Unit4 Doubles-Down on Industries & Sets Out Growth Plan

PAC recently attended the latest European analyst event from Unit4, its first major roadshow since the appointment of new CEO Simon Paris earlier this year.

The ERP software firm is now halfway through its fifth decade, and the company is looking to put its foot down on the accelerator with the target of doubling in size to pass the €1bn annual revenue mark over the next four years.

The company has spent the last three years helping its clients and prospects start their journey away from on-premise licensing models towards a cloud-based delivery model. For new customers, this has been spearheaded by the launch of ERPx, its first fully-Software-as-a-Service proposition, based on the Microsoft Azure platform.

But the vast majority of existing clients have opted for the Unit4’s Continuous Release (CR) proposition, which is designed as a stepping stone towards ERPx. Customers are provided with a steady flow of new features and functions that align with the ERPx architecture (such as AI-driven processes). As users become more familiar with these design and features, the aim is that full migration to ERPx will be seen as less disruptive.

Unit4 leadership reported solid progress with both offerings. More than two thirds of its existing customers have now moved to CR, and PAC heard from several clients who confirmed that the path to adoption has been significantly smoothed in recent years by enhancements to Unit4’s professional and managed services packages – alongside those offered by its major partners.

More than 150 organizations are now live on ERPx, the vast majority of them new logos, and the company states that its pipeline of greenfield opportunities has never been stronger. Unit4 is set to double-down on its efforts to ease the journey from CR to ERPx with more service offerings to help build more robust business cases for migration based on shorter time-to-value and clearer outcomes, and building on best practice to tackle aspects such as change management.

One of the hallmarks of Paris’ tenure so far has been the greater focus that Unit4 has in its proposition and go-to-market strategy. The company’s primary ERP audience is people-based or services organizations that operate in the mid-market, which it defines as companies with between 200 to 5,000 employees.

Paris has continued the company’s evolution from a largely regional-centric company to one that is squarely focused on four main vertical sectors: public sector (primarily local government); professional services; higher education; and not-for-profit (NFP). Other services-based companies that are adjacent to these markets are also a target, but Unit4 looks to differentiate against its more horizontal competitors in the ERP space through its industry domain-specific insight and functionality, such as donor management in NFP or project accounting in professional services. The company’s leadership shared several recent examples of recent contract wins, where this positioning had helped it to win against big-hitters such as SAP, Oracle and Workday.

Unit4’s mid-market clients tend to be loyal, and this is particularly true with the company’s Coda financial platform business. Coda tends to be used by slightly larger clients than Unit4’s typical mid-market hunting ground, and in particular, businesses with high-volume transactions in sectors such as financial services and retail. One significant step this year has been to create an independent Coda division with its own leadership and P&L. This is designed to provide a more dedicated roadmap and level of support for Coda clients, while freeing up Unit4 leadership to focus on the evolution of ERPx.

An important part of this evolution will involve harnessing artificial intelligence within the core platform. Unit4’s Chief Product Officer Jennifer Sherman describes the firm’s approach to AI, and particularly to areas such as agentic and generative AI as “pragmatic.” She highlighted that much of the process optimization and automation within the current platform is underpinned by more established Machine Learning tools and approaches. A panel of Unit4 clients discussed some compelling use cases for Unit4’s “Ava” smart assistant, but Sherman observed that mid-market customers are likely to move at a slower pace with agentic AI adoption at scale due to their resource limitations. That said, a major focus for Unit’s product roadmap will be in building out its agentic operating layer, to help “Ava” play a more effective role as a vital and productive team member across Unit4’s customers.

Another major step taken by Unit4 in recent quarters has been a refresh of its partner strategy. The company has ramped up its investment in a core group of reseller, integration and transformation partners to help clients join-the-dots between CR/ERPx and their specific challenges in terms of aspects such as managing cultural change and creating a new target operating model (TOM).More than 40% of ERPx implementations are now led by partners such as UK-based Embridge, GCON4 in Iberia and Tietoevry in the Nordic region.

PAC’s View: Unit4’s growth targets are aggressive, but it can be encouraged by the recent progress it has made in moving the majority of its installed base over to CR, and the growth and pipeline outlook of ERPx. The word “focus” was used repeatedly by the leadership team during the event, and the company’s clear-sighted approach to its market, portfolio and partners will help it drive differentiation.

Support for CR will run until 2032, and Unit4 knows its core mid-market segment well enough to appreciate that the pace of change tends to be slow. It has already done a lot of work to take as much pain out of the migration process as possible, and is right to adopt an approach that is more “carrot” than “stick” adoption by fleshing out ERPx’s functionality and effectiveness through both direct development and partnering.

Acquisitions are likely to play a role in pushing the company closer to its target. But whereas previous acquisitions had tended to get lost in the mix of its regional structure, the company will be much better served by enhancing its vertical differentiation through adding more compelling industry-specific functionality.

Despite the ambitious target, Unit4’s current geographies are likely to remain the main focus. Indeed, the company’s European heritage and focus can be a valuable asset in its discussions with those clients and prospects in the region with growing concerns over sovereignty, in the face of largely US-based competition.