Episode 3

Process Mining Consulting with Thomas Kerschbaumer, Processand

March 3, 2021
Mining Your Business

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Our special guest

Thomas Kerschbaumer

Thomas Kerschbaumer is a Co-Founder & CEO of Processand. After being a Sales Manager at Celonis, Thomas realized the potential of Process Mining Consulting, therefore he collaborated with his colleague Andreas Klötzel and together they founded Processand!

featuring

Thomas Kerschbaumer

Co-Founder & CEO

Episode Content

Pioneers in the process mining consulting space. Thomas Kerschbaumer is here to talk about his view about process mining and the company Processand he co-founded, as well as reminisce about the past and contemplate the future!

Transcript

Patrick:
Welcome to the Mining Your Business podcast, a show all about process mining, data science, and advanced business analytics. I am Patrick. And with me as always, my colleague Jakub, hey.

Jakub:
Hey, Patrick.

Patrick:
Today's episode is all about what it takes to start a process mining business, the future of process mining consulting, and the struggles along the way. Joining us today is Thomas Kerschbaumer from Processand.

Jakub:
Patrick, thank you for the nice introduction as usual, and I'm very excited about our today's guests. Who is a person who I've personally been working for almost three years? He's our bread giver and I'm very, very happy to welcome to our podcast Thomas Kerschbaumer, hey Thomas.

Thomas Kerschbaumer:
Hi Jakub, hi Patrick happy to be here.

Jakub:
I'm very happy that you're here. And I'm very honored that you are one of our first guests, actually the first guest on our podcast. So, Thomas, tell us something about yourself. What is your background and how did you end up in process mining.

Thomas Kerschbaumer:
Interesting question. So I'm the head of delivery and co-founder of Processand, and my background is a consulting background, right. So I did economics before, then I came to Munich. I'm originally from Italy. I came to Munich, and I started my career at Celonis. And with that move, I came into the topic, right? And I ended up here in the process mining field at the end.

Patrick:
Okay. So what was the actual motivation behind starting your own company?

Thomas Kerschbaumer:
Starting my own company. Hmm, I was a kind of thrown in the situation, let's say. I co-founded Processand with Andreas Klötzel and back then when we started, one of the most genius mathematician joined us as well, Nicolas Möller. And we all worked before Celonis, right. Celonis - the global market leader in process mining technology. And together we did a lot of proof of concept projects within Celonis, to show the customer which value process mining could bring to their business. And after some time, we saw that the customers we worked with during a pilot phase are struggling kind of with building up a whole process mining initiative alone. And exactly there we saw a kind of market gap since Celonos is a software company rather than a consulting company. We said, Oh, hey, let's go out there. Let's jump into the market and help enterprises to be successful with their process mining journey. And some months later we founded Processand. And in fact, many companies appreciated this kind of support we gave them. So we started out working immediately together with big enterprises already, like the German railway company, Deutsche Bank, or also the Swiss telco company Swisscom. And in fact, they are still our customers today.

Jakub:
Right. I think we will dig deeper into the problematics of the consulting itself very soon. But before we do that, I just wanted to quickly stop by the fact that you said you were not alone when you were starting the company. So who did you start it with and l am also wondering, how did you manage the roles? So what are you actually doing or what were you doing back then? And what are you doing now?

Thomas Kerschbaumer:
Yeah, you mean my personal role?

Jakub:
Yeah. And also of your co-founders.

Thomas Kerschbaumer:
Mm hmm. So within Celonis, co-founders, let's say Andreas was a data scientist there as well. I worked more in the business development part. Nicolas was back then a working student at Celonis and gave massive insights into different fields. And when we went out to found Processand, the challenge at the beginning was really how can we support our customers from a general perspective, right? They want to establish process mining somehow, but they don't have the expertize. They don't know how to approach the whole initiative. And that was exactly the entry point. And therefore, initially, we worked strongly, very tight with the customer to establish the process mining initiative within the enterprise and then we extended this initiative step by step, right? That was the kind of door opener which worked out pretty good. Also other customer customers said, Okay, you built up a very good example, now let's do the same within our enterprise.

