In the Digital CxO Leadership Insights interview, Mike Vizard talks to Celigo’s Jan Arendtsz about why the return on investment in automation is not as high as it should be and what needs to be done to improve it.
Mike Vizard: Hello, and welcome to the latest edition of the Digital CxO Leadership Insight series. I’m your host Mike Vizard. Today I’m with Jan Arendtsz, CEO for Celigo. And we’re talking about automation and in general sense of we’re not making as much progress as we may be hoped to have made given our level of investments over the last two decades in it. Jan, welcome to the show.
Jan Arendtsz: Thank you for having me.
Mike Vizard: What is the core of the issue in your mind, because we have invested in ERP systems, we got systems of engagement, we have more applications than we know what to do with and yet productivity numbers don’t seem to be going up all that much? And it doesn’t feel like things are as automated as they shouldn’t be. So what’s your sense of what else?
Jan Arendtsz: Yeah, look on the surface. If you look at the numbers, and there are various reports, right, a medium sized company likely has 100 plus, SaaS applications, as you pointed out; there is an app for pretty much anything and everything that you can imagine. And I think that’s part of the problem. It is so easy for companies to go by these applications at a departmental level; sometimes we’re alongside with it. And the mindset that companies have is okay, I’m buying a business application to solve a particular problem. And to get into that, very few companies take a step back and think about, okay, well, if I have 100 apps, if I have 20, apps, and sales and marketing, how’s it all gonna work? Am I thinking in terms of the business process that I need to implement? Or am I thinking in a siloed fashion? And so I get it, this is the first evolution of SaaS. And it’s now we see even smaller companies, sometimes, it doesn’t happen often, but once in a while, we see even a small company, think about automation, as more of a first class citizen. They’re like, okay, if I’m gonna get all these apps, how’s this all gonna work? And I think that’s the transformation that we’re going through right now. So it’s no surprise is what I’m saying.
Mike Vizard: So we wind up with all these silos, and they each have their own stacks of data, and the data often conflicts and we wind up with processes that are somewhat disjointed. So the question then becomes what’s to be done about all this? Do I look for bigger SaaS applications that span more processes? Or do I try to find some way to integrate all this data in a way that makes it more cohesive?
Jan Arendtsz: I mean, obviously, there’s some self interest here, but I’m going to say, trying to go back; monolithical SaaS apps is absolutely not the way of the future. There’s a reason why there are more and more SaaS apps, because with every new SaaS app, the company is taking a particular problem and going deeper, to find a more meaningful solution. So what companies need to do is first, identify some of the most critical use cases that need to be automated. Automation is something where you cannot boil the ocean, you cannot go and try to automate everything at the same time. One approach, a pragmatic approach is to identify some really key processes. And it becomes pretty obvious to these companies. For example, if you’re selling online, and you’re taking orders through an e-commerce platform, you have to have those orders come into your order management system – that has to happen. And if you’re taking more than 10-15 orders a day, you have to automate that. So that’s pretty obvious. Maybe another example might be if you have lots of employees, and you’re hiring lots of employees, you need to automate that onboarding, off boarding process, right? So there are signals that companies get that, hey, this needs to be done. If I don’t do this, there are consequences. I’m gonna get left behind, so on and so forth. That’s one approach. Long term. I think companies do need to take a step back after a while and say, I can’t really think about the how all of this is going to work. And that’s going to be certain companies that are mature enough. It happens fast enough by the companies, they’ve got to experience some of the problems before they can get to that point.
Mike Vizard: Do you think a lot of organizations have basically taken what amounted to a paper based process that they’ve been using for years and, quote unquote, digitized it by sticking a couple of mobile devices in front of it? But the whole experience isn’t all that much different for the end customer and they really don’t sit down and re-engineer that process for a digital experience? And otherwise, you wind up going to the doctor and instead of filling out a form, you’re punching in the same data into a tablet, but it’s still the same, less than exciting experience.
Jan Arendtsz: That’s an astute observation. And the short answer is yes. But again, it is understandable, right? Companies look at what they’re doing. And they take it segment by segment, maybe application by application. And they start replacing a paper based process with, as you pointed out, a tablet or the mobile device, so on and so forth. And but they’ve not taken a step back to say, okay, that business process that worked in the last 10-15 years, part of it paper-based, facts based, so on and so forth – how can I transform that business process, to have a better customer experience to go through an entire digital transformation? Right? There is a big difference – it may look subtle, it is a big difference in replacing the components versus looking at it holistically. Eventually, though, as I said before, sometimes companies do that they replace parts of it. And they come to the realization that, okay, you know what, I have to really rethink this business process. Because this is a different era, I cannot do things the same way. But in certain cases, that existing business process is fine enough itself, you’ve replaced the components, it really gets down into the details in terms of what you do, what that business process is,
Mike Vizard: Do you think we’ll see shifts in market share, because customers will start voting with their feet based on the digital experience that they’re having? They may not even care if it costs more, they may just decide that this is a better use of my time. And they’ll just kind of shift accordingly. And this will become a much bigger, competitive issue.
