How can Swiss companies turn into digital operations champions?

PwC Global Industry 4.0 Study 2018

Get the Swiss results here.

Digital transformation is the most critical challenge for industrial companies worldwide. PwC’s new study “How to Be a Digital Operations Champion – Global Industry 4.0 Study 2018” shows that as far as Swiss companies are concerned, they have not quite exploited their full potential yet.

The study evaluates the digital ecosystems of companies and to what extent new technologies have been implemented. At the same time it highlights the influence of new technologies on the workforce and corporate culture. The companies that were included in this study were also asked about the digitalisation projects they were planning to realise over the coming five years. The study is based on a survey of 1,155 industrial companies in 26 countries around the world – with a separate country report on Switzerland.

One conclusion of the study is that world-class digital champions are relatively rare in Switzerland, and too many Swiss businesses consider themselves digital novices. The Asia/Pacific region is leading the digital transformation, Europe, generally, is struggling to keep up.

Using digital technology is crucial to be able to compete. Over 40% of companies have already implemented key new technologies, over 70% are planning to do so over the next five years. Revenue increases of 15% and efficiency gains of 12% are expected from digital technology implementation over the same period.

The use of new technologies can therefore bring tangible competitive advantages. Plans for digital solutions and their subsequent introduction are focusing on areas such as predictive maintenance of assets and products, integrated end-to-end supply chains and the use of robotics.

Graph 1: Benefits of Investing in Digital Technologies. Average benefits over the next five years by world region.

Digital champions, i.e. around 10% of global manufacturing companies, are offering their customers digital ecosystems that link their operations and technology to their customers. New technologies are being deployed comprehensively to enable collaboration along the entire value chain. Digitalisation offers large companies the opportunity to increase production in mature markets and close to customers.

Regional differences indicate that the Asia/Pacific region is leading the digital transformation. APAC companies are most advanced on the path to digitalisation and highly optimistic about the benefits of applying digital technologies (58%). American companies (54%) are positioned slightly behind Asia, while Europe (42%) is struggling to keep up.

Manufacturing execution systems and robotic process automation are rather wide-spread among Swiss companies. At the same time, their digital corporate culture is well advanced. However, when it comes to integrated end-to-end supply chain planning and artificial intelligence, the Swiss are lagging behind their competitors, in particular compared to Asian and American companies. The 50 Swiss companies interviewed in the study are markedly less digitalised than their international competitors. Too many Swiss businesses consider themselves digital novices, and digital champions are relatively rare in Switzerland. Exhibiting their confidence in the new technologies, Swiss industry decision-makers are expected to take considerable steps towards a more stringent implementation of Industry 4.0 over the next five years. In addition, a trend towards shifting certain production steps back to Switzerland is gaining momentum.

Roger Müller, Head Digital Operations PwC Switzerland, explains: “Of the Swiss respondents, almost half (41%) believe that the future will see more products produced in their own country. Increased automation could support Switzerland’s competitiveness by lowering production costs and allowing companies to move production back to mature markets and thus closer to their customers.”

Graph 2: New technologies: what is the Swiss status quo? Question: To what extent have you implemented the following technologies within your company? (50 companies in Switzerland, in comparison with 1,155 companies worldwide)

Artificial intelligence, a widely-discussed topic, is beginning to be implemented. A mere 15% of companies worldwide – and only 1% in Switzerland – are on record for already having implemented or piloted AI solutions, mainly in the areas of production and R&D. Artificial intelligence has the potential to revolutionise the quality of operational decision-making. The challenges of introducing artificial intelligence solutions are that employees are unfamiliar with these new technologies, which makes their implementation challenging and their benefits uncertain. What is more, there is a lack of transparency and trust. In many cases, the technology in question is not mature enough and usable solutions are not yet ready for the market.

 

Register here to download the study

PwC’s Experience Center Opening, 14 June 2018

Would you like to learn more? Participate in the Grand Opening of PwC’s Experience Center. For more information click here.

