Author of the article: Tomáš Jirásko
Digital transformation is boosting business productivity by up to 30%. However, the Czech Republic is ranked 22nd among EU countries in terms of digitalisation, which is causing us to miss the train and thus our hopes of reaching the Western standard of living. The potential is huge not only for large companies, but also for small and medium-sized enterprises. Michal Bulánek, Director of the Commercial Division at Ness Czech, helps companies in the Czech Republic and abroad with digital transformation.
As a traditional IT solutions provider, how do you perceive the current changes in enterprise IT?
The biggest phenomenon in enterprise IT is and will be digital transformation in the coming years. IDC predicts that by 2027, global spending on digital transformation will reach nearly $4 trillion annually. Thus, investment in digital transformation could account for up to two-thirds of all ICT spending by 2027. In the new era of business, enterprises are looking to create new sources of revenue through digital technologies and digitise their processes to reduce costs and increase efficiency. The fact that spending on digital technology is growing seven times faster than the overall economy, according to IDC FutureScape, speaks volumes.
We have traditionally been in industries such as finance, telecommunications and utilities, but we are broadening our scope because the technology aspects of digitizing processes are very similar regardless of industry. We are seeing a lot of interest from the services, construction and pharmaceutical sectors, which are currently growing and have the opportunity to invest. Demand is particularly from companies that have accumulated technology debt and need to modernise. According to McKinsey & Company, businesses that successfully undergo digital transformation can increase their productivity by up to 30%, while digital transformation can lead to a 20% increase in revenue in the first two years.
How is the Czech private sector doing with digitalisation?
Eurostat reports that the most digitally advanced businesses in the EU are in Finland and the least in Romania and Bulgaria. Businesses in the Czech Republic are below average in the level of digitalisation in 2023, ranking 22nd among the 27 EU member states in the level of overall digitalisation. SMEs in the Czech Republic also finished below the EU average, with a basic level of digitalisation found in just under half of them.
That is why we want to focus on modernising the IT environment of medium-sized local companies. We see great potential where they have gradually developed IT systems and applications over 10-15 years, but now face technological limits. These companies then often face problems when expanding abroad, making acquisitions or when key developers leave, even retire. We can offer them comprehensive services including analysis of the entire enterprise architecture, design of new systems and help with the transition from existing solutions along with overall modernisation and digitalisation.
Can you elaborate on the specific challenges that small and medium-sized enterprises (SMEs) in the Czech Republic face?
Small and medium-sized enterprises often lack comprehensive solutions and instead rely on organically developed systems that no longer meet their needs. Many of them are not even aware of the need for specialized systems for document management or client interaction, and they depend on makeshift solutions using applications designed for working with tabular data, such as MS Excel, or improperly utilized ERP systems.
A typical scenario involves companies with a small internal server room, older applications, outdated programming languages, and a complex environment. We offer to build them a new IT world in the cloud—whether private or public—using standardized technologies and programming languages. This eliminates dependency on specific vendors and ensures long-term sustainability and scalability.
Where it makes sense, we develop custom solutions. If a customer has standardized processes that they don’t want to differentiate from the competition, an off-the-shelf solution might be appropriate. Conversely, in cases where the customer needs to stand out, we recommend custom development using modern and flexible technologies.
Do you plan to leverage the fact that you are part of a strong multinational group?
We want to be at the forefront of technological trends in the Czech market, provide sophisticated services to local clients, and at the same time participate in international projects.
We utilize the commercial strength that Ness has in Western markets to offer local competencies and know-how. Simultaneously, we plan to apply foreign knowledge, experience, and skills that have already been successfully implemented in the West. The Czech market typically lags a few years behind the Western one, and thanks to its international presence, Ness has real experience with the latest trends.
The goal is to bring this know-how to Czech customers, providing them with information about best practices, suitable technologies, and long-term sustainable solutions. Implementations will be handled by local Ness Czech teams, leveraging global experience and experts from foreign branches. A concrete example of this strategy is the acquisition of Intricity, a leader in the data migration market specializing in tools like Snowflake and Databricks. Here, our international experience gives us a significant competitive advantage.
Within five years, we would like a substantial portion of our business to come from international contracts. The aim is not to reduce our volume in the Czech market but to complement it with international projects, particularly in the area of cloud services.
What specifically do you want to focus on?
Our main focus is cloud migration. This is increasingly gaining traction even among corporate companies in the Czech Republic. The popularity of paid cloud services is growing. Nearly half of the companies in the EU already use them, though in Finland, for example, it’s almost 80%. In 2023, 79% of large, 60% of medium, and 43% of small companies in the Czech Republic used some form of paid cloud service.
Nevertheless, the key systems of large enterprises and their data warehouses are still mostly operated in private data centers. Only now are extensive cloud migration projects starting to take shape, bringing not only technical and organizational challenges but also significant potential for improving the efficiency and flexibility of these businesses.
Trust in cloud services is gradually being gained even by large local companies, including traditionally conservative financial institutions. For them, the transition to the cloud represents not just a technological shift but also an opportunity to modernize IT systems and optimize internal processes.
Our customers’ journey to the cloud is not just a technical matter for us but a comprehensive process involving financial, security, and legal aspects. We aim to be a partner that helps not only with the technical solution for cloud migration but also with the strategy for the entire digital transformation. Ness has unique expertise in this regard and offers a range of services. These include Cloud Engineering, covering migration, development, and operation of new applications, systems, and data. We also assist with implementing cloud environment management and offer FinOps services to optimize cloud service costs.
Another major topic in IT is agile transformation. How do you approach it?
A significant portion of our traditional customers have already undergone or are currently undergoing agile transformation. Telecom operators, banks, and insurance companies are becoming software houses themselves, handling IT development internally within agile teams. This makes them somewhat of a competitor to us, as they no longer seek complete projects but rather specific specialists.
As a result, we are increasingly focusing on high-value-added services, delivering turnkey projects using modern technologies, assisting customers with digital transformation, and growing their business from an IT perspective. These are the areas where we can best apply our experience and expertise.
And what is your personal view on agile development?
I’m a big fan of it, and at Ness, we’ve been using agile development practices for many years with excellent results. According to the 2023 State of Agile Report, more than 94% of organizations involved in software development in the Western world use agile methodologies, with 71% reporting improvements in project delivery speed.
To achieve these positive outcomes, agile transformation needs to be managed, and people must be trained to function effectively in the new environment. It’s beneficial to continuously measure agile deliveries, analyze them, and consistently improve the performance of teams and individuals.
That’s why we at Ness developed our own tool, Ness Matrix, for effectively managing and ensuring the quality of agile deliveries. The key to success is a combination of the right metrics, tools, and processes that enable detailed tracking and analysis of development processes, with an emphasis on continuous improvement and adaptation to changing conditions. By providing hard data, Ness Matrix helps uncover various issues and better evaluate teams and individuals.
Let’s return to digital transformation. What potential do you see for its use in the corporate sector in the near future?
In the near future, digital transformation will primarily be about creating adaptable organizations capable of quickly responding to changes and seizing new business opportunities. Successful companies will be those that effectively combine technology, data, and human potential. We see the greatest opportunities in the areas of customer experience, operational efficiency, new business models, and data monetization.
From a technological perspective, it will involve harnessing the potential of artificial intelligence, automation, data-driven decision-making, and building digital ecosystems.
The interview was published in IT Systems magazine 1-2/2025.