A digital two-tier society looms among SMEs
The importance of digitization for Swiss companies has increased significantly within a year. Small and unprofitable companies are losing out. There is a threat of a two-tier digital society.
Digitization at Swiss companies is advancing in leaps and bounds. However, according to a recent survey of 700 Swiss companies with 30 to 2,000 employees conducted by the consulting firm EY, SMEs are threatened by a digital two-tier society: a gap is opening up between successful and less successful companies. The importance of digital technologies has increased significantly compared to the previous year. Well over half of them already use digital technologies: 60 percent attach medium to great importance to them - in the previous year, the proportion was still 45 percent.
However, successful companies rely significantly more on digitization than companies with a poor business situation and negative business prospects. For 62 percent of the "top performers," it plays a very large or a medium role. By contrast, only 30 percent of the less successful companies say that digital technologies are fundamental to their business model.
No investment due to lack of funds
More than two-thirds of respondents see no fundamental obstacles to investing in digital technologies. However, more than twice as many as last year (15 percent) have too little money, 9 percent lack qualified employees and 8 percent have too little know-how. "Many medium-sized companies are at a crossroads," is the finding of Marcel Stalder, CEO of EY Switzerland. "Some of the companies are adapting flexibly to new developments. These manage to further develop their business model through innovative products and services. Others, however, will lose out: They do not invest enough in the transition to digital technologies, do not look specifically enough for suitable employees, or neglect cultural development. The Swiss economy is threatened by a digital two-tier society."
Digital advocates on the rise
The companies themselves know that they have to face up to digitization: The proportion of companies that are open to this megatrend has risen to 83 percent. Only 17 percent (previous year: 36 percent) say that the importance of digital technologies for their business model will not increase in the next five years. However, many companies still find it difficult to implement this realization in their day-to-day business. For Martin Ceccon, EY Digital Strategy Leader Switzerland, one thing is certain: "Many companies will still experience serious upheavals. They need an agile strategy for digitization, innovative products, services and new business models. Provided the leadership understands and promotes digitization as an opportunity, new exciting growth opportunities will arise. On the other hand, those who hold on to an outdated business model for too long will be among the losers."
Against digital two-tier society
"Size matters" - at least when it comes to using new technologies for their own business: Almost three-quarters of companies (73 percent) with sales of over CHF 100 million use digital technologies. By contrast, only just under one in five (21 percent) of companies with sales of less than CHF 30 million say digital technologies are very important.
Martin Ceccon also calls on smaller companies to be open to digitization, to acquire new skills and knowledge, and to invest in appropriate technologies, because otherwise there is a risk of a dangerous downward spiral. "Even companies with 100 or 200 employees can optimize supply chains, intensify customer relationships or individualize products. They become more flexible and save money, time and resources. Cooperations are important, not only if the company lacks the money or knowledge for its own digital solutions. Companies need to build a digital ecosystem with partners. This means more and more inorganic growth as well." In addition to an increase in collaborations, Martin Ceccon also expects the number of specialized digital solution providers to increase massively in the coming years. "There is still a lot of room to grow for digital solutions as modular systems. For example, smaller companies that do not need their own solution can make use of open platforms and incorporate them into their processes. We will see more of these types of services for small and medium-sized companies on the market in the future."
Switzerland evenly digitized - Germany split
The digital two-tier society has no clear boundaries. There is no discernible divide in Switzerland when it comes to digitization. The survey shows that digitization is accorded almost the same importance from Geneva to Romanshorn. The location initiative for digitization and innovation, digitalswitzerland, which is supported by EY Switzerland and many other organizations, also aims to ensure that digital strategies, business models and technologies are disseminated throughout Switzerland, especially by promoting startups. A comparatively unbalanced picture in terms of regional distribution emerges from the survey conducted in Germany at the same time: In the northeast of the country, the proportion of companies that describe digitization as very important for their business is six times lower than in the southwest.
According to the survey, the importance of the individual technologies and application areas has increased across the board in Switzerland. Above all, customer relationships are now organized digitally by the companies surveyed. 69 percent of the companies use digital technologies for this purpose. Mobile devices such as smartphones or tablets are now used by 54 percent of companies, whether for the work of their employees or for product sales. More than half of the companies also sell products online, with the proportion rising from 44 to 52 percent.
You can also find more information in a Expert interview in EY's annual report.