Jakub:
Right. What is your role at the moment? So I think we are already more than 25 people with our company. And I assume that the roles have changed slightly since the beginning. So what is it that you do today?

Thomas Kerschbaumer:
That's true. At the beginning, of course, I worked deeply into each project. Today, since we are, as you said, roughly 30 people now, the kind of work is going to change a little bit, but still. So I try to stick the needles together, let's say. I'm trying to have a strong customer relationship still since the customer is one of our central element within the company, I want to understand or get a better understanding from a top level perspective. How do we proceed? How can we optimize our implementation process? How can we support the customer more from a strategic perspective? And so my work changed slightly, let's say from a typical project management to a more strategic point of view. That's that's true.

Patrick:
Okay. So switching gears now, you said you kind of fell into the process mining founding company, but why specifically process mining or not any other type of consulting? Is it just a general interest or what led you to process mining specifically?

Thomas Kerschbaumer:
Probably because we've been able to build up a certain knowledge that was not present on the market. Right. So you need a kind of track record on the market that also a customer says, Okay, I want to work with you because you are an expert in the field. And back then we've been really the experts in that field. There have been not that many process mining softwares on the market, only a few, and neither there was a lot of consulting companies offering process mining services, and that was more or less the hint to go exactly into this gap because the knowledge is pretty deep. So the knowledge you need to know in order to build up a successful process mining initiative. It is massive, you need that. We had that on the market. It was rare and therefore we said that's exactly the point we have to jump in.

Jakub:
Thomas, I have a question regarding this. So when you were starting, you were three people. How did you persuade huge corporations who usually deal only with huge consulting companies that have thousands or tens of thousands employees across the globe? How did a company of three persuade huge consulting companies to work with them on on the process mining projects?

Thomas Kerschbaumer:
That's an interesting question. Probably looking back, I would say, we have always been very flexible, right. And the customers knew, okay, I'm going to invest in something new. I'm going to invest in a technology we never tried out before. I'm going to bring up some money, right, to buy the software license. And I need some kind of consulting service. And in order to succeed with this project, I need somebody which is flexible, who knows what he's doing and which is doing exactly this what I want to have, right. And typically the bigger consulting companies, you know it is, hey are a kind of a supermarket. You can buy carrots, fruits, and bottled water or whatever. And it's the same thing with the consulting companies. You can buy their consulting services for management, consulting, I.T. consulting, whatever. And they are also trying to to sell those kinds of services. And the customers back then understood, okay, I don't need a supermarket. I need a specialized shop which is selling me exactly that what I need and nothing else. And that was that what we have been doing. So we sold to the customer, a successful process mining journey and we've been experts in doing that. And that was that what the customer wanted then. And with this argument, we've been able to do the deal at the end.

Jakub:
Did Celonis help you at the beginning? I know that you know the founders, especially at the beginning, you used to be a smaller team. I don't know how many employees were there when you were beginning. I can assume or imagine that you were the size of company as we are today.

Thomas Kerschbaumer:
Exactly.

Jakub:
Did you have any kind of support from from Celonis itself in terms of, you know, having customers approach you because they were too overloaded and you basically took the job for them.

Thomas Kerschbaumer:
As well as well Also, that was a part of the Leap generation. Let's see, that was also one very important topic because to Celonis, yeah, it's at the end, as I mentioned before, it's a software company and not a consulting company. Therefore, they didn't build up that many consulting resources because at the end, that's not really scalable and therefore, of course, they asked us also, look, there we have a quite a complex customer. Could you cover that customer? Because it's highly individualized and you have a specialization on that. Can you cover this customer? That happened as well, that's true.

Patrick:
Right. So switching gears again, I want to move to more specifically process mining. So why process mining and why not any other business intelligence.

