Source: ATOSS annual report 2017
Mr. Obereder, ATOSS has been on the market for 30 years. You can be proud of a long success story with 12 record years in succession. But aren’t you looking to the future with some concern?
What are you thinking of?
When you started out, you were the pioneer of workforce management in Germany. Today, the topics are well-established. Many companies have jumped on board, and everyone wants to digitize.
Ok, so you think the cake is getting smaller. No, we're certainly not running out of challenges or growth areas. The digital transformation of our companies and living environment has only just begun. The large American and Asian Internet corporations are growing at rates that we otherwise only see from small start-ups. At Amazon, for example, sales were up by 38 percent in the final quarter of 2017. Google and Bill Gates are building entire digital model towns. There are radical upheavals up the road that will also impact our subject of working environments. We want to help shape this transformation.
Where do you see such changes?
Entire sectors of industry have been undergoing rapid change since the 90s. Megatrends such as Industry 4.0, the increasing transformation to a service society, rapidly spreading digitization and the trend to “on-demand” solutions – these are all acting as catalysts. The closer intermeshing of work and leisure – keyword work life integration – is making itself felt. On the one hand, the number of employment contracts is rising, and on the other, the employment rates in different sectors and the types of employment are changing.
Can you cite some examples?
Part-time work has more than doubled in Germany since 1987 and now stands around 35 percent. It is obvious that workforce management can make a significant contribution to the creation of value and employee motivation as employment relationships are becoming substantially more complex, multifaceted and individual than before. But the 17 percent of the working population who work according to a fixed shift pattern, have also seen a marked increase in the degree of flexibility associated with their work.
Let’s wind the clock forwards: Industry 4.0, automation and robotics are gaining ground. Does this not pose a risk to your business model? After all, workforce management is about people and not robots.
Don’t worry, we’re not going to run out of jobs. There have already been other massive upheavals in Europe in the last 30 years. In Germany alone, there are 3 million fewer people working in production today than at the start of the 90s. Partly as a result of automation and now accelerated by the intelligent networking of production and logistical processes – Industry 4.0 as it is referred to. Interestingly, however, over 9 million new jobs were created in the services sector in the same period. Automation and robotics do not automatically result in fewer jobs. The situation is rather that we are in a transition phase from an industrial to a service and, in the long term, knowledge society. Around 75 percent of the working population in Germany is already working in the services sector today. That puts us around the average for Europe. If we look at the USA – where almost 90 percent of the working population is now in the services sector – we can see that there is still room for this figure to trend upwards.
ATOSS seems to be coping well with these changes and has delivered its best annual results in the company’s history. What are the factors behind your success?
Well, there are many different reasons, but the main factors in my view lie in our strategic focus on the subject of workforce management, our corporate culture, the skill and passion of our employees and of course our market leadership in technology and innovation.
Technology has always played an important role in your company?
Technology and innovation do indeed enjoy high status with us. We began 30 years ago by developing a time & attendance solution on IBM machines. Today – 4 crucial technology leaps later – we are offering the technically most comprehensive workforce management solution. If it fits with the customer’s strategy, it can also be in the cloud, of course, in connection with the highest SLAs and security standards. In the SAP environment, our solutions are also integrated into the existing HR systems of our customers. The breadth of our solutions for companies from 2 to 200,000 employees and for nearly every sector is unique. This is only possible through systematic investment in R&D. Every year, around 20 percent of our revenue is committed to R&D. This represents a total investment of more than 100 million euros over the last few years. This, too, is unique in our field.
So the upheavals are predominantly an opportunity for ATOSS?
That's right. Since the 90s, there are 5.5 million more people in work in Germany alone. This is due in large part to the flexibilization of working time. Highly intelligent workforce management solutions are indispensable to deal with the requirements that go hand in hand with this process. The need for management systems to cope with the transformation towards sectors with a high proportion of personnel costs such as the services sector, is continuing to rise.
Where do you see potential in the services sector?
Let’s take facility management as an example. This young, dynamic market has changed in a short space of time from a cleaning service for buildings to a multi-service provider. With now over 4 million employees in Germany and gross value added of 130 billion euros, this sector generates approximately 5 percent of the gross domestic product. Providers such as HECTAS, Leadec, Sodexo, WISAG, all of whom are customers of ours incidentally, are growing steadily and some of them have several hundred thousand employees worldwide. Without modern systems, these companies would no longer be able to manage the complexity of their services or offer customeroriented, flexible services. The sector already weighs in at a global market volume of approximately USD 780 billion. And the trend is on the way up.
ATOSS is now an established European supplier. What is your view of the situation in Europe?
The trend towards services is clearly discernible in Europe. In 2015, 71 percent of the EU workforce were employed in the services sector which is 5 percent more than 10 years previously. It is pleasing to note that the number of people in work also rose across the EU as in Germany. However, there are still major differences with regard to the flexibilization of working time. Compared with Germany, France, for example, still has very rigid labor market structures. We are watching with great interest how in the first months of his period of office, the French President Macron has already pushed through changes at great speed leading to greater labor market flexibilization. This will give France the opportunity in future to integrate significantly more people fit to work. At the same time, however, complexity for French companies is increasing. Because a flexible labor market is definitely more demanding as far as workforce management is concerned. This is precisely where our solutions can provide support.
