UNIT4, a sleeping giant

UNIT4, a company you've likely never heard of is changing the way it does business. Customers are delighted and they have a solid third party business analytics solutions strategy. This is one to watch.
Written by Dennis Howlett, Contributor

This week I attended UNIT4's UK user conference as a paid speaker. I was more than glad to do so because it gave me the opportunity to help showcase customer success and innovation. The show lived up to my expectations and was one of the best user conferences I've attended in a very long time. I'll explain why later. Anyhoo...UNIT4? Who? What? Keep with me on this one.

Long story short, UNIT4, based out of the Netherlands is an ERP vendor that reported $555 million for 2010. Full year results for 2011 are due out on 22nd February but at the half year, the company reported gross revenue shading $298 million, up 13% year over year. It owns (along with Salesforce.com) FinancialForce which saw revenues more than triple in 2011. More familiar brands like CODA and Agresso are also part of the portfolio. UNIT4 has a significant and growing shared services offering that addresses the needs of public sector organisations that are mandated to reduce costs.

I first came across CODA and Agresso around 1996-7 when they were independent companies. CODA was and remains a pure play financial application designed for massive scale using the single ledger design. At one time they had a single customer running more than 400 organisations. Agresso, which again has its roots in finance but is now a fully fledged ERP system was always built with analytics in mind. In recent years, the company has verticalised its offerings counting media, financial services, retail and public sector as its main markets.

What I didn't know until this week is that in Sweden, they have 150,000 users in 170 separate organisations of which 150 are government bodies, running ERP in a single instance. As far as I know, this is the largest full scale ERP running in this manner.

UNIT4 doesn't see that as anything special because it claims to have been running shared services for customers since 1998. Cloud purists would call that ASP rebooted but in talking to the company's senior management it became clear they see this as an attractive deployment option that gives their customers almost limitless expansion scope. "Customers can deploy any way they want but what is increasingly attractive is our ability to get customers, and especially public sector, onto shared services at a time when they have to cut costs," says Anwen Robinson, UNIT4 UK MD. Is it a winning proposition?

My job at the conference was to publicly speak with customers on this topic because as anyone knows, vendors can say what they wish but it is customers who tell the real stories. I had provided the interviewees with sample questions and conducted a series of short calls to ensure they understood what I was asking but we didn't meet until some 30 minutes before going on stage.

One example of how this works comes from GO:

The programme comprises a range of projects which will introduce shared working across the councils’ finance, HR, procurement and payroll functions.  Sharing services will enable the functions to be provided more efficiently and will therefore generate savings for all of the partners.

Rob Wood, programme manager for GO, explained that the four council initiative has required that all agree common processes, chart of accounts and the like as a pathway to concentrating on the things that matter: "Change of this kind is never easy but once people see that we're eliminating tasks that get in the way of doing things efficiently then they appreciate that they will do a better job."

Jeff Nielsen, Head of Procurement Cooperative at NHS Camden cited savings of £2.7 million in the first year of operating a procurement shared service. He talked about achieving operational savings in the range 20-30% plus an improvement in customer satisfaction of over 200%. That deployment is an award winner and they now have plans to expand this into a commercial offering in its own right.

Ian Coxon, head of transactional services at Xentrall said that despite its service running in the cloud, they have not experienced any security issues and that as the programme expands it brings further reduced cost. "It's quite simple, the more users we bring on board, the lower the cost for everyone."

What struck me in the conversations was the pragmatic nature of the deployments. Each was born out of financial pain yet the results are consistently positive. Over dinner, customer after customer said much the same thing: the way UNIT4 not only addresses functionality but actively helps customers to be successful is something they value highly. As one customer said: "Unlike other vendors, they don't drop off a CD, pick their check and walk away. They're with us the whole journey. That matters when you're embarking on projects that involve the amount of change we're all going through."

If that was the extent to which UNIT4 is a 'good citizen' then there would be plenty to applaud. That alone was enough to keep me smiling as I spoke with customers. But it is also in their approach to macro market changes that the company impresses.

Last December, Brian Sommer reported on the company's approach to business analytics:

The company is taking a PaaS (platform as a service) approach to analytics. In essence, they are building an ecosystem of business intelligence applications (not just a tool or limited application solution).

At the time, the topic piqued my interest given what we have seen going on at SAP. Or rather not going on. As a coherent strategy, they are streets ahead of SAP/Oracle on this topic. For example, they have clear plans how third parties can develop and monetize their offerings. On stage I asked Ms Robinson how that's going to work out for buyers: "Customers can come in and try the solutions, see what works for them but it is only when they deploy that they pay for what they use." Asked how UNIT4 will support a third party development community, the company's product people say they will provide easy access to open APIs. Quite how that will work out remains to be seen but my advice was simple: make it free. Don't charge for that piece of the puzzle. The company says they will be ready to go live with the solution store in the July 2012 timeframe.

Elsewhere, UNIT4 has got rid of the formal role of marketing and sales head. Instead, they have morphed the role into one that emphasizes customer advocacy. "So when you're not making the grade then your customer officer can come back and get things actioned?" I asked. "Absolutely. If we don't do that then we're not delivering the service we claim," said Ms Robinson.

As further evidence of customer engagement, the company reported that 14% of the ideas it receives from customers are either planned or in active development.

But what was especially appealing was the fact the company publicly recognizes its top contributors to the ideas scheme.

Like all vendors, UNIT4 could do better. I'd like to see them take customer advocacy several steps further with additional forums for support and debate to which customers can readily contribute and where transparency of the to and fro between customers and the company is obvious rather than implied. The sense I get is this will happen in large part because the company has to be wedded to customers, especially those in public sector where the financial pain is particularly acute.

Above everything I was struck by the humility of the company's senior management. On stage with Ms Robinson we had Ab van Marion, group COO. His job is to deliver the company's results. He was remarkably frank about what the company has to do as it transitions to a subscription based business model with increased emphasis on cloud services. "We are actively growing our subscription business at double digits but it is only having a small impact on revenues at the moment. We know that's where the market is going over the long term but I don't think anyone can say with certainty how long that transition will take," he said.

As a side note, I saw company staff toting a variety of devices including iPhone, Nokia, BlackBerry and iPad. In a lighter moment I asked van Marion how he is getting with iPhone: "You know I prefer Nokia but it is my kids I have to keep happy," he said with a smile. That was emphasized in his answer to my on stage 'what keeps you awake at night' question: "Of course it would be easy to say what's happening for the next quarter's results but it is the health and happiness of my wife and kids." It is that sort of remark that provides insight into tone at the top, a crucial ingredient in shaping the way a company does business.

At shows like this, any vendor is always going to showcase the best of its customers but try as I might, I struggled to find any who were less than enthusiastic about what UNIT4 is delivering. That is a pretty solid endorsement and, in the end, the only one that matters.

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