When Mike Ettling reflects on the past four years in his industry, he knows it has been unlike anything he has seen in his career. “The last four years have been some of the most interesting in tech,” the outgoing CEO of Unit4 says.
The world has seen not only a global pandemic, but also the emergence of generative AI and a return to conflict in many places.
“We are living in a world where the hill could disappear or be turned upside down or have a ravine built through it. On all fronts, whether it’s technologically, whether it’s health dynamics or whether it’s geopolitically, everything is changing,” he notes.
“We’ve seen change before, but we’ve never seen change on such a multidimensional scale.”
“The focus has been on how we can achieve more inorganic growth in the business and continue to build out that value proposition for our clients in the mid-market.”
The challenge for CEOs is to find the balance between being overwhelmed by all the multidimensional changes and signals in the market and, at the same time, to remain calm and remember their company’s goals.
“In today’s world, it’s very easy to be pulled from pillar to post and be swayed by the hype,” Ettling says. “You’ve got to stick to the mission, but you also can’t ignore all of the multidimensional context because you still have to take data points to make sure the mission is still relevant.
“That’s what makes being a CEO and a leader today so interesting and so challenging.”
A polished cloud company
Global upheaval is not all that has happened since The CEO Magazine last spoke to Ettling in 2021. Enterprise resource software business Unit4, which Ettling joined in 2019, had just announced a strategic growth buyout by private equity fund TA Associates.
“The business had been through quite a transformation, you could almost call it a ‘bad to good’ journey,” he recalls. “We were looking for a partner that could take us on a ‘good to great’ journey.”
In collaboration with
GCON4
That good to great journey was about completing the transition to the cloud and becoming an experienced and polished cloud company.
“We’ve formally ended support and maintenance of our on-premise enterprise resource planning [ERP] products and are taking all our customers on a journey of getting to the cloud,” he says.
“All our metrics, whether you are looking at recurring revenue or cloud retention, for example, are hitting standards and absolutely demonstrating that we are a cloud company.”
With recurring revenue accounting for 80 percent of all business, it’s clear that clients appreciate these high standards.
“Despite the challenging world we live in, with so many different changes across so many different dimensions, the business has performed really well and we’ve stuck to our mission: that we are the ERP company for mid-market enterprises in the services context where the ‘resource’ is a person, not a widget,” Ettling adds.
AI as game-changer
Ettling believes that we don’t yet understand exactly how AI will transform everything in technology, other than it will be a huge transformation.
“My biggest hypothesis is that AI is going to enable companies to create more capacity for whatever they’re doing: whether it’s a software company wanting more engineering capacity or a retail company wanting more stock movement,” he says.
That capacity can be harnessed two ways.
“You can use it to extract more profit out of your business or you can use that capacity to differentiate yourself,” he explains.
“If you’re going to become more differentiated, you’re going to win more and you’re going to cause the competition to become extinct. That’s why I see what’s almost an extinction arms race going on at the moment around AI. CEOs ignore it at their peril.”
As for the next phase of Unit4’s journey, Ettling predicts acquisitions to feature heavily in the strategy.
“We’ve been very consistent with our cloud growth going north of 25 percent over the last four years, so our organic growth is good,” he says.
“The focus has been on how we can achieve more inorganic growth in the business and continue to build out that value proposition for our clients in the mid-market who want a one-stop platform to handle everything, from HR to finance and project accounting.”
He points to the purchase of Scanmarket in 2022 as a good example of the acquisition strategy the company is pursuing.
“It’s a procure-to-pay offering that really enhances and extends the finance aspect of what we offer customers on the platform,” he explains.
End-to-end experience
That Unit4 has been able to complete its journey with the same number of employees, approximately 2,700, indicates to Ettling that the company is driving efficiency and using technology more effectively.
“We’ve grown the top line on roughly the same number of people as back in 2021,” he says.
One key hire was Jean de Villiers as Chief Customer Officer, brought in to guide a fluid, end-to-end customer experience.
