run and manage the company, the localization you need to do that. Statutory accounts are secondary, or even tertiary, in terms of the thinking. So long as you can feed the data into some local accountant, they will do the statutory accounts. So there's also a shift in what is localization which is needed, and that we're going through, that we're really focused on at the moment.
We've seen it with our customers, we've seen that we're going to have to redefine what is acceptable localization, because of how companies are run now. When you run a global PSO, I'm not looking for German profitability, or India profitability, I'm looking for profitability in that service offering. It's a whole different way, where your priority over P&L is very different now, compared to 20 years ago. That's a change we're right in the middle of and putting a lot of thought and energy into.
Building a positive outlook
Ettling's advice to other company leaders looking to build resilience is to pay attention to fostering a healthy, positive organizational culture and to invest in skilling up employees not only in terms of technical and professional skills, but also in coping and wellness skills. It's particularly important to maintain the right outlook during difficult times, such as the layoffs and restructuring currently being experienced in the tech industry. He recalls Unit4's own layoffs at one point last year:
I was very conscious in positioning it as part of a three-step plan for this race for success — streamline the business, improve the focus of what you want to do, and then build accelerators to accelerate the business, which could also become mitigators for [if] things got worse ...
Then we did a whole lot of things around investing in people at the same time. So you're taking positive action and you're looking at it in a positive context of success, as opposed to a negative context like, 'Well, we're going to lay off 20% of our workforce.'
From a technology standpoint, he says businesses need to look at how to streamline and automate processes, particularly those that cut across different systems, creating efficiency gaps. This is why Unit4's offering includes process automation tooling and its Industry Mesh integration-as-a-service. This is also able to harness new technologies as they emerge, such as ChatGPT and other generative AI tools. He elaborates:
I would argue that a mid-market customer should be saying, 'Why do I need to buy an ERP plus an RPA, plus, plus, plus? Why can't my ERP do it for me? — which is the approach we've always believed in, which is why we launched smart automation. Our smart automation capabilities really enables all of this, so we can plug in ChatGPT and AI capability into that framework. The framework's there in the core ERP, for that kind of stuff with our mesh technology, to talk to other systems, to listen to other systems, to get triggers, to push events to other systems, all of that's in our platform. So I would argue that in the mid-market, customers should be looking for the ERP, which gives them that sort of capability. Vendors should be having it in the core, in their platform.
Get ahead of ChatGPT
Ettling believes developments in generative AI are likely to have a significant impact on automation efforts, and adds:
That creates an interesting scenario, because you can either take it as cost savings, but I'm more interested in can I for the same cost get 30-40% more output? If I can handle 40% of customer queries more efficiently, if I can produce 40% more features, with the same investment in engineering, that's going to have a major impact on competition that can't do that. So I think there's a massive technology automation opportunity to drive more output from the same dollar with AI technologies now.
He advises business and IT leaders to get in front of generative AI and put the right policies in place as employees start to harness it in their day-to-day routine. He recalls a recent meeting with employees in Lisbon:
Somebody actually stood up and said, could we please have a policy on using ChatGPT? I then asked the question, 'How many of you in the room are using it?' and half the people's hands went up. So people are using it already, just day-to-day to help themselves. Everything from EAs to everyone in the organization.
So companies need to move really fast in terms of putting out basic policy around this. I don't believe ChatGPT is GDPR compliant. If you put some data into ChatGPT, it's gone. That's it. There's no GDPR mechanism to say, 'Oh, that stuff you learned on, please can we have it back?'
We are putting out quick policy around giving people guidelines, 'Yes, if you use it, please don't put any company data in, don't put any client data in,' that kind of thing. Then as you use it internally, build it into processes. You've got to really control that and set up company instances in terms of how it's going to work.
But I think the biggest message I have for companies and leaders is, move fast, because you'll be surprised how many people in the organization are using it already.
Unit4 has made the quest for organizational resilience a core theme of its current marketing, reflecting the uncertainties it sees its customers and prospects grappling with. The ongong shift from the industrial era to a digitally connected economy is one of those epoch-making paradigm shifts that challenges every certainty and creates both massive disruption to the established order but also huge opportunities for those with the presence of mind and the ability to adapt. At diginomica, we talk about being change-ready as a core characteristic of Frictionless Enterprise, our own blueprint for planning an enterprise digital strategy.
The growing power of the BRICS economies is an important but often overlooked dimension of the shifting landscape. From a US or European perspective it may seem far away, but in an increasingly connected global economy, the influence that these markets will have on businesses everywhere is already present and will increasingly be felt.