 

Contact

Roger Müller
Head Digital Operations
PwC Schweiz
Tel. +41 58 792 16 37
roger.mueller@ch.pwc.com

Disclose 27, Focus piece 6: Audit 4.0, Part 2, Audit 4.0, Part 2, High-Performing Auditors

Disclose – PwC’s online magazine

«It takes people, digital technologies and trust to achieve top performance.»

Reading our latest issue of Disclose (disclose.pwc.ch/27/) you’re sure to get an adrenaline rush as we investigate a topic with particularly close connections to sport: high-performing organisations.

Focus piece 6 gives you an insight into the topic Audit 4.0, Part 2, High Performing Auditors:

In the wake of digital transformation there’s been a huge explosion in demand for cost-efficiency, greater security and transparency, and fact-based decision-making. This is forcing companies to realign their financial function, and revolutionising auditing – both of which are now expected to make a better-quality and more useful contribution. CFOs and auditors are morphing from backward-looking guardians of quality to data agents.

Read the full report here.

Contact

René Rausenberger
Partner, Head of Technology-driven Audit
PwC Switzerland
Tel.: +41 58 792 22 66
rene.rausenberger@ch.pwc.com

AI will transform project management. Are you ready?

Around 200 years ago the industrial revolution changed society in unimaginable ways for the time. Today another revolution is under way, with even farther-reaching consequences. Artificial Intelligence (AI), experts are predicting, will change everything about the way we produce, manufacture and deliver.

In this article, we will explain how AI is set to change project management practice, what obstacles need to be overcome, and how project managers can prepare themselves to stay relevant in a fully integrated, automated and predictive project management world.

Read more about AI

Contacts

Marc Lahmann
Assurance Director
+41 58 792 27 99
marc.lahmann@ch.pwc.com

Manuel Probst
Assurance Senior Manager
+41 58 792 27 62
manuel.probst@ch.pwc.com

Disclose 27, Focus piece 5: Audit 4.0, Part 1, Finance functions and processes

Disclose – PwC’s online magazine

«It takes people, digital technologies and trust to achieve top performance.»

Reading our latest issue of Disclose (disclose.pwc.ch/27/) you’re sure to get an adrenaline rush as we investigate a topic with particularly close connections to sport: high-performing organisations.

Focus piece 5 gives you an insight into the topic Audit 4.0, Part 1, Finance functions and processes:

Most of the repetitive tasks carried out by the Finance function can be standardised and automated across systems using robotic process automation (RPA). This development has long been predicted. But it has only become reality now that data and such a wide variety of digital tools are available. This way digitisation is fundamentally transforming the Finance function, from number cruncher to sparring partner.

Read the full report here.

Contacts

Paul de Jong
Partner, Head of Systems & Process Assurance, PwC Switzerland
Tel.: +41 58 792 76 58
paul.l.de.jong@ch.pwc.com

Dr Christian B. Westermann
Partner, Data & Analytics Leader, PwC Switzerland
Tel.: +41 58 792 27 97
christian.westermann@ch.pwc.com

Initial coin offerings (ICOs) in Liechtenstein

At a glance
• An initial coin offering (ICO) or a token sale is when a company sells a predefined number of digital tokens to the public in a limited period of time.
• The ICO market has grown very rapidly in recent months and has been a new avenue for blockchain-based start-ups and projects to get the funding needed to launch their projects.
• In September 2017, the Financial Market Authority Liechtenstein (FMA) published a fact sheet on ICOs which stated that depending on their specifications, tokens may constitute financial instruments subject to financial market law.

Download PDF

 

In detail
1. What are ICOs?
Initial coin offering (“ICO”, also referred to as token generation event, token launch or token offering) is a term describing a limited period in which a company sells a predefined number of digital tokens (crypto coins) to the public, typically in exchange for major crypto-currencies (as of today, mostly Bitcoin and Ether). On the side of the token issuer, the collected funds are typically used to finance a project (e.g. the building of a software/ blockchain-based platform). In exchange for the financing, the investor receives a token which may be connected with the right to receive a dividend, a voting right, a licence, a property right or a right to participate in the future performance of the issuer. Usually, tokens are tradable on cryptocurrency exchanges.