“Historically, the entire post-sale period was very piecemeal and siloed,” he explains. “Jean has looked at everything post-sale and started thinking about it in terms of the total customer experience, not a separate implementation, training and success process. By doing that, we’ve really focused on what customers need.”
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Another learning from the shift to cloud solutions is that much of the old-fashioned way of conducting ERP projects is now outdated.
“The days where people stake their career on an ERP project shouldn’t happen anymore,” Ettling says. “That’s not what it should be in the cloud.”
Instead, the emphasis should be on getting customers live as quickly as possible – ideally within three months – and progressively adding features that can be built on with more adoption and more engagement.
The company now sells all its products as a subscription package, including onboarding, live support and continued engagement. The on-premise mode of customizing to each customer’s needs is no more, either.
“Everything we do is now geared around this principle of getting to return on investment as rapidly as possible and getting our customers live on the standard,” he reveals. “Then you can add on solutions for further benefits out of it as you move ahead.”
“Everything we do is now geared around this principle of getting to return on investment as rapidly as possible.”
Ettling knows that might sound obvious, but sometimes change takes time.
“The technology of creating cloud products was actually the easy part of building a cloud company,” he acknowledges. “The hard part is changing the culture around how people engage with the customer.”
This means that the whole dialogue has to be different.
“In the old days of ERP, the cultural definition of being a customer hero was asking what they wanted and tailoring solutions to give them exactly what they asked for,” he continues.
“Now, it’s a question of, ‘Here’s what you are getting and this way, you can go live straight away.’”
It’s an approach that Ettling believes Unit4 has started to master in the past four years. “It’s what will really differentiate us going forward, too.”
Partner success
Of course, Ettling also appreciates that the transition to the cloud couldn’t have happened without the support of the partner ecosystem, such as software services companies Tietoevry and the Arribatec Group, as well as Unit4 enterprise solutions consultants GCON4.
“If you look at the capacity we needed, we couldn’t do it alone,” he says. “We were absolutely reliant on our partners to come to the table and help drive this.”
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He notes that the company now makes its intellectual property (IP) and methodologies available to partners, ensuring they can approach customer implementation with the same ROI-first attitude Unit4 does.
Partners are encouraged to develop and sell apps and extensions on the Unit4 Marketplace, launched in 2023.
“Building IP around the platform helps compensate for the declining revenue on the core traditional implementation business,” he explains.
“We absolutely want our partners to make the transformation and to succeed with us.”
It means Unit4’s partners are undertaking a similar cloud transformation to its own. Some are struggling, Ettling admits, but others have adapted well.
“We absolutely want our partners to make the transformation and to succeed with us and we are very supportive of them doing that.”
A C-suite transition
Ettling says continuing the journey to becoming a highly efficient go-to-market engine and enhancing its AI capacities are priorities as the company continues to build out its capabilities as a cloud business.
“You can’t do one without the other,” he points out. “It’s imperative right now that we focus on both and we get those right.”
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However, Unit4 must now push forward on this journey without Ettling at the helm. In January, it was announced that he will step down as CEO, passing over the reins to Simon Paris, who joins the company from financial software solutions and systems provider Finastra.
Unit4 commented at the time of the announcement: “Mike’s plans are yet to be announced, but through his experience transforming and growing Unit4 under private equity ownership, he is keen to put those skills into practice, supporting more high-potential technology companies to evolve and succeed.”
“Any good leader, particularly a CEO, has to keep learning.”
It’s clear that, when he spoke to The CEO Magazine just before the announcement, Ettling had long made his decision.
“Any good leader, particularly a CEO, has to keep learning,” he says. “I’ve done four private equity-backed roles and every time I feel like I’ve learned new tricks, new approaches and new ways from each one of the owners.
“To that extent, the whole approach to building an efficient go-to-market machine has been something I didn’t know before. I’ve learned a lot on the journey we’ve gone on with TA Associates.
“I think this concept of always being open to learning and how you keep learning is crucial to being a leader. That can play out across all levels and all contexts, but you have to always be willing to learn.”
