SMEs in Switzerland face risk of two-class society in terms of digitalization

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  • Importance of digitalization for Swiss companies has grown strongly within the space of a year
  • Successful companies put much more emphasis on digital technologies
  • Small and unprofitable businesses are falling behind
  • A lack of funds is the main reason for failing to invest in digitalization
  • Hardly any regional differences observed

ZURICH, 20 FEBRUARY 2017 – Swiss companies are rapidly becoming more digitalized. At the same time, a gap is opening up between successful and less successful companies, according to the latest survey conducted by professional services firm EY at 700 Swiss companies with 30 to 2,000 employees. The importance of digital technologies has increased strongly in comparison to the prior year. Well over half of these companies already use digital technologies: 60% consider these to be of medium to great importance – compared with only 45% in the prior year.

However, successful companies place much more emphasis on digitalization than do companies with a poor business situation and a negative business outlook. For 62% of top performers, digitalization plays a major or moderately large role, while only 30% of less successful companies say that digital technologies are essential to their business model.

No investment due to a lack of funds
Over two thirds of the companies surveyed do not see any fundamental obstacles to investing in digital technologies. However, over twice as many as in the prior year (15%) have too little money, while 9% lack qualified staff and 8% are short on expertise.

“Many SMEs are at a crossroads,” says Marcel Stalder, CEO of EY Switzerland. “Some companies are adapting flexibly to the new trends. They are managing to continue developing their business models thanks to innovative products and services. However, other companies are going to fall behind: they are not investing sufficiently in the transition to digital technologies, they are not specifically searching for appropriate staff, or they are failing to develop their corporate culture. The Swiss economy faces the risk of a two-class society in terms of digitalization.”

Digital advocates gaining ground
Companies themselves are aware that they have to address digitalization: the proportion of companies open to this megatrend has now risen to 83%. Only 17% (prior year: 36%) say that the importance of digital technologies for their business model will not increase in the next five years. However, it remains difficult for many companies to apply this awareness in daily business.

For Martin Ceccon, EY Digital Strategy Leader Switzerland, it is clear that “many companies will undergo radical changes. They need an agile strategy for digitalization, innovative products and services and new business models. As long as management perceives and promotes digitalization as an opportunity, this will result in exciting new possibilities for growth. However, those who adhere to obsolete business models for too long will end up among the losers.”

High-revenue companies leading the way
Size matters – at least when it comes to a company's implementation of new technologies for its business: nearly three quarters of companies (73%) generating revenue of over CHF 100 million use digital technologies. In contrast, among companies generating revenue of less than CHF 30 million, only around one in five (21%) say that digital technologies are of very great importance.

Martin Ceccon calls on smaller companies to remain open to digitalization, acquire new skills and knowledge and invest in appropriate technologies, or else they may face a dangerous downward spiral. “Businesses with 100 or 200 employees can also optimize supply chains, intensify customer relationships and individualize products. This will make them more flexible and save them money, time and resources. Cooperative partnerships are important, not only when companies lack the money or knowledge for internal digital solutions. Companies need to build a digital ecosystem with partners. This increasingly also means non-organic growth.”

In addition to an increase in cooperative partnerships, Martin Ceccon anticipates that the number of specialized digital solutions providers will grow tremendously in the coming years. “There is still a lot of room for expansion for digital solutions as modular systems. This allows smaller companies that do not need their own individual solutions to access open platforms and integrate them in their processes. In the future, we will see more of these services for SMEs on the market.”

Switzerland evenly digitalized – Germany divided
In Switzerland, no major regional differences are observed in terms of digitalization. The survey shows that digitalization is viewed as more or less equally important from Geneva to Romanshorn. Meanwhile, digitalswitzerland, a business initiative for digitalization and innovation supported by EY Switzerland and many other organizations, aims to help digital strategies, business models and technologies gain currency throughout Switzerland, in particular through the promotion of start-ups. In comparison, the survey conducted in Germany at the same time gives a less balanced picture with regard to regional distribution: in the north-east of the country, the proportion of companies that consider digitalization highly important for their business is six times lower than in the south-west.

According to the survey, in Switzerland the importance of specific technologies and areas of application has increased across the board. Customer relationships, in particular, are now organized digitally by many of the companies surveyed, with 69% using digital technologies for this purpose. Mobile end devices such as smartphones and tablets are now used by 54% of companies, whether for the work performed by their employees or for product-sales purposes. In addition, over half of the companies already sell products online, with this proportion having risen from 44% to 52%.

Potential often still goes unrecognized
“Many companies are still not fully aware of the potential uses of digital technologies,” observes EY CEO Marcel Stalder. “Particularly in the traditional manufacturing sector, digital solutions are only being adopted slowly in factory facilities, workrooms and development centers. Large companies often lead the way in this area. Many companies also focus primarily on increasing efficiency and improving processes, and fail to recognize that digitalization has the potential to change business models fundamentally and give rise to new services.”

EY itself promotes digitalization internally and externally. “For us, it is also important to take our employees along on this exciting journey and prepare them for the revolution in the business world. Only in this way can we provide credible advice and support to our clients during the transformation to a new, digital reality,” says Marcel Stalder.

You can find additional information in the expert interview in our annual report.


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