2. Token characteristics 
Tokens (coins) can have different functions, which triggers the way in which we treat them from a legal and regulatory perspective. Four main forms exist to date (including many hybrid combinations).

  • Security token
    Tokens with a security character (e.g. debt, equity or derivatives) with an income generating component and potential rights vis-à-vis the issuer (e.g. governance, participation, ownership).
  • Digital currency
    Tokens with an attributed value. They can be used to buy and sell goods and services and can be used to store value (although they can be very volatile).
  • Asset-backed token
    Tokens that provide underlying exposure to real world assets (e.g. gold, diamond, securities, cash, real estate, etc.)
  • Utility token
    Tokens with a utility character provide access to a blockchain-based platform, product or service. They are not primarily designed as a means of an investment.

3. What are the characteristics of an ICO?
In general, an ICO has the following structure:

  • Publication of a white paper describing a project or product as well as the funding via ICO. The white paper also describes the intended use of the tokens to be issued. Software and the technical specifications are published on open source platforms like GitHub.
  • A smart contract is set up, usually based on the Ethereum blockchain. The smart contract is needed to generate and distribute the tokens later on.
  • During a fixed time period, cryptocurrency payments (usually Ether or Bitcoin) are accepted by way of the smart contract.
  • Using the public key for those payments (similar to a digital account number), the smart contract generates the new tokens and makes them available to investors.
  • The tokens may be stored by third parties (wallet providers) and/or made tradable with the help of cryptocurrency trading platforms.
  • Once the funded project is complete, the investor can sell the tokens or exchange them for services.

4. What are the key challenges of an ICO?
Regulators worldwide are starting to look into ICOs, but only few have actually taken action (e.g. China, USA, Singapore). It is expected that the US SEC/EU ESMA and other major regulators will soon regulate the ICO space, particularly from a capital markets, tax and KYC/AML perspective. A further challenge is that many ICOs still lack proper cybersecurity, which can represent a major threat for investors. As most ICOs raise money in the form of cryptocurrencies, high volume transactions provide an attractive target for criminals. Besides ICOs, several cryptocurrency wallets (where tokens/coins get stored) have been hacked recently.

5. How does Liechtenstein treat ICOs from a legal/regulatory
perspective?
In September 2017, the Financial Market Authority Liechtenstein (FMA) published a fact sheet on ICOs which stated that depending on their specifications, tokens may constitute financial instruments subject to financial market law. This may include tokens that have characteristics of equity securities or other investments. In principle, activities relating to financial instruments are subject to licensing by the FMA on the basis of special legislation and may require publication of a prospectus. In all cases, the specific design and de facto function of the tokens are decisive. Any AML/KYC obligations also depend on the specific design. Connecting factors for FMA jurisdiction exist, for instance, if a company’s registered office or branch is in Liechtenstein and/or if relevant activities are pursued on the Liechtenstein market.

6. How is an ICO taxed in Liechtenstein?
Liechtenstein offers a favourable tax system with modest tax rates for issuers of tokens (typically using a foundation structure or a special purpose vehicle), for ICO entrepreneurs and for investors. Careful structuring of the ICO is necessary to manage potential issuance stamp tax consequences (in case of issuance of equity tokens) as well as VAT and corporate income tax consequences (in case of issuance of utility tokens). Since there is no gift tax in Liechtenstein, employing a charitable foundation structure is an option worth considering in detail. Taxation of ICO entrepreneurs and investors domiciled in Liechtenstein depends on the categorisation of a specific token. Capital gains on digital currency tokens should generally be exempt from income tax (due to taxation of notional income from wealth instead of effective investment income).

