In the interview with Stephan Romeder, CEO of Magic Software Enterprises (Deutschland) GmbH
Magic has stood for Digital Transformation for over 35 years. With customers in over 50 countries and 24 locations worldwide, 3,700+ employees, 3,500+ partners and millions of users, the company is part of the Magic Group (NASDAQ and TASE: MGIC), a global provider of proprietary software solutions for application development and business process integration as well as related professional services. The Magic Group also offers a variety of IT services. These include focus areas such as Business Solutions, Industry 4.0, Hybrid Integration, Low Code Web Development, Data as a Service, Mobilization and Modernization, Oracle JD Edwards, Microsoft Dynamics 365 Integration and much more.
In an interview with Stephan Romeder, we talk today about company-wide digitalisation, the challenge of system integration in SMEs, process automation and, above all, corporate data and data-based decisions.
DIGITAL FUTUREmag: Mr Romeder, by now – also driven by COVID – many SMEs, hidden champions and large companies in this country have closed gaps in their respective digital agendas. Where do you currently see the biggest digitalisation challenges or fields of action for top management in the German economy?
Stephan Romeder: It is true that the degree of digitalisation in German companies has increased due to the pandemic. However, if we take a closer look at the “Corona digitalisation boost”, we see that the transformation often only affects certain core processes and individual projects, for example networked working or the individual connection of an external business partner. These partial digitalisations were urgently needed to keep operations running and remain competitive since the start of the pandemic. The situation is different when it comes to general digitalisation in German SMEs. According to the 2021 Digitalisation Index, compiled by the Institut der deutschen Wirtschaft and IW Consult on behalf of the Federal Ministry for Economic Affairs and Energy, we see a very heterogeneous degree of digitalisation and a great need to catch up. Medium-sized companies score only 119 index points compared to larger companies with 250 or more employees with 250 index points. For smaller businesses with a maximum of 49 employees, the situation is even worse; they only achieve 94 points.* There is still a lack of consistently digital business models. There is a lack of digital infrastructure, seamless system integration and intelligent data management with analyses as the basis for data-based decisions. These are essential to make the right decisions in uncertain times with the war in Ukraine, rising energy costs, short-term demand fluctuations, fragile supply chains and a major shortage of IT specialists.
DIGITAL FUTUREmag: If company-wide digitalisation and the associated system integration are so important, how can Magic best support in this task?
Stephan Romeder: Medium-sized companies are well advised to drive digital transformation across the entire company, automate processes and introduce suitable tools. Digitalization today includes the use of disruptive technologies and concepts. By integrating legacy systems and new applications as well as improving business processes, they lay the foundation for successful digitalization. Connected communication with external partners such as suppliers and sales partners enables complete data flow and additional data transparency. The goal must be to dissolve data silos and make data from all sources accessible, structured and evaluable. There are various software solutions on the market with interfaces to individual systems. However, this is not a sound basis for intelligent data management across application and organizational boundaries. No reliable insights can be gained on the basis of structured data. With Magic xpi, we offer a flexible digitalization and integration platform that includes a data lake (data hub) and analysis tools (BI). This enables companies to establish harmonized data management with a 360-degree view of all information, introduce lean IT infrastructure and centralized customer management (CRM).
DIGITAL FUTUREmag: With process automation, companies often have data at their disposal that enables better decisions to be made. Why aren't so many companies currently taking advantage of this?
Stephan Romeder: Data is the raw material at the beginning of the digital value chain. After successful process and system integration, it initially flows unstructured and centrally via an integration platform: for example, business data from merchandise management and customer information systems as well as data from connected machines, devices and sensors from the production hall. A large data collection is created. It is estimated that around 55% of global business data is neither used, analyzed nor measured. It is therefore crucial to prepare and visualize the data. In practice, internal know-how and the right tools and concepts are often lacking at this point. With a suitable digitalization platform and data analytics functions, medium-sized companies can intelligently use and evaluate their data volumes, which represents a major added value.
DIGITAL FUTUREmag: As a solution provider, you are particularly well positioned in the field of integration. How are data-based decisions optimally made and what transparency is possible here?
Stephan Romeder: Data-driven decisions can only be made if all business and production data are available in real time. It is also essential to ensure that the data is prepared for all employees and management within the framework of a valid rights policy. Complete data and system integration forms the cornerstone for transparency and reliable data analysis. In practice, implementation is not complicated at all: independent integration solutions like Magic xpi enable SMEs to quickly capture, secure, and analyze all data centrally, no matter where they are located within the supply chain. A data hub allows information such as customer master data, market and competitive data, and machine data from the production hall to be linked and accessed in real time. Necessary workflows are improved and automated in the process. Data evaluations such as defined KPIs, daily or monthly closings can be clearly displayed in visual dashboards and accessed at any time, regardless of time and place. However, it is estimated that around 55% of global business data is neither used, analyzed, nor measured. It is therefore crucial to prepare and visualize the data material.
DIGITAL FUTUREmag: When introducing a new digitalization platform in a company, what are the key milestones you need to achieve together with the customer?
Stephan Romeder: First, it is important to understand our customer’s expectations in detail. Together, we determine the current state, both in terms of internal infrastructure and process landscape as well as the external environment. We then define how the project should be carried out. This is followed by a detailed cost-benefit analysis, which we create in close collaboration with our contacts and adjust as needed. Next, we jointly develop the milestones as a team. These include joint training sessions, design and detail specifications, setting up the Magic infrastructure, implementation and BP requirements, as well as an extensive testing phase. We monitor and control the individual milestones through regular monitoring and controlling. If necessary, we respond within the framework of our change management and adapt individual processes accordingly. It is very important that the expectations for the project are clear and comprehensible on both sides. The goal is to combine customer wishes with our own economic added value and expertise in the relevant sector of diverse digital solutions.
DIGITAL FUTUREmag: Let’s take another look ahead. How will IT infrastructure change over the next 5-8 years, and what steps can proactive companies take now to prepare?
Stephan Romeder: Digitalized business models will become sustainable: Our digital work environments and business models will continue to evolve at breakneck speed. I recommend that companies and smaller businesses modernize their IT infrastructure quickly. This includes introducing sustainable and automated workflows, using Green Coding technologies, new apps, and digital interfaces. With the growing shortage of IT specialists, quickly deployable low-code solutions can provide support, as they require hardly any internal development resources and can be easily adapted as needed. We are experiencing a data-driven future with enormous data volumes: According to IDC, the amount of real-time data will grow to about 30% by 2025, with more than half of it currently not being utilized. The reasons for this are varied: too many data silos, standalone applications, legacy systems, and manual processes in headquarters and branches. Digitalized processes, modern platforms, and analysis tools (BI) with intelligent data analysis, visualized dashboards, and customized KPI evaluations can remedy this. Digital customer experiences through Customer Experience will continue to gain importance. Creating unique and sustainable customer experiences will increasingly determine sales success in the future. Digital touchpoints, data-based product recommendations, and services for existing and new customers can sustainably enhance a company’s image and revenue. It is therefore important for companies to align themselves with customer needs throughout the entire customer journey. This can be achieved with digital processes and sound data analysis. At Magic, we support companies—especially SMEs—with IT solutions to help them continue to shape their future successfully. Because I am convinced: Intelligent data management is the key factor for the future, and data-driven companies will be the winners in the national and global market.
DIGITAL FUTUREmag: Thank you for your assessments and insights on how constructive digitalization can succeed for economic players of all sizes. This will certainly provide inspiring impulses for the (IT) decision-makers among our readers.