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On this special Fireside Chat, HFS CEO Phil Fersht talks with Nigel Vaz, Chief Executive Officer at Publicis Sapient about his personal and digital business journey.
In addition to serving as CEO, Nigel is a consulting leader and the author of the Wall Street Journal bestselling book titled “Digital Business Transformation.”
You can listen above or watch this HFS Videocast here:
Phil and Nigel cover a range of topics, including:
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This transcript was auto-generated from the original recording and lightly edited for readability. We've done our best to catch errors, but names, technical terms, and company references may be misspelled or imperfectly captured. For the definitive version, please refer to the original audio or video. Views expressed are the speakers' own.
Hello, I’m Joel Martin, Cloud and Applications Modernization Research Lead here at HFS. ERP modernization is an ongoing challenge for many organizations, but over the next 30 minutes I’m going to be joined by Dmitri Krakovsky, Chief Product Officer at Unit4, and we’re going to talk about how it can be an opportunity as well. Today we’re going to talk about the evolution of your business platforms into cloud-native models, and really get into how delivering value is a true opportunity now — with the cloud, and with the opportunities we have rethinking how applications are built and then consumed by users. We’re going to go into the differences between designing solutions for product-centric organizations versus people-centric, which is really what all organizations are becoming now as we deal with experiences both inside and outside the organization. And then we’re going to banter around low-code, automation, and how solutions are being built from microservices, really becoming cloud-native in the DNA — that allow organizations to adjust, adapt, and act really quickly to bring value in real time to their customers, to their employees, and to their business leaders. So with that, over to you, Dmitri. Maybe a little introduction about yourself, your role at Unit4, and what drives you and the company to really bring thought leadership to the market.
Great to see you, Joel, again, and very excited to be a part of this podcast. So, a little bit about me: I am Chief Product Officer at Unit4. This basically entails thinking about the future of our products — figuring out the product strategy, spending quite a bit of time with customers and understanding their needs and aspirations, how they run their businesses, how they think about improving the processes, and then translating this into the new products that we build; imagining different solutions, imagining different experiences, thinking how we can help our customers, how we can automate the work they do, how ultimately we could help them achieve better results. I’ve been at Unit4 for a few months now, and very excited to be here. My background before: I spent four years at Google prior to this, working in Google Cloud Platform, primarily in machine learning-oriented data services and applications. And for about seven years before that, I was the Chief Product Officer at SuccessFactors.
Great — SAP SuccessFactors. That’s really exciting. I’m sure you’re going to bring a lot of domain experience to this, to really talk about your role in industry and your experiences with customers all over the place. And that really brings me to some data points to kind of set up this conversation. Back in the first half of this year, we did a large survey of Global 2000 companies. 65% of them told us they saw the cloud as a cultural change agent for their business, bringing services closer to their users and to their customers. Interestingly, though, 43% are actually moving those business processes to the cloud. So there’s an adoption of cloud, but it’s not as rampant as you’d believe from reading the media. But more worrisome was that 1 in 4 of the folks saw cloud as a cost play. So they talk a lot about it being a change agent and moving business processes into the cloud to be closer and more functional, but then they immediately switch from a value play — how this is going to create business value and outcomes — to, you know, a good chunk of them seeing it still as a cost play. Why do you think that is?
Well, I think it’s a little bit of both. As companies evolve, they look both to deliver better business results and to improve the cost structure — and obviously cost structure is a part of their business results. It’s the opportunity for customers to reimagine how they run the business, to re-examine the processes and see whether the software of the future needs to implement different kinds of processes. Software is the mirror into how the company is run; it’s just a tool that enables companies to run better. So I think it’s just an opportunity — the customers I talk to think of this as an opportunity to rethink the process, an opportunity to rethink the way they work, and then express it all in this different kind of software that allows them to do those kinds of things. And, Joel, you and I talked a little bit about the difference between product-based businesses and people-centric businesses and how they operate. What I see quite a bit, particularly in the people-centric business — which is the type of business Unit4 primarily focuses on — is that one of the very important characteristics these companies look for is flexibility. Particularly in this day and age, with COVID, we’re changing patterns of remote or in-the-office work, how teams gather and operate with each other. The ability to float and change, to be fluid and flexible and readjust based on the landscapes that evolve around them, the business conditions, the competitive conditions, changes in business models — the need to be fast and adjust fast and be flexible is really fundamental to how companies work, particularly people-centric companies. As opposed to product-centric companies, which often value stability. You want to build the process and then keep it stable and repeatable — everywhere, every time, going the same way. In manufacturing and distribution and supply chain, those kinds of areas, stability is a very important characteristic, versus in people-centric businesses where flexibility is valued quite a bit, particularly in the environment we’ve been living in the last couple of years.
