A conversation with the managing directors Volker Wawer, Johann Dornbach and Gerhard Knoch in Karlsruhe
Whoever talks to the PROCAD management in 2020 will feel the continuity of a successful, medium-sized IT supplier for medium-sized companies, built up over decades by Volker Wawer with a steadily growing team. On the other hand, a new beginning is evident, which goes far beyond the formation of the current three-man management board.
Johann Dornbach joined the company already at the end of 2019. After many years of responsibility at SAP in the field of development and sales of software for engineering of the customers. Gerhard Knoch moved from Infor in July 2020 and is now responsible for the strategic orientation in the management team. Both have extensive experience abroad; both know how midsize companies think and act. With them, Volker Wawer has found two successors who, in the realignment of the company, are deliberately building on the foundation that PROCAD has established in its customer base.
The interview with the managing directors focused mainly on the changes that Corona has brought about at PROCAD and its customers. But of course, the reorientation, which was initiated quite independently of the pandemic, also plays an important role.
Ulrich Sendler: What consequences does PROCAD see for the industry half a year after the outbreak of the pandemic in Germany?
Volker Wawer: The main problem was the breakdown of supply chains, not demand. At first it affected those who are supplied from northern Italy. There were even downright paradoxical cases of production stoppages, especially in medical technology, where parts for prostheses were missing. The extraordinarily strong networking of the industry in Europe and the trend of the last ten or fifteen years towards total globalization with assembly in low-wage countries – in the pandemic it suddenly became clear that this too has two sides. Without a buffer stock, a company is in a bad position. Of course, there were also structural problems in some industries, which have now only become more apparent. For some companies, the possibility of short-time work may have been convenient. We have seen that existing orders were not processed because companies preferred to use short-time work.
Gerhard Knoch: Of course, the lockdown was a great help in anchoring the home office. Suddenly there was a willingness to do so on all sides, and it will not disappear again. And the customers immediately sensed that everything had to be done electronically. And it works, and they noticed that.
Johann Dornbach: After a short shutdown of the activities, they were brought up again quite quickly because the users can work just as well with their system at home.
Ulrich Sendler: How did Corona affect your own business?
Volker Wawer: Of course, like most, we suddenly switched to home office. For all employees. The discussion about this has been going on for a long time. There was no lack of trust, but we knew that with the home office a social component would fall by the wayside. With camera, tool, and agenda you can have a video conference, but the normal conversation is missing. It was especially difficult for those who started new with us during this time. In the future there will certainly be a stronger home office component. But we will also learn to appreciate a normal cooperation again.
Johann Dornbach (photo Sendler): Even before that, everyone was able to work at home one day a week. We had introduced this last winter. It went well because our processes are digital.
But your own business? In the first few weeks everything simply collapsed: the business, the consulting, the implementation. Nobody was available, some companies were completely closed. But consulting can also be made digital. A lot is now remote, sometimes even sales appointments.
There were also positive things: in Austria, for example, there was government support for digitalization projects in industry. The crisis should be used as an opportunity. Of course, that benefits us.
Gerhard Knoch: Most customers postponed projects at first and were cautious. But by July, we already had new customers in Italy and Eastern Germany. Some of them wanted to invest right now to move forward again. This continued in August.
Ulrich Sendler: Is there a general push for digitalization in the industry?
Volker Wawer: Tools for digital collaboration in cross-company projects have become extremely important. Many engineering services are part of the supply chain. An employee of a well-known automotive supplier told me that they work with our PROOM tool even though they are not customers for it. But one of our customers has shifted its entire collaboration with partners and suppliers to this tool for cloud collaboration. It will contain data of all types and sizes and will be available to all authorized users everywhere.
Johann Dornbach: “We are preparing for a massive digitalization push in the next 6 to 18 months. The beginnings can already be felt, but it will accelerate massively. In response, we have greatly expanded the PROOM server. For example, there is now a calendar and task management with suppliers or customers. We have had exceptionally good feedback and growing interest from both existing and new customers. We have brought forward the new version PROOM 4.0, which was planned for the medium term, and have already released it.
Ulrich Sendler: Have customers’ attitudes towards the cloud changed?
Gerhard Knoch (photo Sendler): Cloud computing is becoming more and more popular, especially with new customers. That does not necessarily mean that everyone will decide to go for it. But they want to know whether it is possible. Before Corona, this was not the case to this extent. By the way, it is even clearer in the USA. Without PLM and cloud solutions, nothing is possible. We have been well positioned here since June 2020 with our new partner Omni DTS (Data Transformation Service).
Volker Wawer: We have many inquiries about the cloud. And thereby you need to know: Our PRO.FILE software supports the product development process in mechanical and plant engineering. We have customers primarily in the midmarket, from smaller companies to those with several thousand employees. These customers did not really like the cloud before Corona. That has now changed. On the one hand, they primarily want to get rid of the burden of their own data center. But relocation alone does not necessarily reduce costs. They can move more when they realize that with Software as a Service in the cloud, completely different things are possible. There are great advantages, especially in distributed working. This insight is now there. PROOM is our beacon product for this.
