The interview with Alexander Koch, Senior Vice President Corporate Controlling at Austrian Post, was conducted as part of the ‘Business meets Technology’ focus and is one of a series of articles and contributions by Joshua Consulting on the topic of digitalisation and predictive analytics. To discover: in the info boxes there are relevant cross-references to the Joshua Consulting study ‘Digitalisation in Austrian business practice’ (2021).
How does your company deal with digitalisation?
Digitalisation is generally a difficult concept for me. When it comes to the provision of management-relevant information in my area of activity, we are working on this on many levels. We are linking financial data with operational data, we are trying to provide data streams on a daily basis, sometimes even in near real-time. We are gradually venturing in the direction of predictive analytics.
What are the trends regarding digitalisation in your industry?
Our industry is both gaining and losing from digitalisation. The substitution of physical letters is being partially offset by the boom in e-commerce, the transport of parcels, and the services surrounding it. Any electronic substitution in the communication and advertising sector presents us with the challenge of operating even more efficiently.
In what ways has digitalisation already made your work or everyday life easier?
Not every process is easier when digitalised. If the classic signature folder is replaced by a similarly complicated digital solution, nobody is helped. If this is immediately taken as an opportunity to question the process and responsibilities, then digitalisation was the right thing to do and an important trigger. We also have to face additional costs such as IT security. That doesn’t come for free either.
Which areas would you personally focus on particularly strongly when it comes to digitalisation? In your opinion, where does it not create any added value? I believe in enriching all forms of individual knowledge with machine learning. At one point, the ‘war for talents’ will break out and processes will have to be based on data that has already been prepared. On the other hand, tasks will have to be replaced by less qualified employees. They will need instructions in order to carry out their work in a customer-orientated and optimal manner. Digitalisation can help with the generalisation of knowledge here.
Have you ever dealt with predictive analytics? When and in what context did you first hear about it and what did you think about it?
Yes, we were early movers. Despite intensive persuasion, sufficient use cases and a lot of lip service, we failed miserably in terms of culture. We are on our second attempt and this time it will definitely work.
Who initiated the use of predictive analytics in your company?
The initiative came from our IT department. We in Group Controlling then joined forces with them. For the users, it was more important to query the knowledge of individual experts than to preserve it. The test run was good. Further development would have required more effort from everyone involved, and we simply didn’t have enough patience or perseverance.
What were the expectations that you and your company had of predictive analytics before it was introduced?
The expectation was to get a finished product that would point the way to the future without the need for maintenance. Every incorrect prediction was blamed on the forecasting model and confirmed the experts’ belief that humans are superior to machines in this area. You can always ask the human being: ‘and why is it like this now?’ And they always give an answer. To be fair, the machine doesn’t.
We had hardly any difficulties in providing qualitative data. Nevertheless, in some areas we first had to start storing mass data in such a way that it could be meaningfully processed over a longer period of time. In my opinion, the distribution of roles and the cooperation model of the key players, opinion leaders and experts are crucial and need to be clarified in advance.
In what form and for what activities do you use or plan to use predictive analytics?
For us, it is primarily about predicting our processing volumes, which in many places determine the personnel deployment and ultimately the performance.
In what way have you been most surprised by predictive analytics?
That there are people who can handle forecasts so professionally. For a controller, this is often the noblest form of looking into a crystal ball. It doesn’t replace an understanding of business, but it professionalises the tools.
Has predictive analytics paid off for you and your company?
We failed in the short term. In the long term – I hope – we have learnt an important lesson.
What do you think the future of predictive analytics will look like? There has to be a culture of coexistence between predictive analytics and expert knowledge. Once collaboration is not characterised by questions about whether my job is at risk or whether the knowledge comes from me personally, then we can make the leap to good cooperation. Predictive analytics will gradually find its way into many areas. I think you just have to find out for each company where the greatest economic leverage is and simply start there.
Which advice would you give to companies that are about to introduce or are considering introducing a predictive analytics solution?
I would advise them to ask themselves which area is the most important field of activity. Where there is the greatest, honest willingness to take this step. Where the resistance of individuals can be overcome most easily. And how to ensure that the models are continuously developed. This is the only way to attract and retain the best minds.
How do you generally assess the future development of digitalisation? Will its importance for companies (in your sector) continue to increase or have we already reached the peak of the ‘digitalisation wave’?
For me, the word digitalisation is almost too powerful. I think that if you want to automate as many processes as possible in line with real responsibility and meaningful value creation, you can’t avoid digitalisation anyway. You have to be honest with yourself about what you can reasonably achieve. If you think you can replace simple analogue processes with unreal, digitalised processes, you won’t gain anything. The best way is to start with the most important process first. And to begin with a great vision. You can always let up. With the wealth of offerings and the push of tools from IT consultancies, it is often not easy to find out what is most important to you..
Thank you Alexander Koch for your clear and valuable input from your business practice.
Further information on the study ‘Digitalisation in Austrian business practice’ can be found here. (in German)
We will be happy to answer any questions you may have about the study or provide support for corresponding implementation projects. Get in touch with us here!