Prof. Dr. Steffen Strese in conversation with Andreas F.J. Obereder, CEO and Founder of ATOSS Software AG
Mr. Obereder, before we get to the subject of ATOSS, I'm interested to hear your views on the change to our economic situation over the past year.
After 12 years of economic boom, it became clear to us all in 2020 that there are certain developments which have no immediate remedy. And that we'll probably only understand the full extent of them in retrospect. Today, a major impact of this development is clear for all to see: The future has become the new present! The forced rapid acceleration of technologization on a global scale has entirely redefined economic parameters. This has irreversibly changed the process landscape and the work environment across all industries. There are two key factors driving this change: the inevitable digitalization of all enterprise processes, combined with staff who can now work from home or virtually anywhere around the world. Rapid acceleration of digitalization and real-time availability of data from all enterprise processes have put everyone under serious pressure to act.
Have you observed any changes over the past year that have actually had a stabilizing effect?
Sure! The arrival of a new U.S. administration and more clarity around Brexit have opened up new prospects for cooperation, both across the Atlantic as well as within Europe and the EU. There are opportunities to use strengths, such as reliability and partnership, to lay the groundwork for joint action. I expect this to lead to a far better collaboration to tackle global ecological and economic challenges. And yet, behind the scenes at companies, huge volatility and accelerated change processes are fast becoming the norm. This will continue to be the case for us and our customers.
So, how does volatility impact businesses?
Well, here are a few examples from the last 12 months. Take new health restrictions. These trigger major volatility. Social distancing rules, hygiene measures, protection of high-risk groups and split-team organizational structure – these all now need to be factored into workforce planning. Staff hortages trigger volatility. Topics like childcare, sick leave, and legal restrictions on working time flexibilization have to be taken into account. The current crisis has delivered a double whammy to both supply and demand: on the one hand, through a significantly increased risk of supply chain disruptions and the resulting supply shocks, and on the other hand, through demand shocks caused by changes in customer behavior. In order to optimize sales and costs, both aspects must be taken into account in proactive workforce planning. These factors coupled with financial bottlenecks have created an environment of unparalleled volatility
How should companies address this situation?
Well, volatility is nothing new – it just reached unprecedented levels in 2020. Prior to that, the speed of change across the global economy was already significantly increasing. Even then it was clear that there was a need for increased flexibility – for companies to adapt on the fly to a new framework. And develop the ability to respond to unpredictable changes at short notice. According to a KfW business survey, around one-third of SMEs were already using more flexible working hours and locations in April 2020. Among companies that had already experienced disruptions in business operations due to staff absences, the figure was even more than half. Over 70 percent of mid-size companies with more than 50 staff have expanded their use of remote work from home in the last ten months. The results of a McKinsey executive survey also confirm that this pays off. The study reveals that the companies navigating the current crisis the best are those embracing advanced technologies and becoming more innovative and willing to experiment.
How would you rate the progress the economy has made in terms of digitalization in 2020?
In a recent European survey, more than two-thirds of executives said the pandemic is a driver of digital transformation at their companies. This is especially true for areas in which digitalization was being pushed even before the crisis. 2020 was a year of reckoning for many of us in a variety of ways. Even the best-laid plans CIOs had made for migrating their organizations to the Cloud had to be massively accelerated.
Why have cloud solutions become even more of a focus?
The Cloud has proven over the past decade that it is more than just a technology. It's a key enabler of business innovation. In many cases, it has only been possible to react to the external pace of change experienced in 2020 thanks to cloud solutions. Their use allows companies to not only significantly optimize and expand their IT capabilities but also scale at the speed the business demands. This makes both predictable and unpredictable fluctuations easier to manage. Companies that adopted cloud-based solutions early on were significantly better equipped to meet the needs of their customers and staff while maintaining revenue growth. This is directly reflected in the earnings figures from successful organizations. Our core message from last year's annual report was: "Now is the time to prepare." And even though none of us would have wanted the recent turn of events, it has proven to be accurate in retrospect.
Andreas F.J. Obereder
Digitalization and cloud computing have shifted the focus onto improving customer experience and value creation for both external and internal stakeholders.
Is the topic of cloud computing going to continue to gain in significance?
Definitely. Digitalization and cloud computing have shifted the focus onto improving customer experience and value creation for both external and internal stakeholders. But Germany still has a lot of catching up to do here. Eurostat estimates that the proportion of companies that rely on cloud computing services in our country is just 22 percent. In Scandinavia, Great Britain and the Netherlands, it's already well over half. This is also reflected in our own figures. Cloud solutions comprise only about 40 percent of our business in Germany. Whereas abroad, we now sell cloud solutions almost exclusively. Regardless of the increase in the use of cloud solutions in 2020, German and European companies still have a long way to go. We therefore anticipate continuing growth in this area over the coming years.
How does digital workforce management help address the economic impact of the pandemic?
Our solutions create the basis upon which legally compliant documentation of remote working hours, as well as audit-standard record keeping of short-time work or subsidy documents can be maintained. At the same time, they make resource management easier through long-term working hours accounts, vacation management, and capacity planning. ATOSS customers were able to react in an ad hoc, precise, and highly efficient manner. This has kept them competitive, financially secure, and ultimately saved jobs. We have received huge amounts of positive feedback from our customers during this time. And a lot of them represent system-critical organizations like hospitals, logistics providers, and suppliers.
Which sectors get the most out of your solutions?