Contacts

Guenther Dobrauz
Partner, Leader of PwC Legal Switzerland
Office: +41 58 792 14 97
Email: guenther.dobrauz@pwc.com

Martin Meyer
Director, Leader of Financial and Private Wealth Services PwC
Liechtenstein
Office: +41 58 792 42 96
Email: martin.meyer@ch.pwc.com

Mark Schrackmann
Assistant Manager, PwC Legal Switzerland
Office: +41 58 792 25 60
Email: mark.schrackmann@ch.pwc.com

Orkan Sahin
Assistant Manager, PwC Legal Switzerland
Office: +41 58 792 19 94
Email: orkan.sahin@ch.pwc.com

Disclose 27, Focus piece 4: PwC’s Experience Center

Disclose – PwC’s online magazine

«It takes people, digital technologies and trust to achieve top performance.»

Reading our latest issue of Disclose (disclose.pwc.ch/27/) you’re sure to get an adrenaline rush as we investigate a topic with particularly close connections to sport: high-performing organisations.

Focus piece 4 gives you an insight into PwC’s Experience Center:

Digitisation is sweeping companies of all sizes in all industries and areas of value creation. That’s nothing new. What is new is the high-performing approach adopted by PwC’s Experience Center as it guides its clients through digital transformation. PwC’s 28 similar experience centres worldwide produce concrete results and provide first-hand experiences, from strategy to implementation – all in next to no time. In this interview, Holger Greif, Leader Digital Transformation, explains how it works and why PwC’s Experience Center in Zurich has its expert hands full.

Read the full report here.

Contact

Holger Greif
Partner, Leiter Digital Transformation, PwC Schweiz
+41 58 792 13 86
holger.greif@ch.pwc.com

Revitalizing privacy and trust in a data-driven world

How businesses can better manage rising risks to data privacy and security

Massive data breaches, constant collection of personal data—it may seem like privacy is dead in the digital age. But privacy, security and trust are increasingly vital and intertwined in our data-driven society. Many organizations worldwide need stronger privacy risk management that is better integrated with cybersecurity, according to our 2018 Global State of Information Security® Survey (GSISS).

For CEOs and boards, the existential question is less about the future of privacy and more about the future of their own organization: Will the company muster the will and imagination needed to jolt stalled privacy risk management into action? Will it leverage that momentum and integrate cybersecurity, striving to become a trusted brand for responsible innovation and data usage? Or will it cede its place in the market to more committed competitors?

Drawing on key findings from the 2018 GSISS and beyond, we offer nine insights on revitalizing privacy and trust in a data-driven world, concluding with next steps for global business leaders.

Download full survey

 

Contact:
Reto Haeni
Partner and Leader Cybersecurity and Privacy
+41 58 792 75 12
reto.haeni@ch.pwc.com

F10 FinTech Incubator & Accelerator announces next selection of top-notch start-ups

For the third time since launching the scheme in September 2016, Switzerland’s leading FinTech space, F10 Incubator & Accelerator, has selected 15 promising new start-ups for its successful six-month “Prototype to Product (P2P)” program. Within the program the start-ups receive support and guidance in transforming their ideas into successful companies and in connecting with international finance organisations.

International start-up quality in Switzerland
The intense selection process for Batch III was again executed by founding member PwC Switzerland, together with its six fellow corporate partners SIX, Julius Bär, Generali Group Switzerland, Baloise Group, Zürcher Kantonalbank and Raiffeisen. Between September and December 2017 a total of 262 start-ups from over fifty countries worldwide applied for one of the coveted places in the upcoming program.

