Interview with Celonis
Interview with Bastian Nominacher, Co-CEO Celonis
From its start-up foundation in 2011 to becoming a global software services company worth 2.5 billion US dollars in less than ten years – that is the impressive trajectory of Celonis, the company which was awarded the Deutscher Zukunftspreis (German President's Award for Technology and Innovation) in November 2019.
One of the three company founders, Co-CEO and TUM alumnus Bastian Nominacher, explains what the process mining business model is all about. In conversation with Prof. Dr. Matthias Scherer, he talks about important milestones in the young history of the company and explains the successful cooperation of the business with the academic world.
In November 2019 you won the Deutscher Zukunftspreis. What does this award mean to you?
The Deutscher Zukunftspreis is one of the most important innovation and technology prizes in Germany; therefore, to receive it is a great honor not only for us as founding members, but also for the whole Celonis team. We are of course very happy, as the prize is a great affirmation of the value of our work so far, as well as an endorsement of the relevance and potential of our technology.
What is the service that Celonis offers, and who are your typical customers?
With our process mining technology, we support organizations worldwide in transforming data intelligence about their work processes into positive improvements for their businesses. That is the key to greater efficiency and quality in all important processes. There’s no such thing as a typical customer for this service: organizations of all sizes and industries can use our software in order to track down and address inefficiencies within their processes.
We have customers in just about all fields – automotive, logistics, supermarkets, medical clinics, airlines, television and radio stations, and many more. Among all these companies, there are numerous small and middle-sized businesses as well.
In process mining, you use methods from computer science, business studies and mathematics, correct?
Yes, that’s right. My co-founder Martin [Klenk] studied computer science, Alex [Alexander Rinke] studied mathematics, and I studied commercial information technology and financial mathematics. That is a very good combination of abilities, from which we benefit every day.
Process mining effectively combines two worlds, as we consider process-related problems using a data-based approach. Classical process management looks mainly at questions related to automation potential, the improvement of turnover times or better planning processes, and works a lot with models, assumptions or observations. Process mining, on the other hand, offers a data-based approach, in which we use a variety of methods from machine learning to conformity alignment in order to solve business problems. This is where business studies come into play – the problems can range from long waiting periods and unnecessary extra work, to delayed payments.
Process mining is, however, not only interesting for companies, but also relevant in those scientific fields in which computer science, mathematics and business studies are closely related. A large part of the fundamental research into process mining has been carried out by Professor Wil van der Aalst (RWTH Aachen); today he is one of the most influential scientists in the field of information systems and data science.
At Celonis, we have created algorithms on the basis of these scientific foundations in order to visualize data from a diverse number of IT systems and make them useful for the analysis of any process. In my opinion, Martin, Alex and I are so successful because our different backgrounds and strengths complement each other so well in our work.
Which elements of your studies have been particularly valuable to you?
I think it was certainly very helpful to have learnt how to approach problem solving in a systematic manner. It doesn’t matter whether you are dealing with software architecture or a complex financial model – we always rely on the skills we developed at university.
Beyond that, knowledge we gained in fields such as databases, algorithmic studies and economics helps us even today in the further development of our products and in the scaling of Celonis as a company. For example, the knowledge acquired in the area of databases enabled us to develop our own patented Process Query Language (PQL) which facilitates a precise analysis of processes.
Furthermore, knowledge acquired during our involvement in the student business consultancy Academy Consult München e.V., where the three of us got to know each other, is still an invaluable asset. Within the consultancy we took part in a student project for the Bayerischer Rundfunk (Bavarian state television and radio company) and came into contact with process mining for the first time, on the basis of which we then founded Celonis. I would expressly encourage all students to really take advantage of the wide variety of extra-curriculars on offer at university. Without this opportunity, Celonis would perhaps never have been founded.
Can you give an example, of how a customer can benefit from your software?
These days, within every organization – whether a business, a governing body or a clinic – a huge amount of digital data is collected. Information systems, such as ERP or CRM, are continually saving information on what, when and where something has happened in the system. These are called event logs.
Our technology analyzes this information like an X-ray and can recognize where processes are inefficient or can be improved. As a result, trains or airplanes can be more punctual, patients in a hospital can be treated more quickly, and companies can identify more reliable suppliers. Process mining enables smoother consumer experiences, as well as helping companies to keep one step ahead of their rivals and make more sustainable decisions.
When and how did your business idea come about?
Within the student business consultancy Academy Consult München e.V. we were involved in a project at the Bayerischer Rundfunk, in which the ticket system of the help desk needed to be optimized. Here we faced the challenge of analyzing a huge amount of process data. Regular methods of data analysis or interview-based techniques - these are regularly used in business consultancy - were too limited for our purpose.
