For several years now, business software vendor Unit4 — best known for its Agresso and Coda software products — has used the tagline 'Businesses Living IN Change' to encapsulate the marketplace it addresses — to the extent that it has trademarked the phrase and accompanying acronym, BLINC.
CEO José Duarte was unapologetic for harping on about business change yesterday as he unveiled the company's new year strategy and software release to a group of media and analysts in Amsterdam:
"This is the norm and it's accelerating. As a business you need to be more and more agile as time goes on."
Unit4's recipe for dealing with change is the more widely used acronym SMAC, which stands for what Duarte described as "the four megatrends impacting business:" social, mobile, analytics, cloud.
BLINC is not a bad slogan to characterize Unit4'a target market of organizations in the "upper midmarket" of a raft of service industries — mainly professional services, wholesale and distribution, education and research, and government. BLINC also neatly defines that subset of companies who are ready to buy a new business system. It's only when business conditions demand it that organizations accept the upheaval of changing their ERP system.
The challenge for vendors like Unit4, which is Europe's third largest ERP vendor and in the second half of the top ten globally, is that business agility is not something ERP software has traditionally provided. Duarte highlighted this as a major obstacle for CEOs contemplating change in their businesses:
"The landscape CIOs manage is a landscape that was built to last. It was not built to change ..."
Therefore the vendors themselves have to rearchitect their traditional platforms to enable and support change. This Unit4 now believes it has done with its latest release, which as this excerpt from its forthcoming press statement shows, is packed full of those SMAC buzzwords:
... a comprehensive cloud based ERP suite for people-centric businesses that combines new Social and Mobile technologies with user-led design for a new generation workforce.
In many ways the strategy is just what you'd expect to hear, as parroted by pretty much every established ERP vendor in the past year (I sensed many parallels to Infor's digital revival plan, launched last April). But there are also some distinctive features, not least Unit4's lead investment in the FinancialForce.com joint venture with Salesforce.com.
All this coincides with an ongoing bid by private equity investor Advent International to buy out Unit4's listing on the NYSE Euronext public market in Amsterdam. That deal, valued at 1.17 billion euro ($1.58 billion), is almost done but will not formally close until next month. Full year results are due for publication in the same timeframe, which meant that up-to-date financial information was not on offer this week. For the most recent data, check out Dennis Howlett's review of the Q3 results.
ERP expert Frank Scavo believes the deal, if it goes through as expected, should give Unit4 extra flexibility to deliver on its strategy. Duarte also signaled that, once the deal is finalized, Unit4 intends to seize more of the spotlight than it has traditionally attracted:
"There is an immense level of opportunity for a company like ours to really do something in the market on a global scale ...
"We are a very well unknown brand. We are the industry's best-kept secret."
The new platform, which is generally available to customers from Monday, crosses off most of the checklist you'd look for in a more agile ERP system, although I have to caution that this was a half-day briefing so there was limited opportunity to drill into the technology details:
- The underlying architecture, named Vita, abstracts the application logic into metadata to allow configuration flexibility (see this demo of the Modeller application to see a practical example).
- Customers can set their own timetable for implementing new functionality. Each year sees a new 'milestone' upgrade with new functional releases introduced as 'experience packs' every four months, which customers can implement individually.
- An SOA layer allows for interactions with non-Agresso applications.
- Built-in chat collaboration provides the social angle.
- In-memory analytics run on a dedicated reporting engine.
- There's a big emphasis on the mobile user experience, as highlighted in a specially prepared mobile-first microsite.
- Cloud operation is enabled through a multi-tenant application logic layer working alongside an isolated-tenancy database layer.
Unit4 likes to position itself as a vendor that is already more than 50 percent cloud by revenues, but listen carefully to management and you'll hear that (as Dennis has already observed) the terms cloud, SaaS and subscription are used interchangeably. When I challenged him on this, Duarte made clear that conventional on-premise deployments don't get counted in that total, even if the license is on a subscription basis:
"On-premise software accessed through a browser is not cloud. If it is a cloud thing, it should be hosted somewhere else."
