What SMEs struggle with the most - and where digitalization can help
Although the Swiss economic data looks relatively good by international standards, more companies than before are affected by falling margins and high commodity prices and are concerned about developments such as the shortage of skilled workers. The consulting firm CNT Management Consulting has taken a look at the risks SMEs are currently particularly exposed to and why process optimization and digitalization are also a sensible strategy for smaller companies.
Expectations for economic growth in Switzerland remain cautious for this year: In mid-March, the Federal Government's Expert Group on Economic Forecasts predicted significantly below-average growth of 1.1 percent[1]. "The economic challenges are definitely causing Swiss companies problems. This also applies to foreign trade, where the weakening economy in Germany, Switzerland's most important trading partner, is making itself felt," explains Wilhelm Heckmann, Managing Director at CNT Management Consulting in Zurich.
Availability and prices of raw materials cause concern
The SME Study 2023 provides insights into the day-to-day business and feelings of Swiss SMEs. It shows that rising raw material costs and the availability of raw materials are the issues currently of greatest concern to Swiss SMEs[2]. "In order to be able to compensate for price disadvantages, it is essential to keep innovative strength as high as possible," emphasizes Heckmann. Specifically, he sees digitalization in procurement, which means connecting to correspondingly large procurement networks and active risk monitoring with the support of data-based tools and platforms, as a suitable means of meeting these challenges. Heckmann also mentions active supplier management and the improvement of internal planning and scheduling.
State-of-the-art IT to combat the shortage of skilled workers
Another aspect that poses challenges for Swiss SMEs is the search for suitable personnel. In this context, Heckmann points out that Gen Z, i.e. people born between 1997 and 2012, will make up the majority of the working population in five years' time. In the competition for qualified workers, it is important to meet the wishes and requirements of the younger generation. "They want state-of-the-art IT solutions that support their way of working. For example, mobile solutions and solutions that support location-independent working, a high degree of automation and lean processes," Heckmann explains. Being able to offer all of this requires innovative ERP systems such as SAP Public Cloud.
Cloud solutions also the tool of choice for SMEs
When talking about digitalization and process optimization, it's hard to avoid cloud solutions. However, there are still some reservations, especially in smaller companies - for example, for fear of no longer having control over sensitive data. Yet the security issue, such as hacker attacks, is an argument in favor of the cloud, explains Heckmann: "As it is difficult for SMEs to maintain high security standards themselves, they are definitely better off with cloud providers, as they also outsource the risk to an external professional." The expert is already seeing a mind-shift towards the cloud because products such as SAP Public Cloud are getting better and better. The fact that Swiss authorities are already moving to the cloud has a positive external impact. Heckmann is convinced that more digitalization would not only increase security in companies, but also enable the use of best practice processes and new features and functions such as the integration of business AI functions as soon as they become available. "Swiss SMEs are very innovative, and there are many products and services in which Swiss companies are world market leaders. There is still potential in terms of more digitalization and increased use of the cloud," Heckmann concludes.
[1] https://www.admin.ch/gov/de/start/dokumentation/medienmitteilungen.msg-id-100449.html
[2] https://www.raiffeisen.ch/content/dam/www/rch/firmenkunden/unternehmerthemen/mittelstandstudie/2023/kmu-mittelstandstudie-2023.pdf
Source and further information: CNT Management Consulting