After an intensive five days, with 62 online interviews and two days of life pitches by the top 26 start-ups at the F10 facility in Zurich, the seven corporate partners agreed to officially invite the following 15 start-ups (including three corporate-internal teams) to the next Batch, starting on 5 March 2018:

  • Anansi insurance platform for high-growth SMEs with an international supply chain of physical goods
  • Baasis ID all-in-one identity verification (KYC) platform for FinTechs, crypto wallets and exchanges, and government agencies
  • BDEO streamlined operational processes for insurance claims for companies in Europe and South America
  • Borderless blockchain-powered international payment systems for businesses, governments and banks
  • C2SEC cyber risk analytics for insurance companies and enterprises
  • Dynametrics modernized credit processes for banks and credit institutions
  • eHyve centralised, consolidated financial overview for consumers
  • Qard data collection and insights for small online e-commerce
  • Luminant simplified reinsurance for the automotive insurance industry
  • Monday platform which enables small businesses to manage administrative tasks simply and efficiently
  • Safeside 3-click life insurance purchases for consumers
  • SIX IoT programmable eCommerce platform, neutral for suppliers, personalised for consumers
  • Susfinteq EU-China ESK risk assessment using AI for banks and financial institutions
  • Target Insights advanced analytics for wealth managers
  • Vestberry SaaS information management for the private equity industry

Involvement in the F10 FinTech Incubator & Accelerator is one of PwC Switzerland’s core initiatives to attract innovative and exciting new ideas to Zurich and the Swiss financial services industry. In these fast-changing, disruptive times, in which new business models are created and rolled out in ever shorter cycles, start-ups and their way of addressing challenges represent a source of inspiration no business should ignore. Active and close cooperation with these groups of entrepreneurs at an early stage enables PwC Switzerland not only to bring interesting, relevant ideas to our clients, but also ensures that our firm comes into contact with revolutionary technologies and stays ahead of the ongoing digital progress.

What it takes
Crucial for our selection is the start-up’s team and its configuration: a discordant team with the right idea will never succeed, but the right team, with an idea that is still developing and the right guidance, will achieve its objectives. A broad skillset, eagerness and willingness to accept advice or even pivot the idea if necessary, and the desire for a market-ready, adoptable solution: teams exhibiting these qualities are the ones we want to foster and support with our extensive industry and corporate knowledge.

PwC Digital has identified a number of potentially interesting solutions and great teams, which we intend to follow closely once the Batch starts in 2 weeks. We will introduce some of these start-ups and their ideas to you in more detail via this channel as the program evolves.

We are looking forward to an inspiring few months ahead and the delivery of exciting Minimal Viable Prototypes (MVPs) in August 2018.

If you have any questions please feel free to contact our F10 mentors Frederik Gregaard or Sandro Tarchini.

About F10
Based in Zurich, the F10 accelerator program was established by SIX Group in 2015 to promote Switzerland’s FinTech ecosystem, strengthen the innovative capacity of the Swiss finance and insurance sectors, and forge global links. It has been designed for financial firms that want to reach the next level of innovation, providing access to the most promising international FinTech start-ups, radically new technologies and business models. In September 2016, PwC Switzerland and Bank Julius Bär became joint corporate founding members of the association, with the overarching objective of providing a lasting contribution to the development of a state-of-the-art, future-fit Swiss financial sector.

 

Contacts:

Frederik Gregaard
Head of the PwC Switzerland Digital Accelerator
+41 58 792 24 81
frederik.gregaard@ch.pwc.com

Sandro Tarchini
Advisory Consulting Digital
+41 58 792 23 49
sandro.tarchini@ch.pwc.com

Strengthening digital society against cyber shocks

How businesses can build the resilience needed to withstand disruptive cyberattacks

Massive cybersecurity breaches have become almost commonplace, regularly grabbing headlines that alarm consumers and leaders. But for all of the attention such incidents have attracted in recent years, many organizations worldwide still struggle to comprehend and manage emerging cyber risks in an increasingly complex digital society. As our reliance on data and interconnectivity swells, developing resilience to withstand cyber shocks—that is, large-scale events with cascading disruptive consequences—has never been more important.

In the 2018 Global State of Information Security® Survey (GSISS), 40% of survey respondents from organizations using robotics or automation say the disruption of operations would be the most critical consequence of a cyberattack on those systems. Despite an awareness of disruptive cyber risks, companies often remain unprepared to deal with them.