Jan Arendtsz: And I think we’re seeing that right now. I think it’s the fear of being left behind. It’s kind of interesting to see, sometimes when we’re speaking with prospects, or in certain cases, even existing customers, as to why they’re trying to transform. Part of it is because they are forward looking companies but part of it is also if my competitors are doing this, if I don’t do this, I won’t be able to keep up, or my costs are too much. I think it’s on both ends of the spectrum.
Mike Vizard: We talked about SaaS applications. And in fact, they’re really packaged instances of a business process that you can customize and extend. But they’re kind of limited in to a specific function and roll. And then other folks are building custom applications that get layered around that. What is your sense of when should I kind of lean on a package SaaS application versus build something myself that made me have more unique value? How do I kind of navigate that?
Jan Arendtsz: So on this one, I think I have a very strong take, in this day and age, when pretty much every imaginable business function has a SaaS app. The thought of saying that either that’s not good enough or my business is so special. And it’s custom. And I need to build something custom. I really don’t think that makes sense. As always, there can be exceptions, on an exception basis, but there are plenty of apps, good apps to do pretty much anything and everything that you want to do. I think where there’s a role for customers, and that’s when again, you have multiple apps, especially around a particular function business process, you might have to find ways of maybe pulling some of that information out and showing that information in a different way, having a different workflow. And I think that’s a meaningful utilization of a customer, rather than trying to reinvent something that has been done and done much better.
Mike Vizard: A lot of those workflows are built using low-code and no code-tools. What is your sense of how much developer expertise is really required to make those tools work on top of the SaaS application? Or are we really seeing the emergence of citizen developers who can build applications that will scale and are secure or what’s the right balance there?
Jan Arendtsz: So, I think it’s this classic case of, maybe it’s an 80/20 type role where certain simplistic applications in this day and age truly can be built pretty quickly through a low-code platform. But as soon as you start to add complexity, then I think the skill level starts to go up. So definitely, it’s possible for certain types of apps to be built by not so technical users. An example of where complexity may arise is, you’re trying to build this low-code app, that’s gonna touch a few different backend systems. Now you got to pull data out of those systems. It’s not just a simple data model. And that’s when there’s just a massive drop off in these low-code platforms, right? How do you beyond the obvious beyond being able to let’s say, send out an email, send out a text message, instead of rolling through a spreadsheet, maybe connect with salesforce.com? Beyond those obvious ones, then it requires a technical part.
Mike Vizard: You cannot walk down the street these days without somebody leaping out and telling you about this great AI thing that they’ve created. What’s your sense of what’s real about AI? Because a lot organizations, they’re not Microsoft and Google. So they’re maybe behind the curve a little bit in terms of the core tech. But the question I have is, you know, how much do they really need to know about AI? Or is it a capability that’s just going to show up within the applications that I take advantage of? What’s real and what’s not real?
Jan Arendtsz: Yeah, I mean, obviously, it’s the talk of the town. I was coming back from a conference, and I took an Uber ride 30 minutes, and I spent 30 minutes discussing ChatGPT and AI with my Uber driver. And it was one of the most fascinating conversations I’ve ever had in an Uber. Here, here’s how we think about it. Right? It’s, with the introduction of ChatGPT – this has just become a must. And I think that if I were to just dumb this down, at a fairly high level, the hard problems have been solved by really smart people. And now AI is at a stage where it’s the application of, you don’t have to go solve the hard problems, you have to figure out how you want to use it, in your product in your business. And certainly if I’m speaking about Celigo, we see so many different ways where we can use the recent advances in this technology, to help other customers have a better customer experience, time to value so on and so forth. I think the key is just the application of it. It’s not solving the hard problem anymore.
Mike Vizard: So what’s your best advice to folks? A lot of people, they have processes in place; they can’t just, you know, rip them up and start with a blank piece of paper. So how do I get from where I am today to where I might want to be tomorrow?
Jan Arendtsz: Yeah, so we label this as a maturity model; we have five stages for automation, integration lead automation, and we we ask our customers, in fact, we guide our customers, to be able to take a step back and first assess where they are. As the old saying goes, in order to solve a problem, you have to recognize that you have a problem and understand what kind of a problem it is. Not saying that this is necessarily a problem. Every company gets to a certain position in a certain way, it’s just happenstance. So the important thing is to be able to understand where you are, how to benchmark yourself against companies, perhaps in a similar size, similar space, and understand if you’re a little bit low on the maturity scale, and if you can get to maybe the middle of that scale – how’s it gonna impact your business? What are some of the business outcomes that you can think about? When we have a conversation in those terms, I think most companies feel like, okay, instead of just solving the immediate pain point, it does make sense for me to take a step back. It does make sense for me to think about automation as more of a first-class citizen than an afterthought.
Mike Vizard: Alright, folks, you heard it here. Wherever you’re on that maturity curve, you’re not alone. But the issue is, you’re running out of time. Jan, thanks for being on the show.
Jan Arendtsz: Thank you.
Mike Vizard: Thank you all for watching this latest edition of the Digital CxO Leadership Insights series. I’m your host, Mike Vizard, and you can find this and other episodes on the digitalcxo.com website. Once again, we’ll see you next time.