Thomas Kerschbaumer:
In general, you have to say that business intelligence, there are a lot of consulting companies working on this field already, right? They established those departments already 10 years or 15 years ago. Typically the typical ACP consulting houses, for example, the established BI departments already many, many years ago, and that was not our field. And there's a clear distinguishment between business intelligence and process mining, right? You have to separate those two fields and you're able to do business intelligence. But process mining is a totally different approach, right? You need a totally different way of thinking and therefore, we said, let's not do business intelligence, let's jump into the process mining market, because there you have a certain market barrier from from the technical point of view.

Jakub:
If you compare those two, do you think that there are some pros and cons between starting a process mining company and compared to starting a business intelligence company? So if you imagine that you started a business intelligence company as a whole. Would it have some perks, or what do you think was better to actually have this process mining company? And what are in general some good things about that and some on the other hand some some cons.

Thomas Kerschbaumer:
There are probably, let's say, it's more a unique selling point decision, right? Doing rather a process mining consultancy than BU consultancy. It's more about the USP. The unique selling proposition we had was exact the main knowledge we had in this field. And doing that of course is one big con we are still facing today. And that's from management point of view. It's really hard to find smart and motivate the people that are able to cover 360 degrees of our job requests. So that's definitely one critical point in this business. Because the process mining knowledge on the market is still pretty slim, right? There are not a lot of companies doing process mining their racing. There are coming up quite a lot of new ones, but people wise there, it's still not that much. With business intelligence people, you have quite a lot in the market because it's already an established industry, let's say.

Patrick:
Right? So based on this unawareness as let's say, and the history of process mining. Can you judge roughly where you see process mining heading in the future?

Thomas Kerschbaumer:
I think it's going to be a crucial part in the future for any and the enterprise. I don't say that that just because we are in this business. I really believe in the technology. That means we are looking at our customers. The cool thing is to see that the customers come back to us, request new services because they see, okay, that technology brings really value into our process decisions and that will be deep and will be more established in the future. So process mining had also a kind of journey, right? Since some years ago, customers have been happy to say, okay, now we have a certain kind of transparency into our processes and I'm fine with that. Today that's not enough anymore, right? They need the transparency but they need also the decision at the end. So, okay, I have the transparency and what do I have to do next, right? And there we are exactly today that means we help based on process mining data doing decisions, right? For example, we are dealing with the a customer right now where we do a kind of duplicate payment checker to avoid duplicate payments and they have already saved more than a half a million in euros and building up not only reporting that gives them the information, look, you lost or you made €500,000. Duplicate payment, we go back in the operating system, right. And say immediately, look, you're going to pay out a certain amount of money, but check it again because that's going to be paid twice. And therefore, I say this is definitely going to be the future and it will be. There are a lot of new applications coming up, also driven by Celonis. Let's say that the help and the process to proactively.

Patrick:
Right. So we have technology coming in from Celonis, we have our own knowledge and experience helping customers understand their business better. And we also have initiatives from customers, what they want to see in the process mining space. Everybody is just kind of discovering new ways to use this approach to their business. So is the idea that we take consulting along with the customer on this journey?

Thomas Kerschbaumer:
Definitely. And the customer at the end is one of our most valuable asset. And we serve customers all over the world here in Germany, Switzerland, Portugal, Spain, in the US, in Saudi Arabia, and also in the Far East. I would say we are very customer focused as well. And coming back to your to your point, our offering is strictly aligned on the real need the customer has. So we do not build up any services that are nice to sell. Everything we do has to have a certain impact or value to the customer. To give you one example is the establishment of our Value Generation Consulting Department. This department focuses only on how does the customer extract business value out of the process mining initiative. Therefore, with the boot, definitely the customer and the centric decision of the company and build up the process mining initiative based on the customer needs.

Jakub:
So in other words, we are the best consulting company, pleaes work with us.

Patrick:
Absolutely.

