Zurich Drills, bolt-firing tools, dowels – the tool manufacturer Hilti is world-renowned for these products. Very few people inside and outside the construction industry associate the Liechtenstein family business with software solutions for small and medium-sized companies. Jahangir Doongaji has set out to change that. The 56-year-old has been the sole boss at Hilti since the beginning of the year.
He considers the step towards software development to be inevitable – even if the strategy will consume a lot of money over the years and generate little sales. “The software business is not going to produce profits within 18 months,” he told reporters this week at his first public appearance of the year.
Doongaji would be satisfied if Hilti achieved a low three-digit million revenue from software sales by 2030. For the company with a recent turnover of six billion francs and an operating result of almost 850 million, such a sales potential is hardly worth mentioning.
However, Doongaji places software development at the center of his strategy: He envisions construction companies organizing their machinery with software “Made in Liechtenstein” in the future. Hilti, which is owned by a family foundation, wants to develop resource management software for small to medium-sized construction companies with between 50 and 200 employees. “We have the strongest brand in this market,” says Doongaji.
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The manager sees a gap for such software that is not related to the in-house devices, which has not yet been filled by large corporations such as SAP or Oracle, or by specialized providers.
Doongaji was already responsible for an acquisition worth millions
The role Hilti plays on construction sites around the world was conveyed to Doongaji as soon as he joined the company. Born in India with an engineering degree from the elite university ETH Zurich, he began his career at the ABB industrial group. He rose through the ranks quickly, but soon decided to swap his managerial role for a job in Hilti’s telephone customer service.
He was promoted to head of customer service in Switzerland, then moved to the product area at the headquarters in Schaan. The engineer quickly made a career there, too, and was ultimately responsible for the area of electrical appliances and accessories as well as corporate research. Two years ago, he was appointed CEO to succeed Christoph Loos, who is moving to the top of the Board of Directors.
The construction machinery manufacturer produces exclusively for professionals from the industry.
(Photo: IMAGO/Manfred Segerer)
Doongaji and Loos shared the top job and the executive office for a year. During this time, Doongaji mainly worked on the new software strategy – even if an important course was already set at the end of 2021: At that time Hilti bought the construction software provider Fieldworks from the USA for 300 million dollars.
“Further acquisitions are an option,” clarifies Doongaji – as long as they fit into the strategy: it must increase the productivity and efficiency of the customers. The Hilti boss is concerned with the finding that the McKinsey Global Institute found back in 2017: Unlike in many other sectors, productivity in the construction industry has increased only minimally over the past two decades.
“Labor productivity growth has long lagged other sectors in almost all countries,” the authors note. This is particularly unfortunate, since the construction industry is one of the largest industries in the world, accounting for 13 percent of global gross domestic product.
Hilti maintains focus on direct sales
The Hilti boss describes his customers’ problems in detail, which contribute to these productivity problems: Thanks to the Hilti machines, for example, the customers could drill faster. “But they spend two hours looking for the drill.” Many construction companies have a lot of catching up to do when it comes to digitization, for example in warehousing or in daily planning on different construction sites. A simple overview of the existing machines and tools is often helpful.
Hilti has already introduced a first app for this purpose: “Hilti On-Track”, a software that is sold on a subscription basis. Companies can also store the stocks of machines from the competition in it – information that Hilti salespeople can use when talking to customers.
In any case, sales plays a decisive role in the software strategy. The Liechtensteiner’s products are not available in bricks-and-mortar stores, such as hardware stores. Similar to the screw manufacturer Würth, Hilti relies entirely on direct sales – field staff who regularly visit the customer on site. Doongaji won’t change anything about that.
Hilti intends to use direct customer contact and the trust gained from long-term cooperation to sell its software solutions. Even if Doongaji admits that the risk of losing trust is also great. He confirms: “A drill that doesn’t work is different from a piece of software that doesn’t work.”
So far, Doongaji is satisfied with the growth in the software division. Hilti is growing in this area by 50 percent per year – but from a small basis. It is clear to him that his strategy will probably only be successful when he is no longer at the top of the company. “It’s a strategy for the next generation.”
More: Drilling, dowelling, plastering – robots should work on construction sites