Corona has German software houses shifting their business

A survey of VDMA Software and Digitalization shows that about half of the software and digitalization industry is thinking about new business models or has even changed its portfolio due to the current situation.

René Raaijmakers

German software houses observe that their customer base of mechanical engineering companies is lacking a digitalization strategy and is postponing digitalization projects due to the corona crisis. Suppliers are reacting swiftly by changing their portfolios and offering new products. Among the new offerings are virtual training or product presentations, as well as products for remote support and predictive maintenance. A survey of VDMA Software and Digitalization shows that about half of the software and digitalization industry (51 percent) is thinking about new business models or has even changed its portfolio due to the current situation.

According to German IT and software suppliers, the biggest challenge in the area of digitalization for mechanical engineering companies is the lack of digitalization strategies within the company. More than half of the software houses surveyed by mechanical engineering industry association VDMA (53 percent) say that postponing or even canceling digitalization projects is a major problem for their customers in the mechanical engineering sector. Of the 51 German software houses surveyed, 27 point out that the cancellation of projects is threatening the continuity of the digitalization process at their customers from the mechanical engineering industry. Further challenges of digitalization are missing collaboration tools (47 percent)

What are the biggest challenges your customers face today?

Digitalization strategy Canceled budgets Communication tools for web-based mobile working Continuity in value creation processes Reduced budgets IT infrastructure and IT solutions for web-based mobile working IT security solutions for web-based mobile working Staff shortages in IT and software development Knowledge about digitalization 53 53 47 43 35 35 33 27 25

0 1 0 20 30 40 50 60 51 software houses surveyed – numbers are percentages Source: VDMA Software and Digitalization

and the lack of or insufficient digital continuity of value-added chains (43 percent).

The VDMA says mechanical engineering is well positioned in production-related digitalization. This could be read as an understatement and as a diplomatic call to their 3,000+ members to urge them to stay competitive by embracing digitalization. The surveyed software houses from the VDMA membership see the opportunity, especially in the crisis, to push forward the digitalization of business processes and workflows. “One major opportunity will be to build and strengthen customer relationships by combining distance and proximity, for example by visualizing showrooms or training sessions,” says Claus Oetter, managing director of VDMA Software and Digitalization.

Oetter regards digitalization as an important component in building resilience against crises. “Anyone who now courageously and consistently questions their business model will generate opportunities from the crisis. Anyone who has already mastered virtual commissioning and simulation is already a winner,” he says.