Unit4 rolls out packaged services to help its on-premise customers go cloud in the next 2-3 years

Phil Wainewright Profile picture for user pwainewright November 10, 2023
After saying that it won't support on-premise versions of its software after the end of next year, Unit4 this week revealed more details of how it will help customers complete their cloud migrations.

Unit4 leadership panel - X4U screengrab
Unit4 leadership panel (X4U screengrab)

Following on from telling customers last month that it will stop supporting on-premise implementations of its software at the end of next year, Unit4 this week set out how the ERP vendor plans to help them complete their cloud migrations through a catalog of packaged customer success offerings, which will also be made available for new implementations and ongoing support. Jean de Villiers, Chief Customer Officer, says the Success4U services will break up the migration or implementation process into manageable chunks. Speaking in a briefing with media and analysts, he explains:

It doesn't mean you have to do a big bang, but you're doing a steady journey of small, bite-sized pieces of activity, which take them down that track. We announced on the 17th of October that we're going to end-of-life our on-premise capabilities at the end of December of next year. But we've given our customer base next year and two years following, to be able to execute that journey.

I'll say today, we've not had much resistance at all. The questions that we've had from our customers is, 'Where do I start? How do I go along this journey with you? Give me the roadmap.' That's what we've focused a lot of energy on defining, is those specific roadmaps that give a very structured, step-by-step instruction to move in that direction.

While insisting that no customer will be "left behind" in the process, Unit4's CEO Mike Ettling nevertheless says that it's now time to make the move:

We absolutely feel that, with the momentum we have in terms of going to the cloud, but also the rapid advance of new technologies, things like AI, it's right now for customers to really push into the cloud, because a lot of these new technologies are only going to be available in the cloud, in the future, for customers to avail themselves of.

Landings in the cloud

Customers will not be obliged to move directly to Unit4's flagship cloud-native platform, ERPx. Ettling says they will have a choice of two "landing places" in the cloud, with one alternative allowing more time to prepare for ultimately moving to ERPx:

Obviously ERPx ... is the go-forward, future product and the product where we want everyone to end up on. But we also recognize that it's a journey. We have what we're now calling ERP Continuous Release, which is a stepping and staging place where customers can go to with their customizations. It's [the existing on-premise product] ERP 7 in the cloud, but we're totally going to run it differently, in a more continuous release fashion. There's not going to be version numbers like there was on-premise. When they're in that continuous release product, it gives them an opportunity to clean out customizations, do simplifications and prepare for the next step of going to ERPx.

While Unit4 has a strong focus on the professional services industry, it also has a large number of customers in education, non-profits and public sector. It's the public sector in particular where the target of eliminating all on-premise instances within a two-to-three year window may prove challenging. Ettling concedes:

I would say we'd get the majority in two or three years. And then there will be a minority of stragglers, some local government, mainly in the public sector side, which, because of contractual dynamics, because of data dynamics, may not be able to do that in that timeframe.

Success4U on subscription

The new Success4U offerings will be provided on a subscription basis for all Unit4 products and any additional features as they are added. De Villiers says:

Never again will we release a product capability without the success package that switches it on ... Wherever new capabilities are being released in the platform, we're similarly building success packages that will turn that capability on and, in a quick bite-sized-chunk way, that will drive you to being able to gain value out of those new capabilities really rapidly.

Rather than focusing solely on the technology, the customer success packages will also include change management and governance elements. He elaborates:

If you think about any kind of ERP platform or financial management platform, there are typically three elements that will drive the success or failure of that platform. There's the governance element, there's definitely the organizational change element — and that resistance to change is generally very strong — and then there's the tech element.

Now, software companies traditionally have got very excited about the tech element. The practical reality is, unless you address all three really well, you will not succeed. So that's what we've baked into our service catalog of capability that wraps around these migrations, such that we deal with all three aspects — and provide tailored support for the customers but based on very standardized short, sharp engagements and packages of capability that help them to get there. That's proving very interesting to the customer base that we're trying to serve.

Fixed price and a focus on customer outcomes

Unit4 believes it is breaking new ground with its approach, with a strong focus on customer outcomes as a measure of success, and a determination to productize the service offerings. Ettling says the ultimate goal is to have a fixed price for everything:

The internal holy grail we have is that we want to eliminate billable time as the currency in professional services.

The focus on outcomes will flow through to renewal time too, as de Villiers explains:

Ideally, as we're tracking through this journey with you over time, we're tracking value on a regular basis. So the point where we get to a renewal discussion, we can look back over the two, three, four or five years of your subscription and clearly understand the value that our platform has provided to you. And we can bake that into the business case that you take to your stakeholders to justify why you would renew with Unit4.

The announcements were made at the vendor's X4U virtual event on Wednesday, along with several product enhancements such as self-service absence management, a mobile app with OCR for automated expense claim management, bank integrations, and spend analytics.

My take

Every incumbent ERP vendor has faced the challenge of how to persuade the laggards in their customer base to move to the cloud. For many, their existing on-premise systems have served them well and there's little appetite or capacity to move ahead with all the cost and disruption of a cloud migration. And yet vendors are well aware that the longer their customers stay on older versions, the more they'll lose out on the latest functionality coming out on the cloud, potentially creating an opening for competitors to tempt them away to another platform when they finally take the plunge. There's also a cost to continuing to support these older products.

The problem has been that wielding the big stick of an end-of-life support deadline for the on-premise product isn't something that's going to endear you to customers. You also need to come up with a big carrot to make the prospect more appealing. Unit4 is banking on its innovative customer success catalog becoming a tasty enough carrot to seal the deal. There are certainly some interesting features of how this is being rolled out that deserve more detailed scrutiny, which we look forward to digging into in the coming months.

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