Introduction
UNIT4 is going through a radical transformation, yet retaining and building on what makes them a success. The migration to all-cloud going forward is a big step for larger software firms, but UNIT4 is clearly committed to making this happen. And in an ironic twist on the traditional myths of the enterprise software market, they are gaining partners from the consulting sector as they do it.
Last week, the hard-charging Anwen Robinson, President of UNIT4 UK and Ton Dobbe, VP Product Management, who is responsible for the Agresso product line at UNIT4, were here with one of their partners from the UK, Paul Ringham of BT Global Services. These three provided the analyst community an update on their progress at the semi-annual Grape Escape in Boston.
Business Change and What it Means in the Software
Ms. Robinson had some important insights to share that others could (and I suppose UNIT4 hopes they don’t) take a page from. As she told us, “At UNIT4 we are enjoying really good growth and profitability in an economy that is not being kind to many organizations, as you know. But the reality for our customers is that we’ve proven over and over to be a valued partner for helping them to embrace ongoing organizational change, regardless of the form it comes in.” They have something of value that transcends a troubled economy.
We, and they, have been talking about UNIT4’s unique technical architecture that allows business change without radical rip and replace or serious disruptive upgrades, based on their Vita architecture. They shared with us significant research that was done (see Appendix at the end) with 167 companies, comparing SAP Enterprise, Microsoft AX (their major competitors in their EU and UK markets) with UNIT4. They looked at how specific business change, organizational, and/or process change actually occurs and what specific areas of the respective software had to be modified in order to make these changes.
The bottom line: UNIT4 changes were made at the GUI level — end-user-capable modifications that allowed for changes to the workflow, software, and database. In other words, no code changes; whereas SAP and Microsoft mostly required changes at both the GUI and code levels.
What is more, the cost of those changes was not trivial! According to the results of the survey, major business changes can cost, on average, $1.2 million per event, and at the high end, $4.1m. And remember these are change programs, which means that the customer had already bought ERP software and gone live (in this research of 167 companies, that represents a $2.5million initial cost). Then the change occurred and they subsequently needed to make these mega-investments. Of the companies surveyed, 70% had purchased their ERP within the last three years. That means the additional outlay was due to change, not add-on and addition-based expenses due to the desire for more goodies. We certainly know of cases that exceed the $4.1m in expenditures for large enterprises.
We have written a lot about the value of multi-tenant cloud and disruption avoidance, but there is more to it for UNIT4. For UNIT4 this modifiable Vita architecture has been a core to this capability, long before their decision to move to the cloud.
I really encourage buyers of enterprise software to go through the painstaking work of sitting through the deep-dive presentations, demos, and architecture discussions (beyond the ‘how fast can we go live’ discussions), rather than simply looking at screen shots. Having personally sat through the ‘what has to be done behind the curtains’ presentations in order to implement or modify the system with UNIT4, Plex, SAP, NetSuite, SYSPRO, Oracle and many others, I can tell you there are real differences in software. End-users/buyers of software: This is one of the most important business decisions you will make, and it is worthy of your time — and your team’s time — to master the evaluation process, and not just leave it to the advice of third parties. Of course they can help (we do). But I continue to hear war stories about “the consultants told us to use XYZ,” and then the customer is stuck with less than stellar results.
UI Is Not Lipstick on the Pig
UI is more than a pretty face. It is the gateway to the system — but not just a door. UI has been rethought to blend with workflow, analytics, and integration. In fact, modernizing the UI is the hard work being done by most of the ERP market. Read The Face of Things to Come.
We were treated to ‘the demo’ of the new Agresso UI (UNIT4’s ERP system). The demo consisted of mastering specific business changes. One case was the dreaded re-org. Most re-orgs require significant effort and changes to software and data in HR, finance, and the employee’s specific functional modules. The workflows, access accounts, ‘permissions,’ the assets that are attached to them to do their work (such as equipment), and how these roll-up to departments and locations are a real mess to deal with while making the organizational change.
In contrast, UNIT4’s demo showed pulling up the visual org chart and dragging and dropping — GUI only — moving the people to their new departments. Behind the scenes in the data, workflow, etc., everything moves. Not a trivial feat.
The Agresso User Interface is delivered in what UNIT4 calls ‘experience packs.’ This allows for discrete upgrade of individual modules, again making it unnecessary to go through the expense and baggage of buying and having to support more than you need. Experience packs also can blend in the mobile IOS or Android-based interfaces and apps, as required. This is in beta with customers now and will be in general release in October 2013.
Conclusion: Does Cloud Mean No Partners? Rethinking the Myth
Paul Ringham gave us the new thought process for the consulting industry to the government sector in the UK (we hope the US government gets the message on this one). Paul described to us the massive changes underway due to budget cuts that the UK government is making. And with cuts of about 20% being mandated by Prime Minister David Cameron, IT expenses are getting a haircut across government departments. This has meant budgets cuts for new software purchases and also finding solutions that can provide a reduction in the ongoing total cost of ownership (TCO). That means redeployments that reflect that new lower run rate. How about a 70% reduction in TCO? Ringham’s project with UNIT4 brought in ~70% reduction in cost versus other proposals using traditional ERP and their consulting partners.
Now why would consultants want this?
1. Users are catching on to the value of cloud. So to stay in the game, they need to find a way to work with cloud providers.
2. If the total operating cost of the new infrastructure can be much lower, there still is a share for the partner.
3. If this is the new world order, you have to figure out, just as the software companies are doing, how to compete in this new world reality if you want to stay in business.
You can hear/see Anwen’s and Paul’s talks here.
UNIT4’s strategy, overall, is certainly reflecive of the major elements necessary to remain competitive in the ERP market now — UI, cloud, refresh-in- architecture, small bite-size apps, etc. The ERP providers who can master these realities can provide sustaining value and TCO for their customers, as well as remain viable throughout, certainly, this decade.
________________________________
Appendix:
Highlights from UNIT4 sponsored research focuses on the impact of business changes on the ERP installation. In these various research projects of 167 companies, they looked at the most frequent types of changes and the time, cost and disruption of the business. In another study they compare the business change and how easily the software supported these changes. UNIT4 was compared to SAP Enterprise, Microsoft AX (their major competitors in their markets in the EU and UK).
Figure 1 shows the types of changes and the degree of impact on the business.
Figure 2 explores one of those changes, Government Regulatory and Compliance and where the actual changes in the software need to be done.You will note that all changes were made at the GUI level and did not require application/software changes, whereas with AX and SEP Enterprise application changes were required across the board.
In Figure 3 below reorganization and restructure of the business was looked at. Here some changes in application and data are required in UNIT4 and AX, but mostly GUI was sufficient. However SAP Enterprise requires software modifications.
______________________
More on UNIT4:
UNIT4 and Collaboration
ERP Research: ERP Now!
UNIT4’s Multi-platform Offering
To view other articles from this issue of the brief, click here.