Change and Future 2023
First the Covid pandemic, then the Ukraine war - both are events that are not only associated with inconceivable human suffering and tragic fates, they have also fundamentally changed the nature of economic (cooperation) work. Home offices, energy shortages, raw material bottlenecks, increased costs, interrupted supply chains, key interest rate hikes, inflation and an intensified shortage of skilled workers are consequences that have wiped old certainties off the table and are forcing companies to adopt far more agile but also more cautious approaches.
As an IT service provider for the automation of commercial document processes, we are affected by these changed conditions just like any other industrial company. Compared to others, we as an IT company are certainly still in a good position: Since digitization and transformation projects are booming even in times of crisis, the consequences of pandemics or war hardly show up in our sales and order intake figures. This is not only an important signal to our employees and customers, but also to our second "customer" group, analysts and investors, because we are a listed company.
Of course, we see the change in behavior with regard to purchasing decisions and the selection of suppliers and solutions not only in our company, but also on the customer side. The question of a time-limited extension of the payment deadline, for example, is just one facet of a customer-supplier relationship that is becoming more flexible. It is precisely the way in which suppliers and solutions are selected - for example, by means of an invitation to tender or a less formal presentation and submission of bids by various suppliers - that seems to have fundamentally changed as a result of Covid and distance meetings.
Previously, personal exchanges and getting to know a provider before signing a contract were high on the agenda. After all, they wanted to check the "nose factor", find out whether the chemistry was right and how the provider presented itself in personal interaction. These are certainly not insignificant factors for both sides, before one commits oneself in the software solution area for several years and makes investments in not inconsiderable amounts. The importance of getting to know each other personally seems to have decreased: Many of the contracts signed in the past two years were concluded without an on-site meeting.
More and more interested parties insist on a POC, a proof of concept, in which a solution with a defined range of functions is tested under live conditions over a limited period of time. Given the wide range of solutions on the market, people want to be sure that they select the most suitable solution for their business process. There have been POCs in the past, too, but the increase in recent times is quite striking for us. Especially since we are ambivalent about POCs: On the one hand, they are a good opportunity to test an application for suitability in terms of ERP integration and real-life scenarios with the involvement of users; on the other hand, these same users are sometimes not always happy with a limited range of functions and only simulated live conditions.
What we are also noticing is a trend toward investing more in solutions that respond to the current economic situation. In our case, this means that we are seeing increased demand for our collections and credit management solutions. These are applications that evaluate the creditworthiness of existing or future customers, credit and order limits, or payment targets on the accounts receivable side, i.e., the customer side. They structure and control receivables management as a whole. This is understandable, because no one wants to be stuck with payment defaults in times when cash flow optimization is a top priority and profit margins are shrinking due to exchange rates and increased costs.
Contract negotiations are also different - not in principle, but with regard to points that are becoming more relevant in current events. For example, price adjustment clauses, especially if they relate to an index, are put to the test by both sides, or concepts for disaster recovery scenarios in the event of cyber attacks or involvement in a war are an essential contractual point.
First of all, these are all individual perceptions from our perspective as service providers. When we talk to representatives of our peer group, they describe similar experiences. So whether we are talking about general trends here remains to be seen. What is certain is that all of us - as companies or individuals - are reacting to the changes in the economy by changing our behavior and procedures. If you don't move with the times, you move with the times - this aphorism, as platitudinous as it is true, rarely unfolds its simple truth more aptly than in times of uncertain economic prospects and market rules that have been turned upside down.