Celonis: Digital Gold Miners
Everyone is familiar with the phrase “data as a natural resource”. Quite a few companies have yet to understand the value and potential of their data. The Munich startup Celonis uncovers digital treasure to give companies a higher level of transparency.
A lack of transparency is a serious issue for companies: we get stuck in routines and take care of things as usual without much contemplation. Routine blinds us professionally. The problem only gets bigger from a digital point of view, as Celonis co-founder Bastian Nominacher explained during his interview with Munich Startup:
“Digitization generates an unbelievable degree of productivity. At the same time, companies are now faced with increased complexity, which is what makes it so useful to be able to see how things are being conducted in a business.”
His startup has set out to solve the lack of transparency in the business processes of companies. Celonis developed a program based on technology known as “process mining” that aims to shed light on everyday routines. The work performed by Celonis software is comparable to that of a management consultant who analyzes processes in an organization. The objective is to identify inefficient processes and then optimize routines in a company. The difference with Celonis is that processes are not analyzed and visualized by people, but are instead evaluated by software continuously and in real time.
The startup has struck a nerve with its technology. The young company’s references speak for themselves. In addition to mid-sized companies such as the family-run Schukat electronic, Celonis also works with enterprises such as Airbus, Bayer, Siemens, Nestlé, Vodafone and the consultancy firms Deloitte and KPMG. According to Celonis, 30% of all DAX companies use their software. SAP even names it in their own product portfolio under “SAP Process Mining by Celonis.”
“Traces are everywhere.”
Celonis originated in the student-run business consultancy Academy Consult München e.V., which is where the founders Bastian Nominacher, Martin Klenk and Alexander Rinke worked together. All three of them were studying at the Technical University of Munich at that point. Martin Klenk is a computer scientist, Alexander Rinke is a mathematician and Bastian Nominacher has a BA in business informatics and an MA in Finance and Information Management (FIM). In other words, all three are specialists and know their way around technology. Nominacher lists that as one of their factors of success:
“When it comes to our know-how, the three of us could still run Celonis on our own right now, but our resources would have run out a long time ago. In the beginning, I worked on programming too. As a manager, it is extremely important these days to understand trends in technology.”
The technology behind Celonis is known as process mining. The three founders first encountered the topic during their studies. That kind of data analysis was virtually unknown in Germany back then. What makes it so special, explained Nominacher, is that it is an enabling technology that can be used anywhere you find digital data:
“Almost every transaction leaves digital traces behind in a company’s IT systems – which we then use to our advantage. If traces can be found, we can analyze them. And traces are absolutely everywhere.”
That makes potential applications for Celonis software just as abundant:
“Siemens uses Celonis to improve the organization of their supply chain, RWE uses it to optimize their lead times, and KPMG uses it for compliance testing. We also analyze our own job application process with Celonis.”
His goal is to draw attention – in Germany and beyond – to his product. He calls it “evangelizing the market.”
Offices in Munich, the Netherlands and New York City
Process mining originated in the Netherlands where the concept from the field of computer science was researched at the Eindhoven University of Technology. The demand there is very high, and Celonis has its own local office. The company also operates an office in New York City. That is where Alexander Rinke controls business in North America. Celonis has become an internationally active company with its headquarters in Munich.
Celonis acquired funds for international expansion in mid-2016 from the investment companies Accel Partners and 83North. The Facebook investors got on board with the Munich-based company with 27.5 million US dollars. In the five years prior to that, the company had financed itself and could have continued to do so, said Nominacher:
“On a purely financial level, investments were not actually necessary since we are very profitable and growing strong. You have to differentiate as a startup as to whether capital is being acquired to have the necessary liquidity, or rather for strategic reasons. Liquidity was not the issue. For us, it was a matter of getting the right strategic partners on board.”
The company is not currently planning to take up any more capital. Their partnership with SAP is of much greater importance to them than financial investments. The software giant has placed their entire marketing power at Celonis’ disposal:
“Collaboration with SAP is of significant strategic importance for us. It gives us access to thousands of additional sales employees worldwide – and that is a decisive advantage in our market.”
“Nothing could make us leave Munich”
Their continued success has also become obvious on a spatial level: things are getting tight in their Munich headquarters. In the last six months alone, Celonis hired more than 50 new employees. Their move to a new office in Munich is planned for the near future. Leaving the Bavarian capital is out of the question for Nominacher:
“Munich is the perfect location for us. So many large companies are located here. Plus, with more than 100,000 students at the Technical University of Munich, Ludwig-Maximilians-University of Munich and the Munich University of Applied Sciences, we have access to an unbelievable talent base. There is nothing that would make us move: we find good employees, plus we have a super network and lots of clients.”
When asked whether competition from other companies is too stiff in Munich when recruiting new staff, Nominacher replied confidently:
“We do things differently compared to large companies. A person who wants to work with a corporation has a different personality and ambitions than our employees. We offer extremely attractive jobs, very few hierarchical structures and rapid opportunities for career advancement. That has kept us very successful. We receive around 1,000 applications each quarter.”
The company has high hopes for “Celonis Pi” (“Proactive Insights”), which is a development based on the process mining technology launched by the company at the end of last year. Until now, the software has collected and identified running processes. With Celonis Pi, the company has integrated machine learning components.
“Pi is an engine that we worked on for one and a half years. Pi unites process mining with machine learning and artificial intelligence, and automatically suggests specific patterns. Users have been using Celonis to analyze their processes up to now. Pi goes one step further and points out problems and bottlenecks. The work performed by Pi is more than exploratory; it is also makes intelligent recommendations that are completely automatic.”
One more step has been taken on the mission to giving data back its rights. Or, like we mentioned at the start: data is a natural resource. That makes the Celonis team something like the gold miners of the digital world.