Small is beautiful in uncertain times

The right tech means smaller companies can run rings around incumbents
Claus Jepsen
Open shop sign

We are entering a period of experimentation and innovation as the latest crop of cutting edge technologies mature and are adopted at scale. This moment could be a huge opportunity for smaller companies and public sector bodies to steal a march on their larger rivals. With so much change happening so quickly, the time is right for smaller enterprises to leverage the competitive advantage of being small, agile and adaptable, and utilizing their flexibility to move fast and break things to identify new opportunities.

Let’s consider the key factors that are influencing this shift:

  • Core technology is moving to the Cloud. The argument about whether to move core enterprise applications to the Cloud - like enterprise resource planning (ERP), human capital management (HCM) and finance - has been largely resolved. Most organizations accept that moving to the Cloud is central to being able to operate in the 21st Century. It alleviates the burden on resources, but more importantly it provides the foundations for adaptability.
  • Innovation built around the clean core. Cloud migration is encouraging organizations to re-examine their business processes, creating a new streamlined discipline, as they look to adopt standard processes. More importantly, it is driving the integration of data. This clean core enables innovation to tap into a consistent, accurate view of company information and combine it with external sources to add sophistication and speed to decision making.
  • The tools exist to decentralize innovation. Lowcode models and tools, containers and open source are enabling more dynamic development of business processes. And more importantly, they are putting control in the hands of those who want to develop new innovations. These tools mean that users do not need to have extensive knowledge of programming to create functionality and, if the IT team has put the right policies and procedures in place, any new features will integrate effectively with the core.
  • AI and automation are moving to a new inflection point. Accenture suggests we are entering a period of more human-like technology. Certainly, in ERP terms, AI will reduce the amount of mundane tasks that users are required to fulfil and empower them by prompting action and predicting demand. There are opportunities to improve the user experience, which is why we are looking at AI-infused chatbots. The long-term vision, though, is to understand how AI can reduce the cost of prediction and speed up decision velocity.

Historically, only the larger enterprises would have had access to such technology but, as OpenAI has shown, Large Language Models (LLM) are going to be far more accessible. This will foster more innovation at the edge, with smaller organizations being able to leverage AI tools to create tools and insights focused on specific industry niches. Smaller organizations will also be able to focus on these micro-opportunities in the Long Tail, as it will be harder for larger competitors to scatter investment across multiple projects in the hope that they will turn into bigger revenue opportunities they can scale.

We see technology innovation enabling a lot of opportunities for mid-market organizations in some of our key sectors: professional services (PSO) and nonprofits.

PSOs are used to having teams operating in the field but, post-pandemic, remote and virtual working has reached new levels. For these teams, it is critical to have a single source of information to manage billability and utilization effectively. Layering on AI and automation tools adds sophistication to collaboration with clients. Using LLMs to analyze historical financial and human resources (HR) data, it may be possible to reduce the cost of predicting where client demand for services might be critical. AI tools could also help local teams monitor market and competitor data to inform decisions about how to advise clients on strategy.

Likewise for nonprofits each crisis is different. While standardizing business processes makes sense to drive efficiencies across an organization, it is still important to have the flexibility to adapt to individual scenarios. This is where having a clean core combined with access to lowcode tools allows organizations to decentralize innovation. For example, if a nonprofit is providing medical supplies to a number of disaster zones, being able to examine local data to predict potential flash points is invaluable. What if the nonprofit could use AI to analyze anonymized health records to see if there were a peak in patients presenting with a particular condition? Teams at the local level could use the clean core with a single view of information across the organization to identify what medical stocks are available, but they could develop functionality which enables them to better predict demand.

Today’s technologies make innovation more accessible and dynamic. Lowcode reduces the need for specialist technology skills to develop innovation, while the backing of a cloud-based ERP core makes IT more affordable and scalable. The addition of generative AI makes innovation more real-time and targeted.

The combined value of cloud, lowcode, and AI and automation lies in the ability to enable collaboration and agility. This is not necessarily as easy for larger organizations to undertake and it is where ‘small is beautiful’.

If a team fosters a mindset and structure similar to adopting agile development models, it will be possible to experiment with technology, create new business functionality and evaluate its value to the organization. If the new functionality works, it can be shared as a service across the whole organization and, if it does not, a smaller team can move on quickly to the next opportunity. The goal for teams operating at the edge is to be able to interact with clients facing real challenges and use technology to adapt and improve business performance through innovation. Those organizations willing to embrace what is a much more collaborative, services-focused mindset will be more successful in the next phase of the global economy. While volatility remains the norm, those who can adapt will stand more chance of prospering.

Claus Jepsen, Chief Product and Technology Officer, Unit4

Claus Jepsen is a technology expert who has been fascinated by the micro-computer revolution ever since he received a Tandy TRS model 1 at the age of 14. Since then, Claus has spent the last few decades developing and architecting software solutions, most recently at Unit4, where he is the Chief Product and Technology Officer leading the ERP vendor’s focus on enabling the post-modern enterprise. At Unit4, Claus is building cloud-based, super-scalable solutions and bringing innovative technologies such as AI, chatbots, and predictive analytics to ERP. Claus is a strong believer that having access to vast amounts of data allows us to construct better, non-invasive and pervasive solutions to improve our experiences, relieve us from tedious chores, and allow us focus on what we as individuals really love doing.

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Claus Jepsen
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February 12, 2024