Swiss software industry: A long road to sustainability

Sustainability is not a strategic priority  

The SSIS shows that only about one third of Swiss software companies treat sustainability as a strategic priority. This manifests itself in the support of sustainable projects and the incorporation of sustainability aspects into the business strategy. Three-quarters of the software companies also develop technical solutions that are both usable in the long term and flexible and extendable: Code reuse, continuous testing and standardization of tools are common practices.

Nevertheless, only a few companies have defined clear targets and measurement methods for sustainability, which offers room for improvement. In contrast, Swico notes that the hardware industry is investing a lot of effort in sustainability documentation and reporting.

Little pressure from regulations

The main driver for the introduction of sustainability measures in the Swiss software industry comes solely from the customers. More and more clients are demanding sustainability certificates, without which no orders are placed. Regulatory authorities, export markets and other organizations, on the other hand, have only limited or no noticeable influence on the sustainability of Swiss software companies. There is still no pressure from this side.

Sustainability in the competition for resources

Companies need time and resources to develop sustainable measures over the long term and integrate them into their operations. These resources compete with other business priorities. The study states that companies want meaningful metrics. Without clear metrics, it is difficult to transparently track the success or failure of sustainability initiatives and quantify the impact on the business and the environment, Swico members argue.

In terms of sales, growth and profitability, Swiss software companies are positive about the future despite increasing pressure on margins.

Software industry continues on growth path

According to the latest study, growth expectations remain positive. Swiss software companies expect sales to rise by 10 % in 2023 and 10.2% in 2024. By contrast, pressure on the margin is increasing. Unlike in previous years, the margin is below ten percent again for the first time (8.8 %).

Profitability (EBIT margin) of 9.4 % in 2021 has decreased slightly to 8.8 %. The EBITDA margin for the same period is 9.9 % (-1.4 %). The technology and service providers record the largest differences. The employee turnover rate in the industry remains relatively stable at an average of 10.4 % and is 0.4 percentage points lower than in the previous year.

Billing models on the rise

The most important billing model for manufacturers of standard software is billing according to consumption. This is no surprise given the increasing importance of cloud-based service solutions. The trendsetters are the large software providers, who have been pushing the 'as a service' billing model for some time now.

Export business increases slightly

Compared to 2021, the share of sales generated abroad has increased from 6.1 % to 7 %. However, the international share of total sales remains low. As in previous years, Germany is the most important export market. The public sector continues to be of the greatest importance domestically. Thus, in 2022, the Swiss software industry generated 22.5 % of its revenue with orders from the public sector. For the individual software manufacturers, this is even the largest customer with 28.1%.

Source: www.swico.ch