What is currently exercising the CEOs of your customers?
The number 1 subject in the HR domain is the shortage of labor. This problem is set to become even more acute in the future. We are seeing the combination of two effects. On the one hand, there are fewer and fewer qualified workers available as a result of demographic changes. On the other, the economic growth of the last few years which has been appreciable in some areas, has emptied the labor pool. Both effects lead to a skills shortage. In Germany, the Federal Employment Agency is reporting around 410,000 vacancies for skilled workers at the end of 2017 – around 11 percent up from the previous year. This acts as a massive brake on growth. This makes it more necessary than ever to plan and manage existing personnel on the basis of demand, detect bottlenecks with regard to certain qualifications at an early stage and target the acquisition of these qualifications. If companies manage to involve their staff in these processes, they will have taken a vital step towards enhancing employee satisfaction and improving their employer brand. The core business of ATOSS is to help with this process.
And has this message already got through to management board level?
Not nearly enough! Whenever we talk to prestigious companies, it never ceases to astonish me that as far as workforce management is concerned, they are frequently still using a working time management system that should be exhibited in an industrial museum. For example, an ATOSS study revealed that only 5 percent of the companies surveyed tap their existing data to calculate demand and therefore to optimize their workforce management processes. This is a major disadvantage when competing against more progressive companies as employees are increasingly becoming a key resource. It also constitutes throwing away the value creation potential in the billions for the economy as a whole.
»For us, 2018 is the year of the next generation of self services platforms. It's a new era – plain and simple.«
Andreas F.J. Obereder, CEO and founder of ATOSS Software AG
What is the status of digitization in HR departments?
Unfortunately, digitization is often no more than a buzzword. The strategic potential of digitization in the HR domain is frequently underestimated or not even discerned. What we need is for top management to focus a little more on the subject of workforce management in order to realize its strategic potential. The watchword “Digitize or Die!” also applies to HR. Large corporations generally find it easier to digitize their processes than SMEs that still tend to take a conservative view of HR.
Does ATOSS have a product for SMEs?
We know that they need entry-level solutions. And that is why we extended our product range several years ago to include highly standardized solutions. These products help SMEs to benefit from modern software with a very manageable investment and short project lead times. Last year alone, we were able to convince over 500 new SME customers to adopt modern workforce management based on these products. ATOSS has established itself in the mass market. Today, we are a genuine full-range supplier.
Why should companies opt for an ATOSS solution?
Our customers succeed in realizing benefit potentials on three levels. On an administrative level, support processes are slimmed down, automated and designed to protect resources. On an operational level, potential can clearly be leveraged to achieve productivity and efficiency gains. Costs are optimized by introducing demand-driven personnel deployment and improving the associated processes. This usually leads to rising sales on a product or service level as a result of higher quality. This third aspect has a direct impact on profitability and many companies are not even aware of it.
Can you give us some concrete figures?
Take our customer engelhorn, for example, where 1,500 employees are managed in almost 60 planning departments. The ATOSS solution enables this to be accomplished through rules-based plans achieving very high planning quality – in connection with 60 to 80 percent less planning time. In logistics, forecasting accuracy of up to 95 percent is attained. This saves many thousands of hours in personnel administration alone. Above and beyond the administrative and operational level, we also help our customers on a strategic level. For example, in establishing an employer brand and increasing employee satisfaction by involving staff in the planning processes. These are issues that hold high strategic value in times of skills shortages.
Can you cite an example of stronger employee integration?
For our customer Lufthansa, we set up systems under the motto "Democratizing working processes" which enable employees to have their requests included in the monthly working time planning process. Our system excels in factoring in such requests. You can imagine how complex this is with a global player with tens of thousands employees, strong unions and diverse underlying conditions enshrined in law and collective wage agreements. But the benefit for companies and employees is naturally enormous. Employee satisfaction and the degree of self-determination rise, and personnel resources are also deployed more efficiently.
What is the significance of the trend towards globalization for you?
Today, our solutions are at work in over 40 countries. We adapt them to the particular local requirements with the aim of creating value. This allows global players to manage their workforce management processes in a standardized fashion, as the company W.L. Gore & Associates, for example, has successfully proved with our Enterprise Solution in over 25 countries. We have recently taken a further step down this road and are now reinforcing our local presence. Either with strong local partners as in Scandinavia or Benelux countries or own offices as recently opened in the Netherlands. SHELL is a good example of a customer won locally in the Netherlands. We have recently completed the rollout there of automatic planning at all gas stations, thereby helping to realize significant benefits.
What can we expect from ATOSS in 2018?
We take a lot of pleasure in helping European companies to become more competitive by serving them just as reliably and sustainably as we have in the past – and in maintaining our clear focus as a specialist provider for workforce management. We are also making further investments in our portfolio. On premise and in the cloud. Our vision is to expand our technology leadership and become a global player. In the process, we want to play our part in designing and initiating fundamental changes. For us, 2018 is the year of the next generation of self services platforms. It's a new era – plain and simple. Wait and see!
I wish you every success in these endeavors!
As a business and financial expert and recognized authority in the field of value investing, Prof. Dr. Max Otte has published numerous books and articles on business and financial issues.