Thomas Kerschbaumer:
Definitely. Everybody is saying that of himself, of course. But I think we have a certain USP, not only the knowledge, not only the customer which trusts in our service, but also about the people, right? People at the end. And that's also something probably let's extend that phrase. But when you break it down to the bone, it's really about the people. We work with data, but behind the whole dataset are people again, and it's really a people's business. At the end, we have to build bridges between data, IT technology, and the business itself. Therefore, it's always this bridge we have to build and why do I think we are one of the best? Not only the size of the company because having 30 people do process mining is not only big, and this year we are going to grow another huge step but it's really about the knowledge and the people at the end. And I have to say that I'm really happy about this fact that here at Processand we probably have one or some of the smartest guys on the market. We have a strong mix of different nationalities and languages. We are headquartered in Munich and have offices in Taiwan in the US, which allows us to be strongly international and also from our gender perspective. Thinking on that. we have one third woman quota, so having a great mix of different personalities and skillsets within the company is really a crucial part.

Patrick:
We are a very diverse bunch. That is true.

Thomas Kerschbaumer:
That's true. And and if you think about that, being a woman and in a man dominated field means they have to be tough. Right? And it's not only about the IT sector. Jakub, think back, you are also one of the first employees of the company and when you remember back initially we had also only men on board. Right? That is true. And when the first two women came in, the situation changed completely. Somehow the guys tried to be friendlier. They put nicer clothes. The whole communication became friendlier. So you see the constellation of the team at the end is very, very important.

Patrick:
Yes, the diversity impact, positive change.

Jakub:
Definitely. Thomas, where are we actually heading as a company if it's not a secret?

Thomas Kerschbaumer:
So our goal is to be the global market leader in process mining technology consulting. Right. And in order to beat that we don't have to be only worldwide active. Today, we have three offices around the world to cover all the time zones in the world but have to extend our knowledge as well. And therefore, to build up our knowledge. We have also some technologies in our portfolio as well, which helps to build up a more efficient data analytics initiative within the enterprise. Right. So slightly, slightly we are becoming a hybrid company between consulting and software business because we really help the customer to extend the value he gains out of the business analytics initiative.

Patrick:
So if you had to, you know, give advice to someone starting out in the industry, either as an applicant or someone in a company looking at process mining for the first time, what would you tell them?

Thomas Kerschbaumer:
Hmm. I would tell them, go out, talk to the customer and gain the knowledge you need to build up an initiative. That's probably the most important thing. Listen to the customer what his pain points are. And based on these pain points, build up your process mining strategy. And that's the most important thing.

Jakub:
Would you do something differently in leading the process mining company as a consulting company, knowing what you know now.

Thomas Kerschbaumer:
Probably a lot. Lot of things.

Jakub:
Please, elaborate!

Thomas Kerschbaumer:
It's absolutely true because you do so many, many mistakes over the time. Right. And probably one of the biggest mistake is giving up responsibilities too late, right? That's one of the key mistake I did I would say, because having those smart people on board means that they are able to do everything. There are even able to do the things much better than yourself. And that's probably one thing I have to work on myself, dramastically. I've tried to convert myself already several, several times over the time, but they are still coming up. New things we have to change we have to reinvent ourselves each half a year again. And therefore, probably we can do another podcast session about mistakes. Because, that probably will take two or 3 hours.

Patrick:
I'm looking forward to that episode. So if we cast a wider, wider net into the path, would you choose any other industry if you had the chance or would you keep with process mining?

Thomas Kerschbaumer:
And so looking at the market there are a lot of fields which are turning around a lot of initiatives or strategies, or also software which build up a huge potential right now. Therefore, I think it's not only the process mining field where I would jump in, it's more that we've been there and we saw the chance to do something out of this. But definitely, look, there are so many companies, software companies out there which delivery huge impact to the companies or the enterprises of this world. And I think there are a lot of chances. I chose process mining and we will see what the future brings. But it will be definitely one main category in the future. Where we have our fingers in.

Jakub:
Thomas, what is the key for a success for a process mining consulting company.