Yeah, I think you’re spot on there. Flexibility is probably one of the more operative terms these days, and that’s why people are driving to the cloud — to bring services in there, to bring workloads, to bring engagement closer to those that need it. And a lot of that reverts back to the data strategy as well. One of the things we’re talking through is your vision for where your core systems of record, your ERP solutions, your financial solutions, need to evolve. It’s really adapting to something those systems were never really considered to be, which is flexible. So maybe you can tell me a little bit more about what flexibility is, and what you’ve done to address that and make solutions more flexible — to make the ERPx solution more flexible.
Yeah, a lot of that has to do with the ability to have different processes for different work groups, different teams, and to be able to change those things very quickly. One of the big advantages of cloud software — software as a service — is that it’s a lot easier to change it, to evolve it, and to rewire it in different ways, both from the vendor side, where the delivery cycle is a lot faster, and from the customer side, where they could take the core solution and configure it in different ways for different work groups, and do it continuously. Whereas in the past, it was a cycle of: you buy, you go through a long implementation cycle, and then you’re locked and loaded and done, and you don’t ever touch it or change it again, because it’s expensive, it’s hard, and it requires a lot of rethinking and a lot of investment. Now what we see a lot is continuous changes that customers want to have in their software, and they want software that enables these changes without a high cost component or long periods of time to achieve them. A lot of this also has to do with connecting different parts of the flows, different parts of the system together into a holistic business management system. Whereas in the past, you had your financials, you had your projects, you had your procurement, you had your chart of accounts, and they all operated in their own little silos, and then you had to build middleware technology to connect them in some interesting ways — and it was always hard. Having it all as part of an end-to-end holistic process, where the data flows freely from one place to another… As you think about staffing a project, you need to understand who are the people who are available, what skills do they have, where are they located. And if you just examine these two or three questions: location maybe is part of the core HR system, skills may be part of a talent management or project management system, proficiencies and project participation might be part of the project management system — and all of these need to come together into the staffing decision. So you need all these systems to connect and snap and drive each other and reinforce each other, with connection points between them. And then another thing that’s very important is the experiential side of it. In enterprise software we’ve been talking about this for a while, but as consumers we’re used to very specific experiences. The phone becomes the working tool for many of us, where we spend hours and hours as the main tool through which we deliver work. Having mobile functionality, the ability to plug into messaging platforms like Slack or Teams and interact with various systems and with others in the organization — without having to go into a big monolithic ERP — becomes very important experientially. Quick, lightweight interactions where, when something gets stuck, you can get it unstuck; when you need information, you can get that information; when you need help, you can get that help. Having the ability to do all this work on the edges, but still having the system of record capture all this information and reflect the current state of the project’s financials, and so on.
Yeah, and again, mobile is a great example of how people want to consume information. And you gave a great example of how the different silos within a business software solution have to deliver HR, customer, and financial information. Previously — and I’ve been in this industry — all these things were hardcoded. They were built on personas, but they were very rigid, which made upgrading the solutions difficult, but also, honestly, made licensing and getting the information out difficult, because it was so rigid. But I think you’ve come up with some different ideas. Unit4 took a big step in kind of tossing that out and saying there’s a better way to think about how we build an application that can recognize, A, the benefits of moving to the cloud; B, that people are consuming not on large desktops anymore, but on their mobile devices when they’re on the job at the customer’s site, and they need records that help them deliver value; and third, creating an environment that can be adapted as needs change and the culture of the company changes, but that doesn’t interfere with the core system. So maybe you could talk a little bit about what drove that — because that really fits into what we at HFS call the OneOffice mindset, which is a digital delivery of solutions that incorporates native automation, people and process change, and getting access to the decisions and data without redesigning your technology stack each and every time. So maybe there you can kind of kick around some more.
