Why the data difficulties in Deutschland?
Metadata Management

Why the data difficulties in Deutschland?

Germany is a country of contradictions. It's one of the world's leading economies yet at the time of writing it's been without a proper government for four months. It's perceived as an industrial powerhouse yet is currently experiencing widespread union strikes, not to mention ongoing international legal action against one of its biggest car manufacturers.

It's home to a major tech start-up hub yet German society as a whole is conservative and even distrustful of new technology. It's a country of two halves whose East-West reunification is still ongoing and paid for out of taxation. It can be a challenging, bewildering place in which to run or expand a data-oriented IT business.

If you're thinking of initiating data-driven business operations in Europe's most powerful and influential economy, plan carefully. There are two main aspects to consider: legal and cultural. These are intertwined to an extent, in that laws are enacted in response to cultural needs. Even so, there are some surprises.

Starting with the legal aspect, data management in Germany boils down to GDPR with bells on. Companies are strictly regulated in terms of what they can and can't do with customer data, in fact with almost any data. If you're not already compliant with GDPR, get that situation resolved before attempting any expansion into Germany, or you'll be crushed by the weight of compliance.

But even that won't be enough. There are additional considerations, quirks and hurdles that take Germany above and beyond other EU countries, to the extent of risking the country's competitiveness. One that sometimes catches out foreign firms is the requirement that data collected in Germany must stay in Germany. It can't be 'exported' without permission. This even applies to mapping data gathered by satellite. Yes, even in space there's no escape from German bureaucracy.

On that note, bureaucracy is a top complaint of non-Germans living and working in Germany, and of a fair few Germans too. The country is widely change-resistant and this extends to its officialdom, which is firmly rooted in the 1980s. Expect to have to submit reams of paperwork to local and federal offices when opening and running subsidiary businesses here.

The concept of 'light-touch' business regulation is unknown in Germany and email isn't widely accepted as a method of official communication. Instead you can expect frequent requests for forms and documents to be faxed to the Finanzamt (Tax Office), Ausländeramt (Immigration Office) and other government departments. Germany must surely account for the world's largest remaining market for fax machines and consumables.

This may all seem bizarre, but it's as nothing compared to the complexities of German culture, which can only be understood with reference to its history. Germany went through (at least) three major crises in the past 100 years: the currency hyperinflation of the Weimar republic; the second World War; and the country's subsequent division into two separate parts, one of which existed under communism until 1989. The scars of those events remain, coupled with a determination not to repeat the past.

The events of WW2 are taught in schools, with a strong emphasis on the need to be open to, and accepting of, different people. Places such as the Stasi Museum in Berlin act as stark reminders of what happens when an organization holds private information on hundreds of thousands of people, as was the case in East Germany before the Wall came down. Credit is much less popular than in the UK and US. Cash is widely used for everyday purchases, partly due to debt aversion, partly as a way to prevent one's personal shopping habits being tracked by banks. Dumbphones are commonplace, and even smartphone users tend to be savvy about which apps and services they use, avoiding those associated with data-slurping privacy infractions.

Rafael Laguna, CEO of German software company, Open-Xchange provides a cultural perspective on Germany’s attitude to Google. Check out: Viewpoint: Germany, Google & the Stasi Legacy

These are, of course, generalizations. They don't apply to all Germans and there are big differences in behavior and attitude between, say, Munich, Frankfurt, Berlin and Hamburg. But national stereotypes can be useful because they have real-world business implications. For example, Facebook usage in most developed countries runs at around 60%. In Germany it's nearer 40%. Zuckerberg's company recently announced a new charm-offensive-style marketing campaign, attempting to convince Germans that Facebook is a safe custodian of their private information. That will be an uphill battle. It's not a case of "We don't like Facebook." It's a case of "We have a deep and historically validated distrust of any organization that aggregates personal data."

The same battle faces any IT company intending to expand data operations into Germany. However, the rewards for doing so successfully are potentially huge. Germany has a population of over 80 million people and is the most stable, consistently-growing economy in Europe. It is possible to succeed here, and there's no shortage of data-driven IT businesses that have done so, from established behemoths such as SAP to fast-growing start-ups such as those mentioned here and here. It's not easy, but to paraphrase an old crooner, if you can make it here, you can make it anywhere.

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Alex Cruickshank

Alex Cruickshank has been writing about technology and business since 1994. He has lived in various far-flung places around the world and is now based in Berlin.  

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