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“SMEs face particular challenges with digital transformation”

An interview with Professor Dr.-Ing. Ben Marx and Professor Dr. Christian Cseh, directors of the Steinbeis Transfer Center Processes in Motion

If a company wants to go digital, it has no choice: It will have to implement IT projects. This also applies to SMEs, but when they start grabbing IT projects by the horns, they soon discover that the playing field for their particular type of company may be governed by a completely different rulebook than for large companies. This starts with the search for business partners and even applies to the actual implementation of their digitalization solution. Professor Dr. Ben Marx and Professor Dr. Christian Cseh spoke to TRANSFER magazine about the unique conditions affecting SMEs and what can be done about them.

Looking first at the initial situation small and medium-sized businesses find themselves in when implementing IT projects, in what ways is their starting point different from the situation faced by large companies?

Ben Marx: The situation is mainly dictated by the fact that IT projects are expensive and need to break even relatively quickly. Technology in this area develops at breakneck speed and it doesn’t take long for existing solutions to grow old. The high initial outlays and operating costs of digital transformation projects are usually easier for bigger companies to cushion because they can simply spread costs more easily. It’s a different kettle of fish introducing a new condition monitoring process for 20 machines or doing that for 2,000 machines.

Christian Cseh: Certain approaches taken toward IT projects are simply not suited to small and medium-sized companies. Sometimes a pilot study for a project – involving three consultants for two weeks – can incur costs that would be more than a small business envisages for the entire project. Then there’s the aspect that lots of trends in industry, especially in manufacturing, are directly or indirectly linked to IT, whether it’s Industry 4.0, driverless cars, or big data. The market competition for resources has made things even worse, and this is particularly noticeable for SMEs.

That sounds pretty desperate. So what can small and mediumsized companies do about this?

Marx: True, it does sound bad. SMEs do face particular challenges with digital transformation but no, it’s not that desperate, and even big companies struggle with IT projects. SMEs can play to their flexibility and be much more discerning with an IT project. One mistake would definitely be to embark on a project based on the same premises as a big company – only to find that everything is going to be much too expensive, and then do nothing. SMEs can usually zoom in more on things with a project, so they don’t have to bring 30 people to meetings and that saves money. They also find it a lot easier dealing with iterative processes, which is one of those big things in the world of IT – you start with a particularly useful partial solution and then make optimizations step by step. SMEs also have to consider whether they really want everything from a single source. You’ll often hear people refer to monolithic systems, which is basically used to mean a solution that does everything I want it to do. Supposedly, the benefit of such a solution is that it’ll save me lots of hassle, for example for integration work or support. These advantages are indeed there, but on the other side of the coin there are also a whole slew of disadvantages. If a solution meets the majority of requirements at a company, it’ll be difficult to replace it and that can make a business highly dependent on the solution provider. For a small or medium-sized business, something like that can have huge implications because as a client, the individual company will probably not be all that important to the provider – unlike a big company.

Cseh: Another disadvantage is that such systems are less flexible and agile. If you’re using a self-contained solution from a single provider and you need a new functionality, you’re dependent on that provider for help and have to hope that they actually offer the functionality you need. Even if the provider can offer you the functionality, the price will be take-it-or-leave-it, because you’re not in a position to consider any alternatives. So it’s not surprising that such all-in-one solutions are now going out of fashion. Big companies have been focusing more on modular solutions for some time now.

So now that you mention module-based solutions, what do they offer?

Cseh: Module-based solutions are basically a reflection of the division of tasks within a company – these get reflected in the IT system. Everyone does what they’re good at and all the other things are done by the others. So when you look at the IT, everything’s organized into partial solutions. They do a really good job in the specific area they’re used in, but they don’t try to do things in the areas they’re not specialized in. Back in the 90s, the programmers of software for SMEs often still used to write their own programs for data management. These have practically disappeared now. Everybody just turns to a database management system because they know that they can get what they need much more quickly and reliably than the software of someone who specialises in applications for logging empolyee times.

Marx: Most module-based solutions have some sort of ERP system inside them to take care of the basic functions, and quite often they’re even put there for statutory reasons. So that can include things like invoicing systems, accounting, management accounting, or HR. But the really special functions such as fleet management or the kind of data gathering you need for condition monitoring are looked after by other system components. These lift the required data out of the ERP system, process it, and return the relevant results to the system. Of course to do this, you need the right interfaces.

Don’t those interfaces add another aspect of dependence?

Cseh: Not if you use the right standards and they’re open and based on the right communication protocols. There are now a whole host of open, standardized ways to exchange data with a variety of different systems. In the classic world of IT, these are mostly http-based protocols like SOAP and REST interfaces. There’s also OPC-UA, especially in Industry 4.0 because of the overlapping nature of IT and machines. So if you buy software, you need to make sure it supports the right standards. If it does, you lay the right foundations for running existing or future functions through the cloud. If you buy a flatscreen TV these days, you wouldn’t buy one with connections that only work for one supplier, or get one without HDMI. With software, customer behavior with everything- from-one-source solutions is often exactly the other way around.

What are the advantages of cloud solutions for SMEs?

Marx: In principle, deciding whether or not to buy a cloud solution is a make-or-buy decision. Even if I don’t write my own software, with a conventional in-house solution I have to take care of the introduction, start-up, and operation myself. SMEs often have oversized solutions because it’s difficult to get the scale of the IT solution to match the size of the company. Just look at what can happen with the human resources you need. A company might be running software that has to work without a hitch for every working day throughout the year – so basically it needs to set aside two people. If the software is used by 15,000 people, as can be the case with a big company, it’s much easier to absorb the personnel costs than if you’re sitting on the same personnel expenses for 200 users, as will be the case with a medium-sized company. With cloud computing, SMEs in particular will be able to access IT solutions according to their actual needs. Ideally, this will work in such a way that the SME only incurs costs if it also has to invoice something, in other words when it actually derives benefit. So cloud computing can remove some major obstacles when introducing digital solutions at an SME; a company can embark on projects that wouldn’t have been possible otherwise. It’s the classic business enabler.


Professor Dr.-Ing. Ben Marx und Professor Dr. Christian Cseh are directors of the Steinbeis Transfer Center Processes in Motion. The Steinbeis Enterprise has been offering solutions and services in the field of mobile processes since 2011. Its work thus revolves around business process optimization with the support of mobile end devices such as smartphones and tablets. There is particular potential to make improvements in the field of after-sales service and as a result, Processes in Motion has a focus on this area. Many after-sales processes are now supported by a cloud-based application called 4tfs.

Professor Dr.-Ing. Ben Marx, Professor Dr. Christian Cseh
Steinbeis Transfer Center Processes in Motion (Göppingen)