Yeah. Let me offer one observation on this. Why is it that consumer applications are so easy to use — generally speaking, consumer applications are so much easier to use, and loved and adopted, whereas enterprise applications have traditionally been harder to use? I think one of the reasons is that consumer applications are designed for a specific purpose. There isn’t this endless configuration and customization that takes a toolbox and mangles it into something that’s sort of a fit, but not really. Consumer applications are often developed with a very single purpose in mind, for a specific user, for a specific task. Whereas enterprise applications, as I said, follow the pattern where you develop a tool set, and then consultants come in and use elements of the toolbox and make it right for you — but it’s difficult. And so that was one of the big observations with which we started the redesign of our ERPx product that we discussed in the past. The goal in mind for us was: is there a way to deliver software for a particular industry and country — it’s usually an industry-country permutation — that to them would look like it was designed specifically for them, but that we could do at scale? We could create multiple versions of this software using essentially the same technology, creating these versions, or configurations of the solution — we call them industry models — that feel to these industries like they were built specifically for them. That was the goal, and with this we started the redesign. How do you get there? First, you need to decompose what we had into microservices, individual components that could be combined in different ways. We also needed to really think through what constitutes industry-specific stuff, what constitutes country-specific stuff, what are the different kinds of users, and can you express this specificity outside of code, without having to write the code. So we could have people who are specialists in these domains and industries quickly put together very specific solutions for these customers, without having to go through the expense of writing the code, testing the code, deploying the code — all of which slows you down. And if you think about the broader consumer space, there’s been a huge evolution towards mass customization — custom solutions delivered at scale. Many examples of this: I was just doing a quick survey — Invisalign, my kids use these braces. How do those work? They’re not generic things; they fit your mouth specifically. The dentist takes a snapshot and then they’re 3D-printed for you. If you look at ski boots, golf clubs, suits, shirts — a lot of these spaces, the fastest-growing subsegments are custom at scale. And most of these custom-at-scale ideas were enabled by specific breakthroughs in technologies like 3D printing, or, for clothing, fast and precise laser cutting: I send you my dimensions, and as a vendor you could create a suit or a shirt that’s custom for me. Similarly for us, the technologies that evolved over the last three, four, or five years — cloud, microservices, machine learning, different approaches to integration — enabled us to take all these specific custom elements out and express them outside the code, and deliver localizations and industry-specific stuff very fast, with very different economics, which allows us to cover many more segments and subsegments. I think that’s the breakthrough that happened. It’s not that in the past people wanted to build generic software; it’s just that the economics of building software did not allow you to make it specific for the industries — and now we actually can.
Yeah, I think you’re spot on there. One thing that excites me about this conversation is that we’re looking at flexibility, and we’re looking at speed of delivery, which everybody desires — because when they have a problem, the old model was: you send the requirements, the dev team works on it, and six months later, well after Christmas when you wanted that tool to be ready, it’s ready for you, and hopefully it’s still relevant for the next holiday season. Instead, with this bold rearchitecture, you get flexibility and speed. But you just touched on something I think we can explore a little bit more, which is customization at scale. Customization was always considered a bane — whether you were designing software, or on the consumer side wanting something else — because when we look at profitability and costs, customization always costs more, which impacts the total availability of your marketplace. But customizing at scale, and letting your customers customize at scale without impacting the core data set, without impacting the solution — that’s where it gets exciting to me. That’s where I thought, when we first had the conversation, we really needed to have this discussion, because you bring in new thinking around how people are going to customize: they’re not going to customize with a lot of hard code, they’re looking at low-code. How are they going to customize? How do they automate data and workflows to get to the information that’s relevant, while co-innovating or co-creating with others in their team on the technical and business side? And then, again, that people-centric aspect of knowing your customer and being able to not only react but anticipate their needs requires a certain level of the right information and the ability to manipulate and customize that service.
