Double Interview: Debreuck Neirynck and Cronos aan de Leie on the Digitalisation Landscape and Custom Software
Put two managing partners of two leading West Flemish technology companies together, and you can expect an interesting conversation. In this double interview we talked with Neal Van Maele, Managing Partner at Cronos aan de Leie, and Wim Debreuck, Managing Partner at Debreuck Neirynck, about the current digitalisation landscape and the urge for custom software solutions. Must read!
How would you describe ‘digitalisation’ in these current times?
Neal Van Maele (Managing Partner, Cronos aan de Leie): “To explain ‘digitalisation’, it is utterly important to make the distinction between digitisation, digitalisation and digital transformation. Making the switch from fax to email, that’s an example of digitisation. In case digital technologies are used for improving or renewing business processes, we speak about digitalisation. Digital transformation is another kettle of fish, as it’s the process of making change and the ability to cope with changing the core competence of your business and its underlying processes.
“Nowadays, way too many companies still think that because they are doing digitisation efforts, they are dealing with digitalisation, that’s for sure. And that mindset has to change.”
Wim Debreuck (Managing Partner, Debreuck & Neirynck): “To elaborate on that… Identifying a company’s digitalisation maturity level isn’t that easy. Especially because of the fact the digitalisation landscape is still quite young. Just because you are a big company doesn’t necessarily mean you are already far along in digitalisation. For some companies digitalisation is the core, ‘the enabler’, for others it’s a necessary evil. A completely different point of view.”
Neal: “It might be interesting to put some things into context. Kortrijk and by extension West Flanders have always had a competitive advantage in the area of machine building and engineering. Regardless of some severe setbacks in the past (over the second World War for example), where a lot was taken, we were able to quickly recover because of the enormous amount of existing knowledge within the region. The latter could be seen as a huge benefit, and still is, but in the long run it turns out to be a barrier in some occasions. Whereas countries such as China, India and several Eastern European countries were catching up, the West Flemish region insisted way too long on things they were used to doing. Now, more than ever, digitalisation is necessary to stay competitive, to stay relevant, regardless of the sector in which you are active. By automating things in a pragmatic and targeted way, quick wins can be rapidly achieved. And it does not necessarily have to cost a lot of money, seeing it in the bigger scheme of things (focussing on Return on Investment). ”
Wim: “One thing’s for sure. Companies that have not yet embarked on digitalisation better start doing so soon, otherwise they’ll have to pay the price.”
Is there a chance that we will digitisalise to the point of making ourselves redundant?
Neal: “The profound process knowledge is in the heads of the elder employees. On the other side, the younger generations show way more digital savviness. Therefore, digitalisation is needed to bring these two groups closer together. By implementing digital solutions, senior levels can share their experience and knowledge in a more scalable way and work more efficiently in their day to day operations. Whereas the younger generations are provided with tools they’re more acquainted too. Improving training, coaching and operational support for employees (not only customers) will bring more ‘happiness’ and consequently lead to the much needed retention and company relevance.”
Wim: “But there will come a time that we will become redundant. The Industrial Revolution we’ve been through, is now occurring at the service level. More and more services are getting automated. An accountancy firm with 40 employees will have perhaps 5 employees in 10 years’ time. Retraining redundant workers is certainly a possibility, but you cannot re-skill everyone. There are simply too many of us on the labour market. Another possibility is taxing robots like we tax labour. By means of this automation creates compensation.”
Neal: “For many companies, we do not have to look that far into the future yet. The catching up that they have to do is still far too big. They still have to learn how to use digitalisation and automation to support their business processes so that they can scale more easily and work more flexibly, instead of continuously adapting the human resource capacity.”
During the current pandemic, it has often been about how small businesses deal with it. Larger companies were less discussed.
Neal: “That’s because a lot of the larger businesses do not deliver directly to the end customer. On top of that, they have been applying a hybrid business model for some time. Among the smaller companies, the Corona pandemic has established a tremendous acceleration and awareness. What if customers never enter physical stores again? We don’t have a web shop or a proper website, is that an issue? For some of the small and medium-sized enterprises, the pandemic was a true eye-opener, for others it accelerated their digital transformation even more.”
Do you think smaller companies will return to their old ways when the pandemic is over?
Neal: “As I said before, Corona has established an enormous acceleration, and has uncovered the gaps in the digital strategy of many companies. If you want to stay relevant across borders, digitalisation is just required. When the pandemic is over, some companies will return to their old way of working. Others will realize that a digital shift is the only way to survive and to stay relevant. Cronos aan de Leie aims to focus on the latter, businesses that want to make a difference, those that want to outdo their competitors.”
Wim: “Of course, the mindset of consumers has also changed significantly due to Corona. Take for example a doctor’s visit. During this pandemic, lots of doctors have made the switch to an online appointment scheduling system. Something they will not return to. If they had done that earlier, it would have caused a revolution among customers. But now most people are okay with it, simply because they have seen the benefits of it.”
Custom or packaged software? Which should companies opt for?
Neal: “It’s all about a company’s capabilities, and keeping in mind a clear distinction between core, differentiating and innovating capabilities. When it comes to core capabilities, such as invoicing and accountancy which don’t defer that much between companies and industries, it’s a best practice to opt for packaged software. If we are talking about differentiation, processes (internal and external) where you make the difference there’s (a lot of) room for customized solutions. After all, you want to keep that proprietary knowledge and intellectual property within your company. In the case of innovation, custom software or the agile ways of working connected to it, are an absolute necessity. Companies must decide themselves what is core and to which extent they need to differentiate and want to innovate.”
Wim: “If you use the same software as your competitors, you won’t differentiate. But then you need customers with guts, daring people. A company that doesn’t have any guts will usually not opt for custom software. Integration is a very important element in this. It is not a question of custom or standard, it is always a combination of both. Integration is not a differentiator in itself, but it is important.”
Neal: “Packaged software can enable companies to engage in differentiating solutions, things that make a difference. Labour-intensive processes can be automated, freeing up time and money to create and support things to stand out. That needs to be the future spirit!”
Triggered by this interview? Interested in a collaboration with Cronos aan de Leie or Debreuck Neiryinck? Don’t hesitate to get in touch and let’s talk over coffee!