Eight years ago in Germany, three college friends–Bastian Nominacher, Alexander Rinke and Martin Klenk–started Celonis with 12,500 euros. They saw an opportunity to leverage process mining to transform the operations of large companies. From the start, Celonis was profitable and grew quickly.
It was actually not until June 2016 that the company raised its first round of institutional capital ($27.5 million from Accel and 83North). Then there was a Series B for $50 million two years later.
And yes, this week came the mega round: $290 million. The lead investor was Arena Holdings, joined by Ryan Smith (the co-founder and CEO of Qualtrics) and Tooey Courtemanche (the founder and CEO of Procore).
So then what is process mining? And why is it so hot right now?
First of all, process mining has its roots in academia in Europe, pioneered by the Dutch professor, Wil van der Aalst. He is one of the world’s most cited computer scientists (with more than 92,000 according to Google Scholar).
He realized that analyzing event lots from IT systems could provide valuable insights, say in terms of mapping the real processes of an organization and their context. By doing this, it’s easier and more objective to find problems and bottlenecks as well as to uncover the opportunities to improve the systems.
Now it was Celonis that first commercialized process mining. It also helped that the company leveraged existing open source projects and focused on a limited number of use cases like finance, the supply chain, customer service and sales/marketing. This strategy was essential because effective process mining requires a deep understanding of a domain. For example, Celonis has developed pre-built modules to handle specific business outcomes (such as for on-time delivery or finding ways to get paid faster).
“Process mining is an easy idea,” said Rinke. “But it is hard to make it work right for organizations. You need to collect large amounts of data from all sorts of IT systems. You also need to go beyond integrations and must understand the databases that are underneath. And all are customized.”
No doubt, a key driver for Celonis has been the rapid growth of RPA (Robotic Process Automation). “In RPA, you’ll often get to the first low-hanging opportunities by asking people what routines take up most of their time,” said Antti Karjalainen, who is the CEO of Robocorp. “As companies progress in their automation journey, data-driven technologies become an important part of identifying opportunities. People might not even realize how their own work is related to work done in other areas of the company and process discovery technologies can uncover these hidden workflows.”
But the Celonis software is not just for upfront analytics. It is something that is useful for ongoing monitoring to make sure that an RPA implementation is on track.