Yeah, that’s spot on. What are typical customizations? You have your AR, you have your AP, you have your general ledger — the key data structures are not that different across different customers, but the way they’re used, the way their workflows are configured, the reports they need… you look at the business in different ways, so you need different analysis, different reporting. You could have different regulatory regimes in different countries, different metrics matter, and you need to connect to different outside systems. That’s also part of customization — whether you’re in a different industry or a different country or both, integration with those different outside systems is important. So all of this constitutes customization, and you touched upon something very important to us, which is: how do you do it at scale? This low-code/no-code tooling is one of the answers to that. The other answer is the general architecture of the system that exposes the APIs, that exposes what’s happening within individual modules — so it could post a message or event to others who could listen and do something about it — and then creating a low-code/no-code layer on top of this, where we, or our partners or customers, could package different solutions. You could become finer and finer grained; you kind of fractal out, deeper and deeper into the verticals and subverticals and countries. The tool works very simply. It’s essentially an orchestration layer — the low-code/no-code tool we have — that could say: I hear something’s happening in this module, in procurement; let me ask more about this, let me get this result; okay, then it seems like I need a user input, so I could create a simple one-form, one-field dialogue with the user, and maybe push it into the Slack channel where they are and ask them a question. When the user responds, I take the response and put it over here. So now you could create these kinds of experiences without writing a single line of code, just expressing it through the tool: pulling modules, getting the outputs, getting the inputs, creating user interactions, collecting data from users, and reflecting it all in the core system. So you could start creating very rich, very specific layers — targeting industries or countries or particular companies — and that is what makes it right for them. That is what makes it feel like it was developed just for their company, even though it’s done at scale through this tooling. That’s the power — that’s our 3D printing or laser cutting, the breakthrough technology that enables this customization at scale.
Maybe you can tell me — you’ve touched on some of the customer value that you’re starting to see. Maybe you have some examples of some of your customers and how they’re actually doing this that you can share, that will give some real-world, concrete examples of how this works.
Yeah, a lot of this is the littlest things. We see customers now do, for instance — every customer has kind of the same set of issues, like when they acquire a new customer, they want to do a credit check. If somebody is not paying, they want to do collections. When they get a new customer, they want to make sure they have all the right data, so they need to acquire the location, the phone number, the address, and so on. Usually, in every country, there’s a set of specific services that provide this information. A customer comes in, and you need to look up their data from the Chamber of Commerce or whatever the case might be, and then you want to do a credit check. And say you’re a company based in the UK or the US, but you have an affiliate or a customer that comes from Norway — how do you do that? Well, in the past, you did that manually, most of the time. Somebody sits down on a Friday afternoon, goes through the list, logs into some government site or the credit-check site for that country, looks it up, and copies and pastes the information from here to there. It takes 30 or 45 minutes, and they do it over and over again across different countries. In some of the main countries, if you’re in the US or UK, you may integrate with something like D&B, but in your smaller countries you probably do it manually. With us, what we see over and over again — we package this up, and customers do this using the no-code tooling. They say: when there’s an event that there’s a new customer, take the information about them and ping this database through this API endpoint and get the result, or do a credit check and get the information back that says the good state or bad state, and based on that, decide what you want to do — let the transaction go through, or have a manual review. Very common; we’ve had a whole bunch of customers do something like that.
Yeah, I like that. You’re bringing low-code and automation — two fundamental tools of being a successful business — forward. You’ve brought them together, but you haven’t hidden them behind the proverbial firewall of the DevOps team. You’re exposing them not only to be able to work with APIs, but more importantly, exposing them to the actual people in the field to say, this is what I need, I conceptualize it and I can start doing it. These are all really bold steps. Why are you guys sort of a breakaway thought leader on this? What’s happening — where’s the magic happening that’s driving this? Because I haven’t seen this kind of leadership from some of the traditional players in your space.
