UNIT4: The (Largely) Untold Story - Part 3

Part 1 of this blog post series started with my invitation by UNIT4 (formerly Unit 4 Agresso), the second largest business applications provider in continental Europe, to attend its UK 2010 users conference. Frankly, I was a bit skeptical about what new and exciting I might see and hear about at this event in light of the vendor’s analyst tour in Boston in late 2009.

The post then discussed the recent development that preceded both the UK user conference and the Boston analyst tour (but which was not the topic of either gathering). Namely, in the fall of 2009, UNIT4’s on-demand venture, CODA 2go, evolved into FinancialForce.com, backed by both UNIT4 and Salesforce.com.

Part 2 then focused on FinancialForce.com’s strengths and potential challenges and on its step-sibling CODA-Financials’ recent developments. This final part of the series will present my observations of the recent UNIT4 user conference in the UK. 

So, What Did I See in Wales?

Attending UNIT4’s UK user conference gave me the complete picture of the company. Namely, prior to this opportunity, my knowledge of the vendor was limited to its North American offerings: Agresso Business World (ABW), which has been making inroads in the region of lately, and CODA, which is hardly a major brand in North America.

Conversely, in Europe, and especially in the UK, CODA is a respected financial management and accounting package, with a nearly cult-like following. During the gala dinner (which required black tie attire!), I was seated beside a gentleman that works for a global tourist agency who has been using CODA for nearly 30 years; in fact, CODA was the very first and still current accounting system of record for his company’s central back office.

In addition to retailers (as discussed in Part 2), private service companies with a global reach such as car rental agencies, car dealerships, tourist bureaus, etc. are CODA’s sweet spot. Why? International service companies like AVIS require global financial reporting and consolidation capabilities for their HQ office, while needing to deal with an overwhelming assortment of solutions for their local offices’ operations. Namely, each office might have their locally acquired (if not legacy homegrown) solution for billing, reservations, and so on. (How many global providers of packaged solutions for these esoteric office needs are there in the world? Not many, I guess.)

Now, generally speaking, these companies can (and some do) use SAP and Oracle for corporate finance and accounting. However, neither of these leading enterprise resource planning (ERP) systems is as interoperable as CODA’s LINK architecture. Having always been only a financial package that had to integrate to anything from mainframes to Web services, CODA has interoperability in its DNA, and is typically multiple times cheaper and easier to plug in compared to other alternative offerings.

Some Across-the-pond Cultural Differences

Despite many apparent reasons to brag, UNIT4 European staffers feel uncomfortable with using flamboyant marketing slogans (i.e., BLINC, VITA, Ready4Change, etc.). Conversely, this swagger is a matter of course and a critical success factor in North America.

Possibly the best example of cultural differences across-the-pond would be the company’s recent re-branding initiative that took place in early 2010, slightly preceding the UK user conference. In a nutshell, at the corporate level, Unit 4 Agresso became UNIT4, with all the individual products adding the “UNIT4” prefix to their name (except for FinancialForce.com, due to Salesforce.com’s co-ownership).

Interestingly, not all of UNIT4’s global subsidiaries followed suit, since in North America, the subsidiary’s name changed from Agresso to UNIT4 Agresso (which is a former corporate name--confused yet?). Thus, a number of US-based observers and I were logically perplexed by the point of this name change (that was not even consistent worldwide). Given that the new name was not quite unique (i.e., it represents more of the same old name for 30 years), some observers even went as far as to characterize the event as “a ridiculous waste of money (for no meaningful gain) in a bad economy.”

But my visit to Wales and in person meeting with UNIT4's down-to-earth, no-nonsense CEO Chris Ouwinga helped put everything into prospective. The recent UNIT4 renaming was to espouse a global umbrella brand (a la Infor, Sage, Microsoft Dynamics, Lawson, or Oracle). Sure, the company could have picked some more chic name that is more suggestive of the company’s “Ready4Change” slogan and differentiation mantra.

But again, I am not sure how some unconventional ostentatious name would fly with the folks in the UK and continental Europe. For example, UNIT4 event planners chose  a Welsh male choir for the conference's entertainment main act. Make no mistake, the Pendyrus choir is a great cultural heritage and pride of Wales (after all, I am European by birth and understand the culture that values ethnic heritage and casts a suspicious eye on American flamboyance and marketing gimmicks).

However, the choir volunteer members’ average age is well over the current retirement age in the US, which makes the act difficult to compare (in terms of glamour and showing off) to The Foo Fighters, Train, John Mayer, or Cheryl Crow, to name only a few entertainment highlights that I have witnessed at US vendors’ user conferences.

Also, a tuxedo attire in the US is only required perhaps at some fundraising events and other high-profile red carpet events that are not really accessible to regular Joe’s. Conversely, some UK counterparts have told me that owning a tux is a matter of course in the UK (from the middle class up).

Headquartered in Sliedrecht, the Netherlands UNIT4 was founded in 1980. Today, Unit 4 develops, sells, implements and supports business software for running, managing, and optimizing a wide range of private and public sector organizations across the globe. The company has 3,500 staff in offices across 14 European countries and 5 countries outside Europe, from where it supports about 100,000 customers (and partners) in all regions of the world.

UNIT4 is continental Europe's second largest ERP developer, with the following two major products: Agresso Business World (ABW) and CODA-Financials. The company is publicly traded on the NYSE Euronext Amsterdam stock exchange under the U4AGR ticker symbol.