Many key processes for uncovering cyber risks in business systems have been adopted by less than half of survey respondents.

Download full survey

 

Contact:
Reto Haeni
Partner and Leader Cybersecurity and Privacy
+41 58 792 75 12
reto.haeni@ch.pwc.com

Uber’s business model goes into overdrive

Buy, grow and knock out the competition – and now share. Some markets are moving beyond growth and hypercompetition to collaborative consumption via digital platforms. What makes these new models different? Why are some succeeding? And what can they teach us? In this blog we compare the conventional taxi operator model with Uber’s pioneering new approach.

Share, share and spread it around

Holiday apartment platform Airbnb and transport network Uber are at the vanguard of the sharing economy. Basically they’re nothing new: bartering began long before the digital revolution, the practice of renting out rooms for a small consideration was common back in the Middle Ages, and noticeboards for people seeking or offering lifts have been around for decades. But it’s only with the advent of digital platforms that this has all been possible on a large scale, turning markets into mass markets.

A model with a certain extra something

Journalists have taken to labelling promising new startups taking on established markets as ‘the new Uber’. Uber is the epitome of the sharing economy. By simplifying the interface between people offering rides and those looking for them, it’s sending waves of trepidation through the world of established taxi operators. In many places – for example New York and cities in Germany – traditional players are having to resort to legal action to defend their turf, in some cases successfully. It all begs the question of what makes Uber’s approach so superior to the conventional model.

Flexible key resources

At first glance there doesn’t appear to be that much difference between Uber and traditional taxi companies. They all get passengers from A to B. But Uber takes a radical new approach to key resources and the channels used to reach customers.

Uber’s business model.

Flexible key resources

By key resources we mean all the means (which are in scarce supply) used to profitably produce or enrich an offering, for example talented staff, rare minerals, unique brand appeal, etc. Most established taxi firms have a large fleet of vehicles and taxi licences that have to be obtained from the towns and cities where they operate. The supply of licences is strictly limited to prevent the competition from getting too intense and putting too much pressure on wages. At the same time it makes it almost impossible for taxi operators to expand into other towns and cities.

Uber, by contrast, doesn’t have a fleet of its own, never mind its own drivers. Its key resource is its digital platform, the virtual marketplace where independent drivers can connect with passengers seeking a ride. Uber lays down the rules for these business relationships (type of vehicles permitted, prices, payment and ratings). To expand into new cities Uber hasn’t had to build a fleet or recruit new drivers. It’s been able to roll out its platform in new locations easily at fairly minimal personnel expense. This has enabled it to expand across the planet with almost unprecedented speed and aggression.

Connected customer channels

Customer channels are what connects offers with customers. They include all distribution and communication channels through which the customer finds out about or acquires the product or service. In the taxi business a passenger is looking for a taxi. If there’s no taxi available nearby they have to call the taxi office and wait a while. Not with Uber. You don’t have to know a whole bunch of phone numbers by heart. Once the Uber app’s installed on your smartphone you’re only a few clicks away from your ride. The app locates you automatically by GPS and connects the driver and passenger immediately. Less far for the driver to travel, less time for the passenger to wait.

In a nutshell

At the core of every business model is the utility a customer enjoys by virtue of acquiring the product or service. Both Uber and conventional taxi operators enable passengers to get from A to B. But Uber’s model differs fundamentally from the traditional set-up in terms of the way it harnesses key resources and customer channels to optimise the utility for both passengers and drivers. The app minimises the effort to order a taxi and the time passengers have to wait. And it makes it easier for drivers to get fares – so much so that even private individuals are getting on board and offering their services as paid drivers.

It is this type of disruption of existing business models that is transforming many industries, and Uber and other similar platforms are prompting many businesses to re-examine their own business models and try to ‘disrupt themselves’ from within rather than waiting to be disrupted.

 

Contact

Olivier Kofler
Experience Center Director
Office: +41 58 792 3090
Email: olivier.kofler@pwc-digital.ch