The role of tech in FUNKE Media Group’s ongoing transformation

About five years ago, FUNKE Media Group embarked on its stated transformation journey. One crucial aspect of that has been rethinking its corporate IT structure and department, even renaming it to FUNKE Technology. In addition to his transformation role, Krum is Deputy Chief Innovation Officer for the media group. Here he shares how FUNKE’s tech is driving much of its innovation – and transformation.

FUNKE focuses on three business areas: regional media, magazines and digital. The group publishes 12 regional newspapers in Germany, with 1700 journalists and 3800 media professionals backing that effort.

Before joining FUNKE, Krum worked at Neue Osnabrücker Zeitung in different capacities, including Chief Innovation Officer, head of organisation and IT, as well as Head of Digital.

You are the Deputy Chief Innovation Officer … what does that mean in everyday practice, but also regarding the long-term vision of where FUNKE wants to be?

We are seeing an increase in requests for changes to functions, processes and systems at ever shorter notice. This affects all departments and market areas and is naturally a result of the general market development in the media industry and that pressure to change. The parallel requirements and short timelines, some of which affect the same or interrelated system components, present us with major challenges in terms of evaluation and prioritisation in order to implement the right things that will actually bring us as a company closer to our strategic goals. The shortage of skilled workers and therefore war for talent in the tech skills sector is making that even harder.

I believe that the only way forward is to change our historically rather monolithic system architecture into a more specific modular functional architecture. However, this requires clarity about the functionalities that will be decisive for our competitiveness in the future and the resulting prioritisation and strategic roadmap for the transition. It is therefore important for a company to have a vision of its own future and to constantly develop this further – also with IT. This also helps to generate purpose and a future perspective for our existing workforce but also new team members.

For us, the biggest task at the moment is in the area of regional media. Here we need to create the best possible conditions and the technical foundation for the desired and necessary growth in digital subscriptions with the greatest possible flexibility and, at the same time, optimise and, if possible, ‘variabilise’ the costs of our legacy print business in such a way that we can also maintain the print business at affordable prices for as long as possible.

And yes, in many parts this feels like squaring the circle.

We often hear about larger media groups trying to strike a balance between innovating across the group vs. maintaining those winning innovations at the local (title) level… how does FUNKE approach that?

There are good arguments for both approaches. Maybe it’s not an “either or” but a “both and” decision.

 I think one solution could be to find a mechanism as a company to manage innovation centrally, but in a way that the added value is tested in the decentralised units. So, decentralised units can be part of the innovation process and benefit from it, which can improve involvement and create identification with the results. Centrally, however, the overview and transparency is maintained and there is the opportunity to try out more ideas and models if necessary and if there is enough management capacity to accompany these parallel projects.

The real challenge, apart from the correct distribution between centralised and decentralised innovation, lies in the management of the innovation portfolio, because not every innovation idea leads to real innovation and focus is the key to success. In my experience, saying goodbye to ideas and approaches and making decisions in favour of standards is something that is difficult for us. And: The reduction of unnecessary complexity, which is no longer fit for purpose, is absolutely essential if we want to meet the challenges of the future competitively at the system and process level. This requires the correct definition of central standards.

We at Funke have both approaches and combine various formats here that are intended to promote innovation centrally and also leave room for our own innovation ideas in a decentralised manner. We also observe the above described challenges. The development of AI technologies has once again accelerated our understanding of the need for this. However, we also see how important, but also difficult, it is to involve all organisational elements, including the works councils, in this process.

What are some of the metrics/KPIs you focus on to sort of measure FUNKE’s digital transformation progress?

There are different levels of KPIs helping us to navigate through the change. From the strategic perspective it is about the classic KPIs in relation to our business model(s) and departments like “growth of digital subscriber base”, “growth in media time consumption”, “increase in digital readers loyalty” or “development of your production costs” and so on. For us as FUNKE Technology, we are looking at indicators helping us to navigate through the technology change. Meaning reducing operational costs in legacy-based technologies, investing in the adoption of AI technologies, projects to optimise and future-proof our system architecture and also advanced training of our workforce.

I am proud that we at FUNKE Technology also understand the topic of corporate culture as a success factor for transformation and have found a way to identify our cultural development, improvements, new needs for action and also deterioration through employee surveys.

How would you characterise the role of technology in that?

When we began our transformation journey almost five years ago, we took the early step of renaming the former “Corporate IT” department to “FUNKE Technology” as part of our newly defined IT strategy and added the claim “because Technology is the driver of change”. I think this still describes the core of our role very well to the point. 