These days, I'd say the relevance spans all industries. However, especially positive results have been leveraged in the personnelintensive sectors most impacted by fluctuating demand. Take the retail industry. Here companies like EDEKA, ALDI SÜD, Douglas, and Fressnapf have trusted our solutions for a very long time. And, of course, the healthcare sector. Here we have customers like Helios, University Medical Centre Mainz, Saarbrücken and Leverkusen hospitals or the Swiss telemedicine provider Medgate. We are also creating significant value in logistics, manufacturing, the service sector, and the public sector. I'm talking about customers such as DB Schenker, WISAG, thyssenkrupp Packaging Steel, HUK-COBURG and the City of Munich.
These all sound like major players. What's the situation like for medium-sized and smaller companies?
It's just as important. A lack of skilled workers, new laws and regulations such as GDPR or the ECJ ruling on the mandatory recording of working hours – these challenges all point to making investments in digital working time management. Whether you're a company with two to 200,000 staff, ATOSS has a solution for you. Our cloud software Crewmeister is ideal for small enterprises, startups, and trade businesses employing up to about 30 members of staff. It can be launched in the Cloud in 60 seconds and configured within 15 minutes, allowing companies to hit the ground running. You can record working hours, manage vacations, and deploy staff – quick and easily. Last year alone, we won well over 1,600 customers in the small business egment. And we also have more than 3,000 customers in the classic SME segment, you might be interested to know.
Let's talk about compliance – is this topic strategically relevant for companies?
There is no doubt that this is an important topic for companies and fiscal units. New laws and penalties are a constant which in turn make workforce management more complex on both a national and international level. There's no getting away from the fact that a legally compliant system is businesscritical in averting adverse legal consequences. For us, of course, it's the necessary basis upon which we can develop the kinds of conversations with our customers that we want to be having – like those around demand-driven workforce management.
Mr. Obereder, 2020 was the 15th consecutive record year for ATOSS. Once again, your company has been recognized as a leading mid-size company by renowned publications such as the Handelsblatt and WirtschaftsWoche. ATOSS seriously has its act together…
Thank you! In my opinion, a stable political environment is critical for sustainable growth. While a lot of critique may be justified, I think we all have good reason to be grateful for our democratic system's stability and ability to act. What is more, at ATOSS, we generally let our decisions be guided by a sustainable, value-driven approach. In doing this, our team is delivering on our mission to have a lasting impact on the working worlds and all its stakeholders. This mission has no expiration date. It is valid indefinitely and acts as a reality check: Is what we are doing today creating added value for tomorrow? This is more important to us than short-term monetary gain. And it differentiates us. But of course, it's not just about strategy. It takes effective execution by our staff to pull it off. I've been really impressed by the resilience shown across all areas of our company in the face of adversity over the past year.
Andreas F.J. Obereder
I've been really impressed by the resilience shown across all areas of our company in the face of adversity in the past year.
The results speak for themselves.
They do indeed! Despite the most challenging of circumstances, we succeeded in topping 2019 which had been outstanding. The result is an overall growth of 21 percent, with the cloud segment growing by 66 percent, while maintaining a very solid EBIT margin of 30 percent. This is also reflected in the company's value and its surging share price. All of our staff and business partners can be seriously proud of that.
Let's look ahead into the future – what's on your agenda?
For several years now, we've been increasing our company's international focus in order to be able to serve our customers across the world even better. We now have customers in over 45 countries across four continents. Laws and regulations such as GDPR or the ECJ ruling on working time records have a transnational character. So it's not surprising that international solutions are increasingly important for companies. For the foreseeable future, we have set ourselves the target of expanding our sales and service locations into new countries every year and bringing the benefits of our solutions to new companies there.
Can you give us an example of such an international project, Mr. Obereder?
Take the world's largest chocolate producer, Barry Callebaut, with 60 production sites in over 40 countries. In 2020, Barry Callebaut chose ATOSS as its global workforce management partner aligned to its digitalization strategy. Our agile project approach meant we were able to rollout our solution in the first five European countries in just two quarters. The company uses one central system, which is adapted to the requirements and laws of the various organizations at country level. In 2021 we'll be deploying the solution to many more countries hand-in-hand with the customer. That's countries in Europe and Africa, as well as the United States. The whole thing is based in the Cloud, by the way.
Anything else that's on your radar?
Our other main focus over the next few years will be the continuing transformation of ATOSS into a cloud-based company. We have been offering cloud solutions since 2015 now – so we've gained great experience in this area over the last few years. Today, many of our new customers are already opting for one of our modern cloud solutions. Over the next few years – and in order to be able to continue offering the best technology in the future – we'll be investing more than 60 million euros into the continuous development of our solutions and the transformation of our company. This benefits not only our customers, but also a broad partner ecosystem.
Can you tell us a little more about this partner ecosystem?
We are currently making a strong push toward expanding our partner network. This will help us to deploy our solutions internationally, in a quick and customer-centric way. Our network ranges from technology partners such as SAP or Microsoft, into whose portfolios we integrate our solutions, to international implementation partners who supplement our products. We are constantly on the lookout for high-performing companies that want to shape tomorrow's working worlds with us and participate in the success of "Workforce Management made by ATOSS."
It sounds like there's incredible potential ahead…
Absolutely! Every day the team and I strive to adapt and align ourselves to the future. I think I speak for everyone when I say it's precisely this company's enormous potential and its business model that inspire us to do that.