Unit 4: how to succeed with on-premise and SaaS

Unit 4 may not be a familiar name but it represents the recent rebranding of a global top six vendor better known for its Agresso and CODA financials products. Three years ago, Unit 4 acquired CODA which, at the time had started to develop Coda2Go, a SaaS accounting solution built on the Force.com platform. That product is now known as FinancialForce. It is my understanding that part of CODA's attraction to Unit 4 was the fact the company had the beginnings of a SaaS solution.

At the time, I thought it was a brave move for a company much better known for its on-premise solutions and its success in government and public sector offerings. Unlike other vendors that either get hammered because of perceived failure or the fear of cannibalizing the business model, Unit 4 has not had to manage investor concerns. Instead, they have been able to limit their development exposure by hitching their wagon to the Force.com platform. That allows them to concentrate on building functionality rather than having to spend time and effort creating the SaaS infrastructure that is usually required.

You can argue that has its weaknesses. For instance, the company is dependent on Salesforce.com's fortunes. However, given that Salesforce.com seems to be assured on its future - at least for the time being - that should be less of a concern than it might appear. On the flip side, having a large Salesforce.com customer base to attack provides Financialforce with a substantial and ready made pool of potential customers. While Unit 4 has not been immune to the economic downturn it is continuing to invest in SaaS having recently opened an office in San Mateo.

Earlier this week, I met with Chris Ouwinga, the company's CEO and asked him to explain the rationale behind the decision to make SaaS investments. In the above video Chris explains that he sees it as a low cost method of entering a market. He believes that aligning the company to Salesforce.com allows Financialforce to gain something of a head start in not only marketing into the US but also as a pathway to learning how to deploy cost effective services for its on-premise solutions.

I also met with Anwen Robinson, the company's UK CEO. In that discussion, she explained how the company has developed a business model that allows it to sell effectively into strategic accounts such that Unit 4 can offer solutions that meet the needs of different parts of the organization. That might mean for example that Unit 4 sells a site license without the requirement to have named users where the price changes depending on how much is deployed.

She also explained that having Financialforce allows them to cross sell into parts of an organization that do not need a large on-premise solution but which are content to take a SaaS offering. That is what happened at The Telegraph, a large UK media organization that has both Agresso and Financialforce. Anwen added that Agresso and Financialforce are being integrated so that customers avoid the problem of SaaS islands of information in smaller business units.

In another discussion with Ton Dobbe, Unit 4 VP product marketing I learned that the fundamentals of the SaaS model are not new to the company. When he started with the company in 1991, it offered a rental option. "We have been here before so this is not something that surprises us," he said.

Unit 4's financials are due out next Tuesday. It will be interesting to see what impact SaaS development has had on the results and, more broadly, how the company has responded to the downturn. In the first nine months, it recorded its first revenue decline in the company's 30 year history.

I shall be producing a second video where Anwen expands on this topic in the comping days. Next week I will be moderating a customer panel session that showcases The Telegraph story and which expands on why SaaS is important to Unit 4.

Disclosure: Unit 4 met my travel and expenses. FinancialForce is a sponsor to my personal weblog. Agresso has been a past client.