UNIT4 CEO’s Keynote Summary

"Preparing for the upturn" and "UNIT4: the new beginning..." were the two major themes of the 2010 user conference. In his keynote, Ouwinga pointed out that UNIT4, having become a major global ERP provider, wants to signal strength and security via an unifying brand (UNIT4) to the market and its customers.

UNIT4 aspires to set the global standard for business software that helps dynamic organizations to embrace change simply, quickly, and cost-effectively. Embracing change by being transparent, agile, connected, and results-driven remain the core values both internal to UNIT4 and external to its customers. To that end, existing users of various UNIT4 products are assured of their IT assets future under the UNIT4 stronghold, while the vendor promises to change-enable each of its products without forcing customers to migrate to any particular offering.

UNIT4 CEO certainly leveled with his customers and did not try to embellish the company’s current mixed blessing state of affairs. Namely, “Uncertainty,” “License pressure,” “Managing Costs,” and “Signs of Recovery” were the major bullet points of Ouwinga keynote. Although the vendor outperformed most competitors, UNIT4 revenue decreased in 2009 for the first time ever in its three decades of history and had to cut about 200 people.

There were strong regional differences in 2009 in terms of results. Namely, Spain and the UK were tough markets that significantly declined, whereas North America, Benelux, and Scandinavia did quite well. On a more positive note, more investment and recruitment in R&D is underway at UNIT4 and the CEO re-iterated the company’s ongoing commitment to the CODA product suite.

Ouwinga also observed that the economic uncertainty remains (although government spending is slowly stabilizing), that the recovery of license sales will take time, that the mergers and acquisitions (M&As) market is slowly coming back, and that the company’s software as a service (SaaS) business remains small but is gaining momentum. He explained that he sees FinancialForce.com as a low-cost method of entering the on-demand accounting market.

UNIT4 believes that aligning the company to Salesforce.com allows Financialforce.com to gain a head start not only in marketing into North America but also as a pathway to learning how to deploy cost-effective services for its multiple on-premise solutions. The company is not disclosing the actual number of customers for FinancialForce.com, but it claims to currently have customers in 14 countries including the US, the UK, Australia, New Zealand, Germany, and Italy.

Unit4 CEO's keynote concluded as follows: the company remains viable (i.e., profitable and in terms of positive cash-flow), well-positioned for Businesses Living IN Change (BLINC), and is investing in the future. Dennis Howlett, who is a regular fixture at enterprise applications vendors’ events, wrote about his impressions of the event and the subsequent quarterly financial report by UNIT4 in his recent blog post.

The UK CEO’s Perspective

Anwen Robinson, the UK subsidiary managing director (MD, or CEO in North American terms), followed Ouwinga with the report on the UK market. The company is moving towards a strategic platform focus to bring together its own and partner solutions. The UK subsidiary made 68 new name customers in 2009: 26 from ABW and the rest from CODA-Financials, CODA DreamOCRA, and Agresso QL Students (QLS).

Afterwards, I had a pleasure of meeting with Robinson for a one-on-one meeting. In that discussion, she expressed a modest optimism in light of the private sector's revival (and thus good results from CODA). This thawing of the private sector should compensate for still a sluggish public sector market, especially in the so-called PIGS European countries.

Robinson also explained to me how UNIT4 UK has developed a business model that allows it to meet the specific needs of the Public Sector and with a key emphasis on shared services – a vital initiative in support of the UK Government’s drive to decrease the huge budget deficit. This model effectively  provides a site license based upon size and type of organization (without the requirement to have the named users) and allows other organizations to cost-effectively join, where they all then share increased savings.

FinancialForce.com’s secondary positioning as financial middleware should help UNIT4 gain access to a variety of large enterprise customers interested in a real-time feed of their customer relationship management (CRM) data and transactions into an existing general ledger.

Marrying “Cloud” and “Soil”

To that end, Robinson also explained that having FinancialForce.com in its arsenal allows UNIT4 to cross-sell, in a software plus service manner (discussed on Part 2), into parts of an organization that do not necessarily need the overkill of an on-premise solution but which are content to take an on-demand offering.

That is exactly what recently happened at the Telegraph Media Group, which has selected UNIT4 solutions for use in its media sales department. Namely, FinancialForce Accounting will automate the largely manual invoicing and accounting processes used in this busy department and will integrate with the Group’s existing Salesforce.com CRM solution to give a single view of the Group’s advertising sales and subscription management data.

In addition, FinancialForce Accounting will be producing invoices, creating all the accounting entries and automatically passing them into the Telegraph’s ERP, which happens to be ABW.  An additional advantage of deploying FinancialForce Accounting is that, for the first time, non-financial users of Agresso can access a 360-degree view of the financial data held in customer accounts in real-time and in read-only format. In this case FinancialForce.com is essentially acting as accounting middleware, providing a link between the new cloud and existing on-premises (“soil”) applications.

Prospective customers should consider UNIT4 products based on their business requirements (post-implementation agility in a homogeneous environment vs. interoperability in a heterogeneous environment), industry segment, and geography. Dear readers, how do you find UNIT4’s positioning of its products? What are your comments and opinions about the company’s product strategy as well as your experiences with any product from the UNIT4 family?
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