Digital Product Development 2025

Roger Müller Director, Advisory Services, PwC Switzerland 15 Apr 2019

PwC’s study «Digital Product Development 2025 – Agile, Collaborative, AI-Driven and Customer-Centric» shows how digital product development drives performance and makes customers happier. It also uncovers what Digital Champions are doing differently to achieve their results.
It’s a match: digital transformation meets digital development

Today’s customers want personalised products and services that are uncompromisingly tailored to their requirements. The need to remain competitive globally and offer a supreme customer experience at the same time resolutely pushes industrial companies to keep their latest designs, technologies, products and integrated solutions up-to-date. As a result, companies must develop innovative, customer-focused products and services at ever shorter intervals. Such speed and need for innovation is undoubtedly a challenge that developers and manufacturers must respond to by increasing the efficiency and output of their product development, and thereby keep both time and costs under control.

Digital Champions are already deploying key technologies including web-based, next generation product development techniques, data analytics and AI-based solution designs, integrated product lifecycle management (PLM) systems and agile development techniques. Companies that have adopted digital product development, integrate their activities with key partners and are becoming leaders of an integrated development ecosystem. The benefit for customers is evident: integrated complete solutions, rather than individual products and services. Effective co-creation tools, common standards and simultaneous access to joint product development platforms are becoming part of an integrated ecosystem.

Based on data of a survey conducted in December 2018 and January 2019 with 200 executives from industrial companies in central and northern Europe and additional in-depth interviews, we have identified a number of key findings that provide insights into how companies can use digital product development to keep their edge in a competitive and challenging business environment.

Seven reasons for digital product development

It is all about meeting your customers’ expectations. A strong commitment to digital product development is therefore ultimately rewarding. Spend smarter, not more. Digital Champions embrace digital product development and benefit from an array of advantages. Here are the seven most prominent findings from the study:

  1. Digital product development drives performance
    Digital product development promises an increase in efficiency by 19%, is expected to reduce time-to-market by 17% and facilitate the reduction of production costs by 13% over the next five years.
  2. Customer focus is key
    Digital Champions have more customer focus in product development than others. They tap into data and analytics to increase value for customers and develop individually-tailored products.
  3. New digital products drive competitiveness
    Digital Champions are top generators of revenue from new products and services. A total of 14% of champions manage to generate more than 30% of revenue from fully digital products and services, and 29% earn more than a third of revenues from new products within two years of introduction. They also reap far greater benefits from personalisation.
  4. Data analytics and artificial intelligence (AI) are the new backbone of digital product development
    41% of all companies are using data analytics and AI in product development to optimise processes and quality and to better design and validate new products and services. Digital Champions employ data analytics and AI more extensively to achieve better Design for X performance and customer-centric design.
  5. Digital tools, methodologies and processes boost effectiveness
    No need to spend more on product development to get better performance: Digital Champions have introduced effective tools, methodologies and underlying processes to include fully-integrated PLM, digital twins of products and processes, real time co-creation with partners, and agile development principles.
  6. Cybersecurity is a must
    Significant investments in cyber security and sensitive data protection are a must. A total of 71% of the companies still lack an approach that is mature enough to mitigate the cyber risks inherent in data-intensive development processes.
  7. Vision: product development is part of an agile, integrated ecosystem
    Companies need to become part of an integrated partner ecosystem that focuses on internal and external co-creation with agile and digitised development processes and methods with a clear customer focus.

“Swiss companies who want to deliver customer-focused products they can no longer do without digital tools and capabilities in product development, such as artificial intelligence and data analytics.”

Roger Müller, Director at PwC Switzerland and expert on Industry 4.0
Where does Switzerland stand?

Industry 4.0 and the concurrent digitalisation have entirely changed the value chain of companies; vertical connectivity changes how they have to organise production. Driven by increasingly individualised customer requirements, digitalisation also means that leading industrial companies need to revolutionise their range of products and services with intelligent, automated services and set up new digital business models.

Digital product development and agile processes are especially important for small and medium-sized enterprises (SMEs), the backbone of the Swiss economy. Unsurprisingly, more and more Swiss SMEs are adapting the necessary new technologies as they have a long history of successfully expanding in new countries and entering new markets in a competitive environment. A Swiss Champion is a market leader in its niche on a continent or among the world's best in its field. It is a technological leader, sets standards in terms of innovation and quality and can thus continuously expand its dominant market position. Our champions come from very different sectors: the mechanical engineering and toolmaking industry clearly dominates, followed by the consumer goods industry, the technology sector and the health sector. These four sectors account for four out of five Swiss Champions.

For the Swiss Champions we have identified three key success factors of globalisation: a superior product, consistent customer orientation, and the value of people. Thereby, digitalisation deeply impacts the DNA of Swiss Champions on different levels. It enables easier globalisation as it facilitates communication, data retrieval and decision making. It fosters innovation and enhances the relationship between company and customer. In addition, digitalisation strengthens companies' resistance to crises, because they can make their processes more efficient and reduce costs.

And, as mentioned, digital technologies increase production efficiency because they enable faster, more accurate and individualised production.

In order to successfully stay ahead, Swiss SMEs – be it traditional family businesses, industrial leaders or high-tech start-ups – must pick up these aspects of digitalisation and implement them according to their individual company’s situation. The development of new business models and products and services, the constant further development of customer relationships on a digital level and a digitally-affine workforce are the base of future success.

How to become a Digital Champion

In order to fully move towards an integrated digital product development, engineering and development departments need to master three fundamental challenges and:

  • Develop innovative, connected, customer-centric and personalised products and solutions
  • Drive efficiency and digitalisation of core product development and engineering processes
  • Integrate their departments into an agile and integrated partner ecosystem

At PwC Switzerland, we are a global team of professionals with extensive expertise in all the building blocks of digital product development and agile development techniques. We accompany you step by step in building an agile, collaborative, AI-driven and customer-centric product development. We help you to become a Digital Champion by providing a digital product development strategy and implementation roadmap and support you with training programmes.

 

Contact us

Roger Müller

Director, Advisory Services, PwC Switzerland

Tel: +41 79 878 31 80