If Unit4's strategy is successful, midmarket enterprises will leverage the company’s ERP platform and employees will never know it, said CEO Michael Ettling.
The Unit4 strategy revolves around a "self-driving ERP" plan where the platform operates in the background with automated workflows that come to multiple applications.
Speaking at the Unit4 Analyst Summit in Philadelphia, Ettling outlined the midmarket ERP vendor's strategy. Unit4 is focused on people-centric companies (think services), non-profit and education with up to 10,000 employees.
Ettling said:
"Today, we are on ERP X, and tomorrow we're chasing this vision of self-driving ERP. We think this is going to become more and more prevalent. My Holy Grail of self-driving ERP is that you buy my ERP and nobody in the organization ever logs into it. Your access is through Microsoft Teams, Slack or through whatever. No one wakes up in the morning and logs in to the ERP to do ERP work."
This Unit4 strategy could be ahead of its time. As generative AI becomes the new UI for enterprise software, many of the SaaS applications you log into will fade to the background. With copilots and agentic AI, the concept of headless enterprise applications is going to be more prevalent.
- GenAI may be the new UI for enterprise software
- Agentic AI without process optimization, orchestration will flop
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To Claus Jepsen, Chief Product and Technology Officer at Unit4, the self-driving ERP concept is really about not having a UI for ERP. Jepsen:
"The way we look at this is that the best user experience is actually no UI. The best ultimate user experience is you don't even have to go into the ERP. ERP systems have a tendency to be very monolithic with complex UIs. There should be a mix between a conversational user experience where we move users away from dealing with the maintenance of data."
Constellation Research analyst Holger Mueller said:
"Unit4 has been painting a compelling vision of ERP for close to a decade. The good news is that it is now serious about moving customers to the cloud with an end of life date by end of 2026. The migration of the masses has not started yet - so all eyes will be on 2025 and Unit4 getting its customer base to move to ERPx."
Unit4, which has €425 million in revenue, ARR growth of 25 and cloud ARR growth of more than 25%, has been on a transformation of its own since 2021 to evolve the product and support it. The company has migrated to the cloud, focused on ERP workflows and integrated automation with robotics process automation with the ability to swap into generative AI.
The stack, which uses Microsoft Azure as its infrastructure, breaks down like this:
Unit4 is "gently nudging" its on-premises customers to the cloud with a common platform. On-premises customers have until the end of 2026 to migrate to the cloud. Unit4 announced the transition in October 2023. There will be exceptions based on government use cases, data sovereignty and security needs.
Ettling said that the move to get customers to go to the cloud enables AI and automation delivery. Unit4 is betting that the real value in ERP is in the workflows, AI and automation between the components--finance, HR and projects--on a common data model that is extensible.
"AI is obviously the buzzword of the moment and we've been thoughtful about how we approach AI," said Ettling. "For AI to work you still need to read and write a transaction and then get AI to do something with those transactions." Ettling also said the company's work with RPA extends into large language models too. That argument has also been made by UiPath. The general idea is that automation and process is more important than the underlying models powering workflows and experiences.
Ettling said:
"Generative AI is now just a different smart in smart automation, as opposed to something new. It's the user experience in self-driving ERP and processes that enable it. Sometimes it may be AI, but sometimes it may also be a robotic solution or something else. We really have a view on AI that it's part of the user experience. A lot of the marketing or story around AI is AI for the sake of AI, as opposed to AI to deliver better on a North Star."
Other takeaways from Ettling's talk:
- Unit4 wants to get 1 billion annual revenue by chasing a North Star of a self-driving ERP that's automated.
- 95% of new logos added to Unit4 over the last two years are cloud deals.
- Unit4 is open to mergers and acquisitions for smaller tuck-in deals that would add functionality or provide a legacy base that can be converted to the cloud.
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