Well, look, I obviously don’t want to talk about anybody else, because they should talk about themselves — we’re really focused on what we could do for our customers. But some of this has to do with timing. Software generally goes through rearchitecture cycles every so often, and it just so happened that we were ready to jump into this three or four years ago, and a lot of these technologies really evolved right around this time. So in some ways it’s a combination of being in the right place at the right time. And this predates me, but I have to compliment the team for having the courage to jump in and say, we will change what we have, take it apart and reassemble it in a different way to take advantage of these new technologies. I think that’s really paying off for us now that we’re through this rearchitecture cycle. And frankly, a lot of the software we’re building now — the new functionality — we build in this low-code/no-code way. It’s not just a tool for customers, it’s not just a tool for partners or professional services. A lot of what we are building is built not in the core of the ERP but outside of it, as microservices, or built in this low-code/no-code, descriptive way. But having said that, Joel, we are definitely in the first inning of this. The degree of connectivity, the degree of specificity that we could provide to these customers to really achieve that vision of software that’s right for their business — not a business, but for their business — we’re still, there’s a long road ahead. I feel like we have a lot of tools to do that, but there’s still so much we could do, and that’s what makes me excited, and that’s why I wanted to be a part of the story with this company.
Oh, for sure. One thing I also like, building on that, is something you mentioned earlier, which was the industry-specific configuration model. Thinking about those customers and bringing that together — you talked about having that industry-specific mesh view, the config models, bringing all this together. So how does that play into it?
Well, that’s part of it. I talked quite a bit about making sure that the software we build transforms itself, morphs itself, to be right for the businesses. But in the examples I used — a very specific common problem we see in every customer conversation — they say, okay, it’s great that your staffing works this way, but I have 200 other vendors in my IT landscape. There’s the CRM system and the CPQ system, and a specialized project system, or a grant-management system for nonprofits, or a student-information system for higher ed. And then, for every country, there are the bank connections I have to make, and I do elections, and I do credit checking, and I do treasury, and all this other stuff — basically for every country. So as we talk to these customers, they say, okay, your thing works great, but your thing needs to connect to everything else, and that’s often an expensive, long integration process. And that’s where we thought: heck, we could use the exact same tools to connect us to third parties, or actually connect third parties to each other, not even with us, using the same low-code/no-code tooling — so that we could create these meshes for these different industries. That’s what we’re working on now: providing the connectivity for a typical set of vendors that exist for each one of those industries, and delivering this connectivity, or connection integration, as a product that we maintain, support, and evolve. We follow the changes in the APIs, we understand the data formats, and we connect the data together for different industries. That’s the idea of those industry-specific meshes — connectivity and integration between third-party vendors and us, and in some instances between the third-party vendors that the typical customers in these industries use.
Oh, yep — sorry, go ahead.
No, no, that was kind of it.
I was going to say, the one advantage I see out of that is that, by architecting your solution in this form and being so open to working with others, it builds a certain level of trust within the organization. They have a dynamic, flexible relationship with the core tools now, and they can start really focusing not just on buying all these additional add-ons, but on what they can build themselves and what is really important to the experiences of employees and their users. Again, going back to that OneOffice framework, instead of just having to buy a smorgasbord of solutions because they don’t have that flexibility — because it’s not delivering the value, because they need to add this accent or extra functionality — it sounds like you’ve rethought it from the standpoint of: we know what we do well, we can organize the data, but we’re really going to prioritize exposing and making that data customizable at scale, so it can achieve a lot more. Which fundamentally, to me, fuels what a lot of companies are going through right now, especially coming out of the pandemic — finding themselves in a cultural transformation, or an evolution of how people want to work and how their customers want to engage. With rigid, fixed systems, that leaves a lot of companies really struggling with where to start on their cloud journey.
Yeah. You said something that triggers another thought I want to make sure is important to us. In the past, there’s been a little bit of tension between best-of-breed and suites. You could get a specialized service that does something really well, but it doesn’t fit into your suite; or you get a suite that has a lot of different components, but the individual components are not so awesome — because suites often couldn’t invest as much time, or didn’t understand the specific subdomains as well as the specialists. Now, if you go back three, four, or five years, one of the big evolutions in the enterprise space has been the proliferation of specialized API services — from Stripe to SendGrid to messaging to whatever, many very specialized services delivered as APIs. That’s another element we want to make sure we can capture: as a customer, you could compose what you want, consume some stuff from us, consume some of the best-of-breed, but have all of this plug into each other very easily. And then in the future, if another service appears and you want to replace something you have, you can unplug it and re-plug the next one, and the thing just goes on and works just fine — without having to rip out the whole system, which was often the case. You’d want to replace a small component and you’d have to level the whole house down and rebuild it from scratch. Whereas now, when things are built as microservices, they’re all individual, there’s an agreement in how they talk to each other, and there’s an orchestration system that we deliver for connecting them, so it becomes a lot easier to unplug, re-plug, and use different best-of-breed in different countries. And that again goes back to that flexibility we started with: you don’t want to get stuck as a business. You want to evolve, and you want a system that’s not just functionally right for you, but that allows you to evolve and change. That’s almost the more important characteristic these days.
