Business in Bulgaria is increasingly investing in software

21.12.2016

 

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Business in our country is much more decisive now when it comes to investments in systems, consulting and best practices implementation, according to the experts in Next Consult - Toshko Petkov (left) and Ivo Dreshkov.

 

The past year can be considered as the beginning of the digital transformation. It was one of the main messages of consultants and the providers of IT solutions for the business in 2016. Although there are signals for improvement, Bulgaria is still “at the bottom of the rankings” in competitiveness and efficiency of the business.  In addition, the emerging period of political instability may affect the market to slow down which could result in the delay of some of the projects for business software implementation in 2017.

We will discuss what is happening in our country in the field of digital transformation and how the projects for implementation of CRM and ERP systems are managed, with the managers of one of the most successful and fastest growing Bulgarian consulting companies - Next Consult, a partner of world-leading software companies and business services such as Salesforce, SAP and the methodology of Lean transformation "20 keys".

According to Toshko Petkov, Partner Business Consulting, 2016 can be described as a very good year for the companies in the sector of manufacturing , information technology and distribution. "I have noticed, that in Bulgaria a tendency has occurred  to invest less in machinery  and more in business practices, systems and software solutions, as the goal is to digitize and to be more successful.This reflects very favourably us as a company, because when business is doing well, consulting services are doing well too, "he said. At the same time, we cannot ignore the problem of low productivity of the Bulgarian economy.

"What has happened 5-10 years ago? The Companies massively invested in machinery and equipment which introduce technology but do not lead to labour optimization. In business existed an understanding that the labour in our country is cheap, so there is no need for automation. That led to low added value. Under the pressure of the labour market it comes a time of transformation, where according to official data remunerations continuously grow with a rate of around 8% over the past few years", said Toshko Petkov.

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That increase in wages creates pressure on companies to transform their business. "Until recently, no one took into consideration how a specific task is performed because labour is cheap. Now the situation is changing and companies are looking for ways how to be more efficient, i.e. how with less people to create greater value.

Business is much more decisive when it comes to investments in systems, business consulting and implementation of good business practices, i.e. being able to do more with fewer resources," said the manager. He pointed out a number of factors for the upcoming change. First is the economic factor - as wages rise, companies must be more competitive and be able to perform the same tasks with fewer people. On the other hand is the development of information technologies, third - backwardness in terms of what is the best way to use IT systems (ERP and CRM) and best business practices.

"In our company we do just that - we are kind of preachers, because we implement and develop these systems for our customers, but also train other companies," said Petkov. Ivo Dreshkov partner software solutions in Next Consult recalled that the term "digitalization" has been used for a long time from a lot of people. "This word became popular among a very conservative sector such as the financial - banks, insurance companies.

Digitalization is the mantra to which all aspire. In terms of companies, it happens for quite a while, for example, Salesforce started with this concept 16 years ago. The technologies is currently available, the question is when customers will realise its benefits and when it will become widely available”, said Dreshkov. According to him, there is still a gap in the understanding of the process. He added that "Working on a computer or using a smart devices does not mean that we are digitalized. This is an entire concept, the idea is not to be modern, but to be effective". In our country digitalization is still misunderstood and it also needs to be dressed in an appropriate legal framework, says Dreshkov.

"A lot of things are done according to the regulations and laws, some of which are no longer adequate for the modern requirements. For example, insurance companies in Germany have adopted a standard that defines how to store a document. When that document follows the standard, it is kept in an electronic form, which means it is not stored as a paper documents. Meanwhile in Bulgaria everything is stored on paper, and then kept for 10 years in huge folders. Technologies in Bulgaria are available, we have identification through phones or through an electronic signature. Our hope is that the EU will be the engine of this process through its legal framework and directives, that will have to be respected in our country, from all providers”, said Ivo Dreshkov.

 

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The problem is also that in Bulgaria we talk about digital transformation mainly in the aspect of customer interaction - self-service, digital marketing, etc. and much less about manufacturing. Toshko Petkov added that it provides a huge scope for digitalization - in the manufacturing itself or in the services and processes in a company. "We are currently examining the possibilities for an overall digitalization of the manufacturing for one of our customers. The main aim is to optimize the management. On the other hand it can be organized in such a way that less things to be dependent on people, that means - minimize errors and optimize costs", said Petkov.

The biggest benefit of the overall digitalization of the industry is that such a business model can be adapted to different kinds of manufacturing, regardless of where it is located. "The idea is to put employees in such conditions in which with minimal knowledge and experience to be able to handle their tasks, i.e. the system itself guides them what to do.This will make possible the transfer of know-how to a new organization. Currently few companies in the country talk about that, but there is huge potential for digitalization of the manufacturing," said Ivo Dreshkov. Both managers are confident that the digital transformation is a factor in the globalization of the market.

This is valid for industries such as IT and manufacturing, which are already global. Thus the difference in goods prices in different countries will gradually disappear. Step by step Bulgaria will become part of the digital globalization too. This year the business in Bulgaria received a new opportunity for a major funding for the implementation of business software under the program "Innovation and Competitiveness". But, according to Petkov, things in this program do not happen in time. "Whenever announced European programs, companies that need new systems are waiting to see whether they can make money on it or not. This leads to stagnation of the projects.” That affects the market by fluctuations - in this case downwards because while companies wait, the number of projects significantly declines, and next year there may be many projects that have not enough resources.

Overall, however, European programs are stimulating because they increase the demand for software systems, especially from small businesses. On the other hand, they create a cyclical market that is not favourable neither for companies - implementers or customers concluded Petkov. According to Ivo Dreshkov if something is free, it is not particularly appreciated, so he remains with mixed feelings about these EU projects. "Generally, when one thing is done without personal resources and the need of such systems is not yet fully recognized, then this is not the right approach," said Dreshkov. "Some people say they don`t have 50,000 leva for a business system and then buy a car for 500,000. The way of thing needs to change. In a trading company nobody questions the existence of tools like a car, computers, phones, supplies, etc. But when it comes down to a real tool to make the job of the merchant more effective, such as a CRM system, which costs about 100 dollars a month, it is considered as an unacceptable cost. And this is the most important tool that can make the performance of the company twice as effective, "said Toshko Petkov. For several years Next Consult develops partnerships with the world's leading SaaS business services - Salesforce.com, and since the beginning of 2016 the company has begun a partnership with SAP, while acquired a majority stake in the implementer of SAP projects sPro. "This step provided us with more tools. Until recently we relied on other companies in order to implement them, but now we do it ourselves, "said Ivo Dreshkov. For next year Next Consult plans a new series of business training in management. It will be aimed at companies who cannot afford consulting services but instead can use the know-how and work on their own.

The company intends to pay more attention to markets outside Bulgaria. It has already stepped in Romania and Greece, and now attempts to enter the markets of Western Europe and the USA. "We think that we are mainly going to target markets abroad in 2017. Of course we will organize the traditional Salesforce conference," explained from Next Consult. Given the emerged political instability in the country at the end of the year, both managers are sure that as long as the country is without a government, it will not be able to operate properly. "The country is a major factor in the Bulgarian economy, because it is the contractor - the money is coming into the budget, and hence into the economy. Each change of power leads to a period of 6 to 9 months in which the country does not work. Now this instability will affect the business next year because many companies depend on public procurement," commented from Next Consult.    

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