Title topic “ICT and innovation”

In competition with their own mentality

Swiss companies need to accelerate their development processes if they wish to avoid being overtaken by competitors. However, in the IT that is essential for agility, they are extremely conservative.

Daniel Meierhans

In a current study, Franz Brinken, CEO of the machine tool manufacturer Starrag, gets to the heart of the central challenges for the Swiss industry with a tangible comparison: “In Switzerland, the development, production and market launch of a machine takes up to five years. In Asia, these are on the market in a maximum of two years.” As a result, the study “Innovation – reinvented” by the consulting company Deloitte sees Swiss manufacturers as being under pressure. They need to accelerate their innovation processes and have the courage to take risks if they do not want to be overtaken by their global competitors.

 
Speed instead of absolute reliability

With this, Deloitte points out a development that not only affects Switzerland as an industrial location, but all globally active companies – in these markets, which have been increasingly volatile and even more fiercely competitive since the financial crisis, speed is becoming a key success factor. Within five years, a competitor can launch a solution that is perhaps not quite as good, but is less expensive. There is just as great a risk of the requirements changing fundamentally, for example if energy prices decrease or the customer segments in the recipient countries shift.

 

Ultimately, this confronts Switzerland with a mental challenge. Instead of absolute quality and reliability, there is increasing demand for a willingness to take risks and for flexibility. These properties are gaining additional significance because very few companies are still able to produce new products entirely independently. For specific expert knowledge, for example from IT, materials science or the interaction design, specialist development partners need to be consulted.

 

Focus on operations instead of change

The use of IT provides a perfect example of how much Swiss companies struggle with willingness to take risks and openness. “Only around ten percent of Swiss companies are using public cloud computing and even they are using it only to a modest extent. This indirectly shows that only very few companies have a cloud strategy,” observes Michael MacNicholas, Director Technology Advisory at Deloitte in Switzerland. According to the CIO Survey 2013 by Deloitte, in other industrial countries, in contrast, 23 per cent of companies are already using services from the public cloud.

1/4 The agendas of Swiss CIOs are dominated by operating and cost topics. Driving forward new digital business models only comes in fifth place. Internationally, the situation is precisely reversed. (Note: The response options were not exactly identical in the Swiss and international surveys)

2/4 Driving forward digital strategies has a low priority. This directly affects the possibilities available to IT to develop business innovations – the CIOs lack human and material resources.

3/4 Switzerland is among the countries with the highest IT spending per employee. Nevertheless, modern IT techniques are comparatively rarely used. Thus there is a risk – especially when it comes to the cloud – that we will fall behind in the area of innovative business models, too.

4/4 The Swiss CIOs point to data protection and legislation as external factors that are the main reason for the low level of cloud use. This is surprising as, today, many offers address precisely these issues.

1/4 The agendas of Swiss CIOs are dominated by operating and cost topics. Driving forward new digital business models only comes in fifth place. Internationally, the situation is precisely reversed. (Note: The response options were not exactly identical in the Swiss and international surveys)

The low cloud adaptation rate in Switzerland is an expression of a fundamentally more conservative attitude with regard to IT as compared to global competitors. While the CIOs of competitors place their main focus on the ability to implement changes as quickly as possible, in Switzerland maintaining operations is at the top of the priorities list. “However, this is also related to the fact that Swiss companies have built up comparatively high-quality and complex IT with a high degree of individuality,” MacNicholas relativises his statement.

«Instead of absolute quality and reliability, there is increasing demand for a willingness to take risks and for flexibility.»

Wait until drawbacks occur

In the past, Swiss companies have been spared a few overrated hypes with their reserved behaviour. However, now that the Internet of things, the 4.0 industry, big data, mobile commerce, bring your own device and other consumerisation technologies or an abruptly changing business environment are demanding increasingly rapid and, above all, flexible responses, such behaviour could soon become a drawback. According to MacNicholas, the ball is in the management’s court: «As our survey shows, the IT managers themselves would very much like to be active as innovation drivers. However, Swiss managers view IT above all as a service department and, in most cases, still do not fully recognise their innovation potential.»

Challenges in innovation

The study by Deloitte highlights how Swiss companies can react to the increasing pressure to innovate:

«Innovation reinvented»

Agility in IT

Agile IT covers the dimensions of flexibility and quality. Specifically, responses to new challenges should be fast (adapt core processes, continue developing software) and it should be possible to guarantee a high quality standard (fulfilling the functional requirements, service levels).

Agile IT

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