Thomas Kerschbaumer:
I think the key for success is probably what I tried to mention before. You need the right people, you need the knowledge and you need your own development based on this knowledge. That means, for example, look, look at our advanced analytics team. They work closely with the customers on Advanced Analytics initiatives based on process mining. So we try to do something out of the knowledge we have. I think that's one of the main success criteria and making use of the knowledge we have and building new functionalities, new methodologies and new use cases out of this new know-how.

Patrick:
Are there any parts of that that are the most difficult? You mentioned that you need the right people, you need the right development, and you need the right knowledge. Is there any part of that more difficult than the other?

Thomas Kerschbaumer:
I'm not pretty sure what's more difficult than the other. Everything has its very own challenges. Definitely finding the right people. For example, right now we are hiring, right? But it's it's not that easy to find the right people because you have to do a decision based on on the man or woman if it's the right one, because if we go with somebody, we want to keep them as long as possible. And therefore, that's one kind of challenge. The second challenge is then really okay, when we when we have those smart people, okay, how can we extend now the knowledge we have and how can we bring added value to the customer? And that's a totally different approach then and totally different challenges on the table.

Jakub:
Thomas, for instance, I see a huge challenge, especially in the knowledge part. So the process mining itself, that's the part that I think anyone can handle after some time of practice and actually some real life implementations as we are dealing there with some SQL language and some general knowledge of programming and I'm sure we will cover it in one of our future episodes with another of our colleagues. But what I'm most, most fighting with and what I thought that was the most challenging part was the understanding not of the process mining technology itself but of what we are implementing, meaning that I remember we very often went into the workshops with our customers and suddenly you are talking business terms about real business ERP systems, which no school in the world prepares you for. So what's true personally I found very, very challenging was actually the knowledge of all those are ERP systems, especially SAP. Is there some recommendations from you on how or where a person can actually obtain such knowledge? Or would you just say that it's something that just comes with practice.


Thomas Kerschbaumer:
That's definitely something that comes with practice. And also one very cool thing about this business, I would say is that by doing those implementations right, we what we do is we analyze the raw data, right? And the raw data, and they're coming in by front end decision, right? So you have business guys sitting in front of an IT system. They do certain decisions and they put those decisions into the system. And we see those decisions based on data. And then we build up the bridge between data sets and results of analysis with the business. And you mentioned, okay, the first part of doing the technical side is not that difficult. That's true. But building up that bridge then to the customer, bringing up the direction. Okay, why are you doing that exactly in that way, there are eventually other ways that could work better. That's then something definitely that's experience, I would say. And that's the cool thing. What I try to mention or I want to mention is a cool thing about this business is that we have a certain differentiation between our consulting services and the typical consulting services consulting businesses are doing. Because usually for the strategic management consulting companies, for example, you work for 1-2 years. Exactly. For the same customer. Right, and for the same key problem. Right? And therefore, you don't really learn that much. Looking on the process mining process implementations or also to our consulting business, the cool thing there is that within one year, for example, you work with five or ten different companies over three, four or five different processes, therefore, having hands on sessions with the customer is probably the best way to learn how the customer really thinks it works.

Patrick:
Yes. You won't get around the practice and just the experience.

Thomas Kerschbaumer:
No, definitely not. Definitely not. Because also, for example, we are many times analyzing ERP data, right? And of course in the university you learn working with SAP or whatever and of course there you are already gained first insights on how such a system works and why do people do certain decisions and so on and so forth. But you will never catch this knowledge in that course. Therefore, you go directly to such a company and work in a purchasing department for a year, for example. You really know why several things have been done in a certain way, or you come from a data perspective like we do. We have a look at the as-is and talk then to the people, to the business guys, why are you doing this in that way? And by doing this you learn quite a lot.

Patrick:
Data doesn't lie.

Thomas Kerschbaumer:
Exactly. That's true.

Jakub:
Thomas. We are slowly, slowly coming out of time. But before we do, we have two questions for you. I would like to hear from you some story that from your own experience that went something very, very well. And then on the other hand, that went very, very wrong.

