"Platformization has the potential to create many winners"

The Managing Director of cobra - computer's brainware GmbH, Jürgen Litz, talks about the potential of a digitalized SME sector and how decisive competitive advantages can be gained from the unique structure of this economic engine.

Mr. Litz, as Managing Director of a software company for customer relationship management systems, you are particularly committed to SMEs. How do you see the economic engine currently positioned?

Jürgen Litz: Much better than it is generally perceived. Although the various crises have left their mark, the economy in German-speaking countries has been able to pull itself out of the affair reasonably well thanks to its structure. There is a lack of economic big players here, but there is potential in a completely different area. We have a unique selling point that is the envy of the whole world: a base of medium-sized companies that would never stand up to international comparison in terms of size and turnover on their own, but which together support an entire economy.

In the years before the pandemic, you often criticized the state of digitalization in SMEs. Has anything fundamentally changed here during the crisis?

In fact, yes, although in some places it was certainly not voluntary. Nevertheless, the pandemic and the associated restrictions have prompted even the last medium-sized companies to open up to digitalization and thus lay the foundation for further steps that are open to technology. The willingness to develop is clearly evident - even more so than three or four years ago. Now is the time to seize this opportunity.

What does this opportunity look like?

Of course, giving employees the option of working from home and holding meetings via ZOOM or Microsoft Teams does not turn a static steamship into an agile speedboat. What is really important now is what can be done structurally with this basis. A bold step in combination with the right technology has the potential to unleash the 'hidden champions' or the entire SME sector, and thus turns out to be a beacon of hope.

Can you explain this term in more detail?

If you look at the German-speaking economic area from a certain distance and compare it with economic powerhouses such as the USA or China, you might get a clear impression: The former global economic power is being left behind. It is difficult to compete with the Amazons, Alibabas, Googles or Tencents of this world in the heart of Europe. Especially as conglomerates of this size have developed their own platforms and, with their international appeal, ensure that smaller companies become dependent on them. Reducing dependency on the large platforms - and doing so by having their own platform for their own business model - is called platformization. This means that companies are not competing with large platforms, but are transforming and strengthening their own business through the opportunities offered by platform support. This enables an improved customer relationship, for example.

How are these much smaller companies supposed to keep up with US or Chinese big players?

Although many small and medium-sized companies are small lights in this comparison in terms of company size, number of employees or turnover, they are often world market leaders in their often very specialized fields. A small company that manufactures rubber seals for the doors of a certain car model may not have the most glorious international reputation, but it proves to be indispensable for the production chain of this commodity. This is just one of countless examples. Medium-sized companies need to take advantage of this.

How can this be realized in a lean way? Is there already a technological movement in this direction?

The trend in commerce is clearly moving away from the old frontend-to-backend structure and towards headless systems. This approach separates the front and back end from each other and all the components that together ensure that customer interaction works. The search function, product display, database and checkout are not dependent on each other and are connected via API interfaces using front-end technology. As a result, medium-sized companies are increasingly becoming service companies that solve their customers' problems in a more holistic manner. The next stage is customer experience or cocreation, which involves creating value together with customers. To enable this evolution, however, companies need a new quality of technological support.

What exactly does this look like?

In the general discourse, platforms are often reduced to marketplaces or technology platforms. Here, SMEs too often prove to be the appendix rather than the sovereign of their own transformation. As already mentioned, companies such as Amazon or Alibaba are threatening this economic status by increasingly not only taking over the market and customer interface but, in case of doubt, even becoming the fiercest competitor. The answer to these threats is as simple as it is intuitive: it is about optimizing value creation and thus strengthening your own co-creative ecosystem. A CRM - i.e. customer relationship management system - that develops in this direction can form the core of a comprehensive customer platform.

And your company: Has it already embarked on this path itself?

In fact, we have succeeded in realizing the customer experience level as a so-called CXM Web Connect solution, in which any applications from individual forms to store systems can be connected to the CRM via intelligent interfaces. With this headless structure and a connection to the company's own website, the path to independence can be paved simply and efficiently. The German SME sector consists of a wealth of hidden potential that is just waiting to come to light and drive an economic upturn. Platformization has the potential to create many winners.

About the person

Jürgen Litz has been Managing Director of the customer management software manufacturer cobra computer's brainware GmbH based in Constance and cobra computer's brainware AG in Tägerwilen TG since 2009. Based on his many years of experience in the field of customer management, he is committed to promoting a positive understanding of data protection and data opportunities with regard to the EU General Data Protection Regulation and the GDPR. You can find further information at www.cobra.de.