No, I completely agree, because — again, having gone through ERP implementations, having gone through revisiting and upgrading — that’s a very painful part of a customer’s journey. Having a solution that’s modular, and thinking about how it’s going to flex and change around your business, versus you around it, I think is a very compelling story. And especially for people-centric organizations it is very important, because they are growing quickly — through acquisition, through their own partnerships, through changing customer demands — and that flexibility is really a key differentiation between the people-centric world of solution delivery versus the product world, where you’re going to be stamping out the same widgets at a certain cadence and driving certain efficiencies. There are fundamental differences in customer needs there. And I think that, going back to the industry-centric discussion and the at-scale discussions we’ve had, the flexibility really brings home a differentiation. But I would also argue that when we think about customization at scale, that’s as applicable to a product-centric organization as to a people-centric organization.
That’s probably true. That’s probably true.
Well, this has been great. I really appreciated the conversation. Any parting thoughts? Any words of wisdom for people out there considering what they need to do to continue on this cloud journey — to be flexible, to still stay true and really get a hold of their data — that you would share from your experiences, or where you see your vision of where you’re taking your current teams?
Yeah, I think it just never stops. That’s my conclusion from all of this: building this notion of change, and having change be an important characteristic of the system — the ability to sustain change, and the ability to continuously re-examine your existing processes — is super important. Technologies enable this now, and again, we’re at the first inning of something like this. But if you look at the broad technological landscape — natural language understanding, vision, all these machine-learning-enabled technologies around data understanding, dealing with unstructured and structured data in combination — how much of the work is still automatable? Just the other day we did a product review around one of the areas in timesheets, for instance. You can ask yourself a question for so many of these things: anytime a user needs to provide some input and input some data, almost always you could ask, can we just get this data automatically somehow — from observing the state of the work, the state of the system, observing the calendars, the ability to interact through natural language and through what people say? So I think there’s so much time we could save for customers and users by just applying machine learning, and different subdomains within machine learning, to these problems. So going back to my original point: anytime you feel like, oh, we got to this great point, and it’s probably good now — there’s another layer, and another layer, and another layer. So picking the vendors and building a system that can sustain change is probably the biggest lesson, because things just evolve very fast these days. And what you cannot get caught in is: it works for me now, but I’m stuck. That’s like a cardinal sin, I think.
I completely agree with you. I hear so often people talking about horizon strategies, and too often poor planning requires you to really revamp your whole technology stack each time you hit one of these horizons that people talk about. And to your point, it’s an ongoing journey — there is no finish line for companies, for customers, for people. Baking automation and AI into the DNA of your products is going to be what pays dividends, but also the ability for customers to take the most advantage of that. And we’re seeing that across the industry; we’re validating it constantly — that this is a market demand that is being met but still hasn’t really crystallized. And I think you’re rethinking how to approach it, from an industry, an architectural, and a customer-engagement model, that’s pretty forward-thinking and pretty attractive for customers to really delve into — to say, that can get me across multiple horizons; not get me somewhere quicker, but be survivable and sustainable for the long term. So that’s interesting. Hey, with that, I want to thank you for your time. This has been a great conversation, a lot to think about, a lot to unpack, but really exciting. And I don’t say that often when I’m thinking about business applications — that they can be exciting again — but it’s exciting because it’s contextualized in the way people want to work, and in the environments they want to work in, both cloud and mobile, and then their ability to basically develop and do things without having to go through a massive amount of retraining and cultural change. All those things come together, and those are really competitive advantages for a company to adopt when they can do that. So with that, any parting thoughts?
No, this is it. Thank you. It was awesome to talk, and it stimulated a lot more thoughts on my side. So thank you for this, and I’m excited to continue doing things together.
Great. Thank you, Dmitri.
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