R&D investments in Finland will continue to grow, driven by public funding. Finnish companies will continue to increase their product development investments in Finland also in 2022. Growth will be accelerated by the green transition, the advancement of digitalisation and the growth of public innovation funding for industry. This is evident from the CTO Survey directed at the Chief Technology Officers of industrial companies. The survey was conducted by Spinverse in cooperation with the Technology Industries of Finland and Business Finland. This finding is also supported by a recent investment report by the Confederation of Finnish Industries, in which the results on the growth of industrial investments were very similar.
However, the complexity of the operating environment, the need for rapid change, and the need to find skilled partners and workforce challenge companies in their goals of digital and green transition. Other challenges are related to component shortages, skilled workforce shortage and various regulatory challenges. “National regulatory choices are an increasingly important factor in attracting investment. The decision-making environment must be predictable. The regulations that oftentimes limit the operations, should be complemented by incentives, such as reducing the risks of investment,” says Pekka Koponen, Founder and Chairman of Spinverse.
Business has strong confidence in its added value in the green transition
Led by the Technology Industries of Finland, Finnish companies have sought to expand the traditional carbon footprint calculation, which only measures the company's own polluting effect, with “carbon handprint calculation.” The handprint also takes into account the life cycle impact of companies' products.
91% of the CTO Survey respondents feel that their companies' carbon footprint is at the forefront globally. “The result is promising, showcasing the ability of Finnish industry to act as a catalyst in climate activities. We believe that the handprint thinking will continue to act as a driving force that improves the competitiveness of industry,” Pekka Koponen continues. Most technology leaders estimate that the transition to carbon neutrality in their industry is taking place in the next six years. The changing business environment is driven, in particular, by the demand for new solutions and changes in value chains.
Energy-focused themes such as Power-to-X technologies, wider utilization of hydrogen and improving energy efficiency became the most important research and development areas in the survey in terms of carbon neutrality. In addition to these, more durable materials and their recycling were considered as other high-priority themes.
58% of CTOs estimate their companies' expertise in carbon neutrality as high, but at the same time 73% of CTOs feel that their companies need partners to achieve their carbon neutrality goals. The competence needs of both companies and partners are very multidisciplinary.
Investments on digital transformation shifting from process development to artificial intelligence and data utilization
86% of technology leaders who responded to the survey believe their companies are at the forefront of digitalization globally. 65% estimate that the digital transition has already taken place or will take place in the next three years. The change in the business environment is driven, in particular, by the demand for new solutions and new business and revenue models.
Artificial intelligence and machine learning are seen as key targets for research and development to drive digitalisation. They are complemented by investments in data analytics, data-based services and data security.
Only 47% of technology leaders estimate their companies’ digital skills as being high. The competences needed to accelerate digitalisation, both within companies themselves and within their partners, emphasize diverse data processing skills.
"The growth in RDI investment is a positive signal towards Finland's goal of investing 4 percent of their GDP in innovation," says Pekka Koponen. “This has been clearly accelerated by the decisions made to direct Business Finland's funding to business-driven innovation ecosystems and pilot plant investments, for example through the Veturi Program for leading companies and by allocating EU Recovery and Resilience funding. Companies have immediately reacted to the decisions by increasing their own investments. Almost 80% of respondents plan to apply for public funding.”
“So that the companies' RDI investments continue to grow, Finland must have a competitive operating environment. However, in terms of public RDI funding, we are lagging behind the other OECD countries. In December, the Parliamentary Working Group on RDI presented a historic political commitment to increase funding to 4% of GDP. The Working Group's good proposals on the R&D tax incentive and the financing law, which will ensure the growth of appropriations, must now be prepared and submitted to the parliament by the government,” says Heikki Kuutti Uusitalo, Head of Innovation Policy from the Technology Industries of Finland.
The shortage of experts and finding suitable partners was clearly indicated as a bottleneck for growth.
Pekka Koponen sums up: “In solving the shortage of experts, all means must be introduced from facilitating immigration to retraining. The public sector alone will not be able to solve the problem quickly enough — we need to step up the activities for training in the private sector, too. In addition, the need for partnerships between companies will increase, because there are simply no experts available.”
The CTO Survey was conducted in late 2021, when it was sent to more than 500 technology leaders. The survey has been conducted annually since 2011.
Spinverse founder and chairman: Pekka Koponen, tel. +358 40 545 0008
CTO Forum is a Finnish community of CTOs. It invites all innovation and technological officers of Finnish companies to network, discuss and share ideas between businesses. CTO Forum’s mission is to promote the work of CTOs and businesses. CTO Forum is organised and the award is handed out by Business Finland, Teknologiateollisuus ry and Spinverse.