Unit4 Connect - customers don't care about our software

Profile picture for user gonzodaddy By Den Howlett May 9, 2017
Unit4's analysts sessions at its Connect event were revealing of a company that is transitioning in its key markets but which needs to be more aggressive in its marketing.

Stephan Sieber, CEO, Unit4
Stephan Sieber, CEO Unit4

A year into his tenure as CEO at Unit4 and Stephan Sieber presents a disarmingly frank face to a company that is transitioning from on-premise ERP to offering a more expansive, cloud based solution set.

At the company's annual Connect event held in Rotterdam, Sieber and other executives took a full half day to run analyst/media sessions covering strategy, innovation in higher eduction, professional services and CPM. We got to see some cool bot technology aka Wanda, but noticeably absent from the presentations were customers.  For a UK audience, the other missing piece was a focus on public sector, Unit4's most important UK market segment.

On several occasions, Sieber trotted out what at first sounds like a suicidal message:

Customers don't care about our software or technology. They care about the outcomes.

For me, this is a very good message for Unit4's target audience, which is the C-level buyer in the mid-market.

It is an acknowledgment that the relative ubiquity of high technology means that only a modest group of people care about the bits and bytes. In that context, enterprise apps are a bit like the car business. Who cares about the valves in a car engine other than gear heads? In much the same way, who cares about your data architecture other than nerds? Of course if you're running a fleet of cars with not-as-yet-offshored repair facilities then you might care a bit about the moving parts but by and large, you don't.

The flip side of course is that you have to be at the top of your value game. Debits and credits for which every ERP company is known, are so passé that they are almost never spoken about, other than in the hallway to the controller's office, where said controller mentally adds up the trial balance print out. Today, it is all about the manner in which data informs decision making through information delivery.

Here, Unit4 has a good story. I recall first seeing what was then Agresso and yes, at the time, the architecture mattered because what the company had done, which no-one else had figured, was how to build a malleable GL structure upon which you could report across multiple dimensions - all without the need for a separate ETL or set of BI tools. It was heady stuff made more mysterious by the inclusion of weird table header hieroglyphics that only a programmer in the Nordics could have invented.

The difficulty for Agresso/Unit4 was that while the solution was incredibly advanced, the marketing could not keep pace. And in America, while the company achieved a certain level of following among the more enlightened analysts, it could not break out of what looked like a stereotype rut. In some senses that was self evident from last week's discussion around higher education, one of Unit4's main verticals.

Unit4 and HE

While there was plenty of talk about rich functionality and the ability to support student onboarding and student management requirements, the logos Unit4 chose to put up were almost wholly Tier-2 colleges. That's not to say there is anything wrong with the solution. On what we saw, I'm certain it goes head to head with Workday in many key areas.

But the fact remains Workday has come out of nowhere and yanked the HE market from under everyone's noses. A combination of truly modern technology, the ability to scale massively coupled with the halo glow of not just being a cool kid on the block but also having the vital connections inside the HE establishments, is a powerful combination for Workday.

For its part, Unit4 says - and with justification - that the HE market is big enough that it can win handsomely alongside competitors where it targets appropriately. OK - but to do that you need genuine visibility which, in turn, requires clever marketing.

To me, that's a key weakness, as evidenced by the lack of walking, talking customers. What makes this more troubling is that Unit4 says is it is targeting HE organizations that are under pressure or looking for high value student outcomes. Laudable? Absolutely, but is that a market demanding of true innovation or one demanding of cost efficiency? It makes a difference to what is delivered and which can be generally sold across a market.

Unit4 and CPM

In CPM, the picture looks better, as you'd expect of a company that made its bones by concentrating upon the outcome from the GL as I outlined above. Here, Unit4 is attempting to slot itself between the Anaplans, Host and Adaptives of the world and SAP/Oracle hegemony.

It argues that the former group are only doing budgeting, planning and forecasting while the latter are far too expensive and slow moving in the BI space. Yep - I can buy that. But then does the mid-market buyer gravitate to an SAP/Oracle or is it satisfied with Host/Adaptive (and/or Anaplan) with a dose of Tableau/Qlik thrown in for data viz? And then what about my colleague Brian Sommer's favorite hobby horses - big data and IoT? 

Unit4 counters by saying that its recently (July 2016) acquired prevero solution offers customers advanced predictive capabilities in the services industries where Unit4 plays best. Great. But a closer inspection reveals that while successful with more than 4,000 customers, prevero's success is concentrated in the German speaking markets. Unit4 is addressing this quickly with a series of roadshows designed to demonstrate international reach.

I'm good with that but I suspect my U.S. colleagues will remain skeptical. Contrary to what may appear the case, U.S. buyers don't need a lot of political encouragement to adopt a NIH (Not Invented Here?) attitude. In short, forget your inbound sales model. If there ain't sharp suited feet on the street then it doesn't exist in the U.S.

Unit4 and professional services

Moving on, we come to professional services. This is where I see significant potential for Unit4, which has always had a solid footprint in this market segment. The customer list is impressive with names like Grant Thornton, RSM, bravida and ING jumping off the page. The development of end to end processes that go from CRM through PSA and out to ERP  - and then back - in a virtuous circle - is truly remarkable, as are the fine grained project management capabilities. It is easy to forget that Unit4 had the means to assemble recommended skills based project teams long before it became a 'thing.'

Interestingly, Sieber said that customers are asking Unit4 how they can address the contingent workforce scenarios that are starting to spring up. This will be an interesting challenge. On the one hand Unit4 has a history of providing the capability of building teams in self service style. But - can it compete with the Task Rabbit and WorkMarkets of the world who have come along to not only take a crack at Kellys but also provide alternative management opportunities aimed at driving out cost while focusing on skills? Likely Unit4 doesn't need to compete but rather that it should either partner or become a hub in its own right.

Work Market may have some of the limelight at the moment but would I feel comfortable skilling up my next estates or construction project using their recommendation engine rather than looking back to my own historical project success metrics? It's a 'no contest' in my mind provided that Unit4 marketing doesn't get distracted by the shiny new thing.

I raised the question of how Unit4 competes in the context of its sister company FinancialForce having a presence in the same market. Talking with Jeremy Roche, who recently moved over from FinancialForce to Unit4, they claim there is very little cross over and that the companies are largely addressing different segments.

My take

Unit4 is one of those rare beasts that has been quietly and successfully serving both public sector in some markets and services businesses in many others for many years. It is caught in something of a storm as the momentum behind the shift to subscription and cloud based models challenges them on both the technology and marketing fronts. They're getting there at their own pace but need to be more expansive around the hybrid model approach that works for larger mid-market organizations but may be less well received at the smaller end of that market segment.

It is vital that Unit4's marketing brings plenty of willing customers to the table and especially around the new capabilities the firm is enabling. Customers sell to customers and affirm the vendor's position in ways that are impossible for any direct marketing to achieve.

Showing us Wanda was definitely a fun thing and now that Amazon has introduced Show, I can only imagine the excitement among that team as it rethinks processes across numerous functional requirements.