Patrick:
A train wreck.

Thomas Kerschbaumer:
Okay. I have to think a little bit about it, but what went really well. There are a bunch of good projects we did. I would say the best projects ever are there where we do that are the main, main success criteria also for a process mining implementation. It's a customer I cannot tell the name right now because we are right now in the reference contract. But a huge success case was that it's a chemical company. We came in, they had certain challenges because they had massive losses right now in the Corona time. They are really struggling from a business side and they said, okay, process mining is really a strategic project or technology we want to focus on. And hopefully it brings the results that we can optimize ourselves, that we can optimize the cashflow, that we can optimize the way we work in order to be more efficient in the future and to sustain this kind of crisis we face right now. So we came into the project, it was not long ago, it was in November last year, and they said, okay. A) we have to be very fast and B) we need real business value. And we said, Okay, we are pretty busy right now, but let's take this this challenge and we really want to support you there. Then we started immediately. The cool thing was there was the full commitment from the customer to work on it effectively, very pragmatic. And then we realized the process mining initiative within four weeks, right? We did two processes with three data scientists. So we have been really efficient the our business value department came in and build it up together with the customer in a small team - about five people. For the main use cases we found out, okay, there's a low hanging fruit potential. Low hanging fruit for us means this could be realizable within the next six months, a 500 K and the customer committed to it as well. We set up action engines, so smart notifications based on the data analytics we did before. It's running right now. I had a call yesterday with the guy and he said: "Yeah, we are already saving money because we are paying on time, we avoid too fast requested POs and so one we have more buying power and so on and so forth. We are already saving money right now." Now we are tracking all those things and after six months we are going to draw a line to check, okay, what was the impact at the end? So that's really a success story at the end. I have to say.

Jakub:
Im always very happy to hear such stories. And also being part of that makes me even more happy and just to end on the light note then. What went wrong? Could you give us story about a project where something went wrong or some that just were a trainwreck.

Thomas Kerschbaumer:
What went wrong. So I remember one customer project we had one and a half years ago, something like this and there we had good people on the project as well. We had a certain budget for the project as well and there it was also our fault, let's say. What went wrong? It was a misalignment on the expectations. And building up the wrong expectations and not making sure that the customer really understand how our job works cost a lot of effort we had to put on top and the customer was never happy. That means, where for the customer we wanted to analyze the the end to end purchase to pay process, for example, and you know how process mining works. We need one central idea, one idea where we build up our data models and we had different interpretation of what end to end means, right? So the customer thought something completely different that we thought. And therefore, we have never been able to match his expectation within the short amount of time they purchased. At the end, we had to do a lot of investment from our side. We deliver not only one process in process mining terms, we delivered four processes which cost a huge additional effort from our side. And so we tried to catch the expectation step by step from the customer. And we have not been able to reach that. Right. So that's really a bad example. We lived with it and, therefore, we changed also the way we structure our projects. So also coming back to the question of before about making mistakes, we try to change our way, how we work with customers after each mistakes we do. And therefore, today we have a completely different project approach, which is established pretty strongly now. But that didn't work out back then and that was really one main project which was probably the worst project we ever did.

Patrick:
Well, okay.

Thomas Kerschbaumer:
Long story short, misalignment of expectation management.

Patrick:
Yeah. Oh, that sounds, sounds like a bit of a bit of a struggle.

Thomas Kerschbaumer:
Yup.

Patrick:
Well, I think that about wraps it up for this episode, so thank you. I want to say thank you for coming on and sharing your insights and your experience and your history and Jakub, as always.

Jakub:
Thank you, Patrick.

Thomas Kerschbaumer:
Thank you, guys. It was a pleasure.

Jakub:
Thank you. So we will hear you in the next episode. Patrick. Yeah. If any of you listeners have any questions, just feel free to write us an email on miningyourbusinesspodcast.com and we are looking forward to the next episode with you. Bye bye.

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