Johann Dornbach: The new version PRO.FILE 10 is cloud-ready. We radically changed our roadmap towards the cloud after Corona. PRO.FILE will be able to run in the cloud as well as on site at customers’ premises from the beginning of 2021. One year earlier than originally planned. We have set up a task force for this and invested additional money. The sense of urgency was truly clear. We started out with Microsoft Azure as a cloud partner, but later, of course, solutions with AWS and others are also possible if that suits customers better.
Volker Wawer: But the desktop is still important because of the necessary performance. It needs hybrid models. The database and the app server run in the cloud, but some intelligence is still available locally. Not via a fat client, but via a desktop client that communicates with the app server. The logic resides on the app server, but local performance, graphics performance and so on are provided by the desktop client. For some customers, loading a 3D model locally still takes four or five hours. This cannot be solved via the cloud. For others, who only have small files, something else is conceivable. One customer already has everything on the cloud server and worldwide access. Locally there is nothing left.
I would like to say one more thing about the cloud for a question and answer session with Chancellor Merkel or the person who will be in charge afterwards: Internet access is a basic need in Germany. Like water and electricity. I do not even need to talk to some customers about the cloud if they don’t have proper access at their location. Some things about the cloud are simply hanging on the last mile. If that is not wired, there is no digitalization.
Ulrich Sendler: What changes are taking place in PDM, PLM and document management?
Johann Dornbach: For us and our customers, digitalization means having data from engineering, from R&D, released for sales and production. The Internet of Things, IoT, has caused uncertainty for several years. But all this can only be done with PDM and PLM. I don’t think everyone has understood that yet. We still have a mission here. Thanks to Corona, the willingness to get seriously involved has grown enormously. DMStec, on the other hand, is a solution approach for technical documentation in all areas of a company except engineering. If companies pursue a digitalization strategy, they need all data over the network. This does not work with paper folders. At this point Gabo is our partner. Gabo takes care of structured document capture, using our software, but also AI and Deep Learning.
Volker Wawer: DMStec is an important new focus for PROCAD. Many companies – and also public utilities and other authorities – have some kind of machines or large plants in use. But the documentation is stored in folders on paper. We are currently remarkably successful with the introduction of a structured document management.
Ulrich Sendler: Does the pandemic also have an impact on business models in industry?
Gerhard Knoch: There are interesting examples. Instead of a flight from Madrid to Barcelona, a rail connection has prevailed due to a new business model of a train provider. The provider guarantees technical safety and absolute punctuality. Another example: a manufacturer of exceptionally large special machines has changed its business to service instead of product sales. This is changing the entire industry and its suppliers. Running such a service yourself makes all the difference. But the pandemic has not had a major impact on such changes.
Ulrich Sendler: Were there any redundancies or short-time working at PROCAD?
Volker Wawer (photo Sendler): We had short-time work in the first four weeks, when everything came to a standstill at the customers. At present, we have no plans to use this instrument again. There were no redundancies due to the pandemic. On the contrary, our personnel recruitment continued to progress. We were looking for specialists in marketing and for the cloud and have already found some.
Ulrich Sendler: What are the three most important results of Corona from PROCAD’s perspective?
Johann Dornbach: That can be summarized easily: Firstly, the cloud is right at the top of our and our customers’ agenda. Secondly, the home office has suddenly accelerated digitalization across the board and will continue to do so. And thirdly, the pandemic has changed the emphasis on collaboration, particularly in engineering.
Ulrich Sendler: What is PROCAD’s strategy for the future under its new management?
Gerhard Knoch: PROCAD will have a stronger international presence. Our first focus will be on the USA. But we are also thinking of other regions. We want to win larger customers and upper medium-sized companies for our products. Our focus will remain on mechanical and plant engineering. But with DMStec, municipal utilities and plant operators are also becoming more important. Up to now, they account for only 10 to 15 percent of our customers. We want to increase this share with partners.
Ulrich Sendler: What are the most important changes the market will see?
Gerhard Knoch: We will remain a product house. We want growth that can be measured by licenses and SaaS subscriptions, not by consulting hours. We want to continue to be live very quickly with software functions that are needed by our customers. SaaS is not a contradiction to the product house, just a different billing model. Over 90 percent of PRO.FILE’s functionality is handled by customers via the configuration of the standard software. Almost no customizing is necessary. We want it to stay that way, and we want to become even better at it.
Volker Wawer: The keyword is No code. Software should be a ready meal for the customers. We use Blockly from Google. It’s like programming with building blocks and comes from the education sector. We put our IP into these blocks. So, the customers can build their own additional functions. All without a consultant.
Johann Dornbach: Look at our new business cards and our homepage. PROCAD is still in the company address, but the big logo is PRO.FILE. Our core product is absolutely in the foreground for us as a product house. CAD and Multi-CAD and the corresponding integration and management of data remain a central part of our solution portfolio. But PRO.FILE goes far beyond that and covers the processes, the entire product life cycle and project management.