In a scientific study by Professor Dr. Wil van der Aalst, we read about process mining for the first time. However, at the time, it was only a scientific concept, and widespread commercial usage was not yet possible. So we began to write the software ourselves and from this, the idea for Celonis was born.
Was there ever a moment in the young history of your company, in which you doubted whether you would be a success, and a point at which you realized that you were definitely on the way to the top?
The idea for Celonis was born fairly quickly. At first we tried to build up the company alongside our studies, but it soon became apparent that that would not work. We then concentrated all our energies on Celonis, which was of course a massive step to take, and accompanied by a huge amount of financial insecurity.
In the early stages in particular, it was very difficult to convince companies of our idea and our competence. In the first year we sent hundreds of hand-written letters to potential customers and travelled around the whole country, trying to convince customers of the capabilities of our software. A key moment was definitely when we won Siemens as one of our first big customers. At that point, we could see that the demand for our services was huge. In the meantime, the potential of our market is now estimated at 40 – 50 billion US dollars a year.
Did you have any support from the TUM when founding the company?
The TU Munich plays a very special role for us, as we got to know each other here during our studies. Even before we founded Celonis, we received some great support: alongside the TUM Gründungsberatung (TUM start-up advisory center), the Chairs for Information Systems, Industrial Design and Entrepreneurship helped us to develop our business model and our corporate identity.
In 2015 we were the recipients of the Presidential Entrepreneurship Award from the TU München. This close connection exists still today – there are numerous co-operations and joint projects, and many of our employees were once TUM students.
How did you finance your young start-up?
We financed our first five years completely by ourselves. That was only possible because we could build up a customer base from the start, and took some very conscious financial decisions. At the start, we also were supported by the start-up-founders program EXIST, run by the German Ministry for Economy and Energy. Since 2016 we have a number of renowned international investors on board, who support us not only financially, but also with their experience both in establishing large IT companies and within the international software business.
A large number of mathematicians work for Celonis. What does a day’s work as a mathematician at Celonis look like?
At Celonis, mathematicians are employed in many different areas – partly in very technical roles, but also in jobs with a lot of customer contact. For example, there are many mathematicians involved in software engineering, working on the development of new features and functions within our software. On the customer contact side, we also have many mathematicians who work as Business Analytics Consultants or Process Mining Consultants. In these positions, with the help of our Process Query Language, our “Celonauts” generate added value for our customers, based on concrete data-based insights. In this way, everyone at Celonis can apply their individual strengths to their work.
What do you look for in the selection of your employees?
We recruit our staff for many different areas, from product development to sales, so the demands and profiles are obviously very different. The main decisive factor which distinguishes our “Celonauts” is that they are solution-orientated and ambitious team players who will go that extra mile to ensure success for our customers and partners. Our shared passion is process mining technology.
What tips can you give our students, who are considering founding their own company?
Try it and trust in yourself – it’s incredibly good fun to develop and advance your own projects and ideas. And look for experienced mentors who are a good match to you and your ideas. They can often help to recognize possible pitfalls in the start-up period, and how to avoid them!
You still cooperate with the TUM and other universities. How do these cooperations work, and what do you get out of them?
At the moment, we have co-operations with numerous chairs and projects. Within these, we hold regular workshops, guest talks and other events, in which students of the TU München have the opportunity to learn about career opportunities at Celonis. We also participate in career fairs and invite entrepreneurship and start-up-focused student groups to our offices. Celonis is also the host of the TUM Start-Up Afterwork Insights.
Furthermore, we support a number of research projects, with the likes of the Chair for Information Systems and the TUM Institute for Machine Tools and Industrial Management. We also offer regular applied practice projects at the TUM Data Innovation Lab, in which students from a variety of subjects can work on interesting topics in the fields of data science and machine learning.
One of your activities is the "Academic Alliance" – what is that about?
The Academic Alliance is our academic co-operation program for education, research and teaching in the field of process mining, with more than 250 university partners worldwide. Our goal is to optimally prepare the next generation for the future of smart business transformations. Alongside “Challenges” and “Hackathons”, we also offer a free online certification program for process mining. We are regularly invited to give guest talks at the TUM and work together with chairs in the departments of business administration, computer science and mathematics. Get in touch with our Academic Alliance team if you are interested in finding out more about our technologies and cooperation possibilities. I also invite all students, researchers and lecturers to test our technology themselves. Each academic receives a free Celonis licence, along with example data sets and learning material from us.
What would you wish for from the TUM (and other universities) in regard to the education of young talents?
A strong connection to practice and reality, and more intensive interaction between science and business.
Where will Celonis be in 10 years?
I am confident that in 10 years our process mining technology will be one of the main technologies which all companies will use to improve their processes. Currently we see a strong market momentum and demand, which we aim to fulfill. This is a great opportunity to generate long term growth and to establish a successful and sustainable technology business.
Thank you for this interesting interview!