Nevertheless, the 'cloud' total does include managed services such as the large-scale shared services deployment of Agresso for public sector customers in Scandinavia. And of course the Agresso variety of SaaS is a form of client-server SaaS as opposed to the cloud-native alternative represented by FinancialForce.com.
Nevertheless, Unit4 is unique among old-school ERP vendors in its ownership of a cloud-native pureplay in the shape of FinancialForce.com, in which Salesforce.com also has a stake. This has no doubt brought invaluable 'cloud DNA' into Unit4, as well as offering real choice to customers that lean towards one cloud model over another.
FinancialForce.com CEO Jeremy Roche said that there have been occasions where his people have introduced a prospect to the Agresso sales team. As the two teams get to know each other better at company events like this week's launch in Amsterdam, more cross-pollination will result, he said. Duarte added the company would also welcome rivalry between the sales teams:
"We have hardly seen ourselves competing, and that is a problem that means we don't have enough feet on the street — it's a problem we'd like to have."
Inevitably, FinancialForce.com appeals more to companies where CRM is a big part of the customer's activities, said Roche:
"Most of our customers are either mature in their view of the relationship with the customer, or are very rapidly on a journey to get there."
One aspect of FinancialForce.com's customer acquisition strategy that the Agresso product team have taken on board is its tendency to solve one business problem at a time, gaining a foothold in a customer and then expanding its footprint over time. This reduces the length of the sales cycle, said Roche:
"Give me a business problem that you have. I can do it a piece at a time ...
"People change their ERP apps once every ten years. I might be in a retirement home by then. Let's get some value to them, let's get them on a journey."
A final ingredient in the new strategy that is not yet fully fleshed out is a determination to work much more with partners. This has not been a strategic focus in the past, said Duarte:
"The world is a very big place and we're a relatively small company. We're declaring that we're open for business with partners ...
"In the past it has been opportunistic the way we have been doing that. We want to make it strategic."
I wondered where these partners will come from. Duarte suggested Unit4 will be aiming to appeal to a new breed of partners rather than the traditional SIs:
"The big well established players that make billions are going through severe pain with the changes I have alluded to.
"Their business models are being stressed to the limit — like most of the well established enterprise software companies that have come from on-premise. I think they will be laggards in change."
"There is a bunch of challengers that have expressed already interest. I believe the challengers are the ones that will move first. Our expectation is to attract a host of different players that see that the current setup is a setup doomed for failure."
This is particularly true of the FinancialForce.com ecosystem and Duarte acknowledged that Unit4 may need to be more creative on the Agresso side, where hosting is usually done by the partner rather than the vendor taking this on. He said that opens up opportunities to partner with telco or hosting companies, or with partners that will embed the Agresso software in their own customized business service. "Whatever is OEMable we''ll open up to partners," he said.
This was my first close-up encounter with Unit4 although I've known FinancialForce.com since pre-launch. In some ways there was a distinct sense of déjà-vu as Unit4 announced moves that echoed an assortment of its competitors' strategies, from Microsoft and Infor to Duarte's alma mater SAP.
At the same time, the existence of FinancialForce.com as a significant component within the mix means that Unit4 can't turn a blind eye to the cloud-native story. That potentially gives the vendor an edge that rivals don't have (unless you count Oracle CEO Larry Ellison's intimate knowledge of NetSuite's affairs, in which he owns a controlling shareholding).
FinancialForce.com is also important in raising the group's visibility and presence in North America. Its traditional strength is in Europe, which helps give it a more broadly based global footprint than many of its more US-centric peers.
On the other hand there are uncertainties. The picture remains unclear until the transaction with Advent is completed. And I feel unconvinced by the partner strategy, which sounds immature and poorly thought through at this stage.
On the whole, though, the vendor has a positive story and a clear message to a target market that has to update business systems to survive the transition to the digital age. Therefore it's a story to watch with interest as it evolves further during 2014.
Disclosure: FinancialForce.com. Oracle, Salesforce.com and SAP are diginomica premier partners. Unit4 covered my travel expenses to attend yesterday's briefing.
Image credits: Courtesy of Unit4.