Technology has been the – most underrated – success factor in the big success and rise of the media industry after WWII. It led to a prospering and growing media company through generating and defending high market entrance barriers by having and maintaining big printing facilities and complex, highly optimised logistic structures and processes. That is changing because digitalisation leads to lower market entrance barriers – there is no need for printing plants, logistic infrastructures, or complex editorial systems anymore to become a news publisher. The result is more competition and lower contribution margins.

Where does FUNKE stand on having a common tech stack/platform for all titles to work on?

I am pleased that we recognised the need for consolidated and harmonised systems and platforms as early as the takeover of the then Axel Springer titles (in 2014) and began to take the necessary but still difficult first steps towards a standardised and more central platform strategy. 

But the truth is that it is not possible to renovate architecture of our size that has evolved over more than 30 years overnight. Especially when it comes to de facto organisational development projects, as is the case with departmental applications, where the first questions are about the right organisation, distribution of tasks and then processes, which I have to answer sufficiently in order to be able to implement a uniform system platform. 

Regarding our infrastructure architecture, we actually benefited (in that specific perspective) from our cyber-attack in 2020 and the opportunity that arose out of it: to not rebuild the old unsecure architecture but start with a new one from scratch, defining our current infrastructure and security FUNKE Standard. 

So we know that we need a common tech stack and platform strategy and have made a lot of progress. For example, all newspaper titles in the regional media already use the same editorial system, the identical subscription management platform and same ERP. We have already achieved this step in the standardisation process, so we are currently in the process of renewing and modernising our architecture and platform(s), which – as described above – we are driving forward on a modular basis and in line with the departmental processes, organisational development and requirements.

In our World Press Trends report, Reader Revenue and Product Development were two of the top areas where publishers said they would invest in 2024. Does that line up with FUNKE’s priorities?

Following our digital growth strategy for digital sustainability, yes, these are also two of our top priorities on the market side and this also has a lot of impact (priority) on our architecture roadmap.

CMS was also listed as a key technology that publishers will invest in 2024… FUNKE recently implemented a new CMS platform. How has that gone so far, and how does such a project galvanise teams across the organisation?

I am happy and proud of our project team that has just this week successfully completed the rollout process of the CUE editor (from Stibo DX) throughout FUNKE regional media. As far as we know, this is the fastest or at least one of the fastest CUE rollout projects in the history of Stibo for a company of our size. To that success I see two key elements:

First, having brought the right team together. And this particular refers to our interdisciplinary project team, which is made up of members of IT as well as the editorial team (including the management and chief editors). This team has managed the project together with a common goal at eye level. The most important prerequisite for the team composition was the right mindset, making sure everybody really understands why we are implementing the CUE editor and then secondarily the professional expertise.
Second, in my opinion, one big mistake that is often made is the attempt to solve organisational and leadership problems with an IT system. This does not work. The real key to editorial (digital) transformation lies in the right leadership, qualifications and mindset of the editorial teams. The right tools can support this but cannot enforce the necessary change. We have therefore decided to manage and differentiate between two project strands in the project setup. 1) The system project with the task of implementing the right editorial editor for a digital-first editorial organisation, so focusing on the right functions, and 2) a project strand for editorial transformation, which deals with the necessary organisational development and effects and defining the right organisational environment. And of course these two strands had to work together very closely.

Already through the running project we saw an improvement in exchange across former “editorial” borders, locations and titles. Having just finished our CMS/Editor rollout, I expect this is a good start and not the end of transitioning into a better organisation and galvanization of teams.

AI is becoming relevant in all aspects of news: Story discovery, research, creation, production, and distribution. But AI is not one technology. How does Funke plan to make sure use of AI is managed and tracked so journalistic integrity and regulatory compliance is under control?

We still believe that the best use and benefit for us lies in the assistance functions of AI applications. It is important to us that our journalists are and remain responsible. AI processes should therefore start with a human being and end with a human being to assure the quality of our work. Already, AI technology can be a good and fast assistant and make tasks easier for us, be it summaries, semantic markups or alternative suggestions for headlines, teasers, etc. Some already use it for the automatic generation of content guided by journalists. And the AI models and use cases evolve quickly and we are curious about what we will see here in the future.

In order to ensure and manage the correct adoption and use of AI, we have set up a kind of hub and spoke organisation. Somewhat comparable to the innovation approach I mentioned before. The Hub is a central board made up of members from our divisions (Regional Media, Magazines, Funke Digital and the Center of Excellence). This is where the threads come together and decisions are made about central guidelines and mechanisms. The spokes are individual areas or units in the divisions, such as the editorial team for regional media. They ensure that we also have and adhere to journalistic guidelines for the use of AI and test AI use cases for their own areas of responsibility.