Mittelstand: The middle business syndrome

Small and medium enterprises (SMEs) are the backbone of the Germany, Austria, and Switzerland (DACH) economy. The German Mittelstand accounts for more than half of economic output and almost 60% of jobs in Germany, according to the country’s Federal Ministry for Economic Affairs and Climate Action.

According to the Swiss Federal Council, SMEs provide two thirds of jobs in Switzerland. Meanwhile, research institute KMU Forschung reports that more than 99% of the Austrian economy is made up of SMEs.

We often look to big corporations as the prime examples of innovation and growth in an economy. By overlooking the middle, we’re skipping some of the biggest growth engines today—and missing opportunities to use innovation where it really counts.

We need to better understand why the Mittelstand is a huge driver of growth and what we can learn from the innovative potential of this thriving market. To do this, we spoke with two visionary leaders in the Mittelstand practice at ServiceNow.

The role of the Mittelstand

“What makes the Mittelstand so strong is its diversity,” explains Nadia Bischof, director of commercial business for ServiceNow Switzerland. “The sector ranges from forward-thinking startups and pioneering tech companies through to global players and well-established, family-owned businesses.”

What these firms have in common is family or independent ownership and often a deep bond with their local community. This enables fast decision-making and means the Mittelstand can swiftly react to changes in the market—the key to continual innovation and growth.

Sector pressures and opportunities

Due to their high innovative strength, SMEs face similar challenges to large corporations.

“The pandemic made the importance of digitisation clearer than ever,” says Hanna Kamijo, director of general business for Germany and Austria at ServiceNow. “The Mittelstand needs the right technology solutions just as much as the corporate sector. Some are already at the right level of process maturity, but others still have a way to go,” she says.

“These companies typically have fewer IT staff on hand to cover tasks, including employee support, onboarding, and general system management in their day –to –day,” she adds. “With platforms like ServiceNow, the Mittelstand can help relieve these burdens by simplifying business processes whilst reducing operational costs. This in turn frees employees to focus on driving innovation.”

Propelling growth through the middle and beyond

In the midst of economic uncertainty, SMEs and their considerable output present a huge opportunity to spur growth—despite adversity.

“We know that the sector is agile by nature, so it needs solutions that can be implemented quickly with low adaptation effort,” Bischof says. “ServiceNow is the ideal partner because we can support the Mittelstand in a goal-oriented and, above all, holistic manner. As diverse as medium-sized companies are, our portfolio is also variable: All lines of business are covered with industry-specific solutions.”

“We have to take these companies with us and inspire them,” Kamijo adds. “This relies on demonstrating ServiceNow’s expertise so that SMEs have full confidence in a platform approach to digitalisation.”

Choosing the right partner with the right solutions will enable the Mittelstand to harness innovation for the future. It’s an approach that other organisations can also learn from. Find out more about how ServiceNow supports digital transformation for the Mittelstand.

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