“Digitalization impacts every industry”

“Digitalization impacts every industry”

Ulrich Amberg, Head of Consulting at KPMG Switzerland, talks in an interview about smart washing machines, the enormous innovative capacity of start-ups as well as the growing importance of data protection and cyber security.

Partner, Head of Consulting

KPMG Switzerland


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Digitalization impacts companies from every sector: How are Swiss firms dealing with this major topic?

In terms of the scope and speed of digital transformation, the situation among our clients is far from uniform. Every sector has companies that are investing very actively in digital innovation. On the other hand, there are also firms that have done very little in this area to date. There are countless examples of digitalization: In the financial sector, for instance, banks are now processing mortgage lending online. This is a service that did not exist in the banking industry until just recently. A further example is the establishment of mobile payment systems which allow people to pay for everyday purchases using their smartphones. There is also a great deal of activity linked to efforts aimed at increasing levels of personalization and linking complementary offerings in order to optimize services on online platforms. Many companies are revamping how they interact with customers and employees via social media channels and are analyzing their data pools more systematically in an effort to optimize their offerings. The Internet of Things is also taking shape: The number of household appliances linked to the Internet is rising constantly. It wasn’t long ago that the idea of using a smartphone to control a washing machine or to connect several different household appliances to each other was a vision of the future; now this is a reality. Switzerland is still a world leader when it comes to innovation and its innovations are frequently associated with or form the basis for digitalization. Its contribution can be seen, for example, in the development of sensors for smart objects.

Are large global corporations better prepared for digital transformation than locally based SMEs?

Depending on the size of the companies in question, there can be huge differences in their ability to embrace innovation and in their respective innovation cultures. This has a major impact on how proactively these companies make use of new technological opportunities. Size and tradition, however, are two factors that tend to cause sluggishness in this area. While many well-established corporations are contending with a lack of agility and an insufficient willingness to change, local SMEs face fewer obstacles preventing them from digitalizing their business models and processes and implementing the relevant organizational changes. The advantage of large companies lies in their access to funds for financing projects of this nature or for promoting innovation outside of their existing business activities. The latter may take the form of incubators for start-ups, for instance. The big digital disruptions have always stemmed from start-ups, from Apple and Microsoft all the way to Google, Uber and Airbnb. The main reason for this is the fact that start-ups are not restricted by the need to take an existing business into consideration and can focus fully on the development of new products and services.

Are there differences between individual industries?

While digitalization affects all industries, the extent to which they are impacted varies. The effects in the financial and service sector are omnipresent. Here, a large part of the value chain can be fully automated and digitalized. In other industries, the process of digitalization is taking on many different facets, ranging from online distribution channels and the greater integration of supply chains across company borders to the digital transformation of manufacturing processes using technologies such as 3D printing. Last but not least, even the products themselves are changing as a result of digitalization. One example of this is clothing with integrated sensors, so-called “wearables”. At the same time, however, there are also industries and activities that are only affected by digitalization to a very limited degree, such as the skilled trades.

The topic of data and analytics, i.e. the targeted use of big data and the added value this generates, takes on vital importance within the scope of digitalization. Could you give a few specific examples of where this is used?

A recently published KPMG study entitled “Clarity on Data & Analytics” –  based on a survey of 830 company representatives in over 15 countries – revealed that companies feel that the systematic analysis of big data benefits them most by enabling them to make decisions more swiftly and accurately, improve their dialogue with customers and increase employee satisfaction. Just 14 percent of the surveyed companies, however, cited that they had the necessary know-how or the required capacities to fully exploit the potential that big data offers for promoting their company’s success.

One specific example of use is the real-time evaluation of data streams from social media channels in order to systematically identify relevant discussions and trends. A further example is the automatic aggregation of publicly accessible information on counterparties in business transactions. This allows for potential risks, such as a lack of creditworthiness or dubious activities on the part of their executive bodies or owners, to be identified. Yet another case in point is the automatic evaluation of transaction-related data with the objective of recognizing statistical anomalies and thus uncovering fraud cases. And the list goes on and on. The areas of application for analysis of large, unstructured data pools are countless.

For many companies – and their consumers too – this fast-paced development is a cause for concern. Which trends do you see in the areas of data protection and cyber security?

The significance of data protection and cyber security has risen enormously over the past few years. Thanks to the Internet, the global connectivity of IT systems, mobile devices and smart objects is increasing every day and this, in turn, is opening the door to completely new types of threat scenarios. And in all probability, this situation will intensify even further in the future. Conventional security measures, such as firewalls as a perimeter defense mechanism for corporate networks, are no longer sufficient. Today, attacks by professional hackers and activists are much more elaborate than they used to be and call for more sophisticated defense methods for preventing, detecting and responding to such attacks. Other factors include the growing complexity and volume of the data collected as well as the global processing and transfer of such data in connection with offshoring and outsourcing activities. In all of this, legal and, to some extent, regulatory restrictions need to be considered when transferring this data across national borders.

Which developments do you expect to see over the course of the next few years?

One core issue of digital transformation is the Internet of Things, i.e. the connection of various devices and objects to the Internet using sensors and miniaturized computers. The vision of the so-called fourth industrial revolution – also known as Industry 4.0 – builds on this and ultimately aims to create smart factories. This concept comprises new automation techniques, specifically for the self-diagnosis and self-configuration of technical systems. We can also expect to see a sharp increase in the use of 3D printing processes and robots in a variety of new areas of application as well as the commercialization of self-driving cars.

One other issue is the rise of mobile end devices as a primary online channel. While the Internet was mainly accessed via laptops and desktops not long ago, many applications are now being accessed most frequently using tablets and smartphones. Consumers expect to be able to access digitalizable offers and services anywhere and at any time and to be able to process transactions immediately and with the highest possible degree of automation.

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