The survey summarizes the results of a survey of 69 Finnish CTOs on research and development trends. Key findings include: - CTOs plan to increase R&D resources and budgets in 2015, with over 40% planning to increase headcount and investments. - The share of public funding for R&D is expected to increase, with more new R&D projects expected to be supported by public funding in 2015 than 2014. - While most CTOs see industrial internet having a major impact, 35% are not concerned about related security risks. The majority have plans to dedicate R&D resources to industrial internet over the next few years.

1. CTO Survey results, fall 2014The View of Finnish CTOs on the Latest R&D TrendsDr. Laura Koponen, SpinverseOy
Eeva Viinikka, Laura Koponen, Lauri Tolvas

2. Executive Summary
•69 Finnish CTOs were reached by online questionnaire
–Today’sworkshopsfocuson selectedtopics
–10 in-depth interviews for drilling still deeper
–FinalresultspublishedduringnextCTO-Forum
•Insight to the top investors views
–10 of the top 25 R&D investors in Finland in the Survey, 17 of the top 100
•The key findings of the survey are
–CTO’s plan to foster the R&D resources in 2015
–The share of public funding in R&D expected to increase
–What you measure is what you get –also in innovations

3. Background data
•Total of 69 respondents
•~50% fromGreaterHelsinki region
0
10
20
30
40
R&D headcount by number of respondents
Top-100 investors
Rest
0
5
10
15
20
25
<2%
2-5%
6-9%
10-15%
>15%
R&D Budget (% of revenues)
Top-100 investors
Rest
Other
Metal and…
Chemical Industry
Life Sciences and…
Energy and…
Electronics and ICT
0
10
20
30
40
Distribution of respondents
Top-100 investors
Rest

4. R&D budget to be increased in 2015
46%
39%
40%
47%
46%
33 %
49%
54%
29%
28%
38%
49%
31%
37%
20%
25%
30%
35%
40%
45%
50%
55%
60%
Prediction
Actual
Prediction
Actual
Prediction
Actual
2015predictionShare of CTOs who are planning on increasingtheir budget or headcount
R&D investments
Headcount
41%
29%
2015prediction
Top100
2012
2013
2014

5. 0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
2015 prediction
Top-100
No plans to cut R&D headcount any more
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
2013 result
2014 result
2015 prediction
Share of CTOs vs. changes in R&D headcount
Decrease
Stay the same
Increase

6. World economy seems not to impact patenting
9%
3%
3%
7%
12%
14%
48%
47%
50%
35%
38%
33%
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
Patenting results in 2013
Patenting results in 2014
Patenting forecast for 2015Share of CTOs vs. changes in patenting activity
Decreased
No opinion
Stayed the same
Increased

7. The share of public funding in R&D: expecting increase
Share of public funding in R&D budget (2014)
<5%
5-14%
15-29%
30-49%
50-70%
>70%
0 %
50 %
100 %
New R&D projectsin 2014
Expected new R&Dprojects in 2015
Number of R&D Projects supported with public funding
Increased
Stayed the same
Decreased
No opinion

8. Technology and innovation are high on the CEO’s and Board’s agenda, still only 35% evaluate the process systematically
0 %
20 %
40 %
60 %
80 %
100 %
CEO Agenda
Board agenda
CTO satisfied withinnovation process
Systematicevaluation
CTO’sviewof theinnovationgovernancetopics
No
No opinion
Yes
“Thereisaclearcorrelationbetweencapabilityininnovationmeasurementandinnovationsuccess….”
(ADLInnovationExcellenceStudy,2013)
YES -YES
NO -NO

9. Reviewing the innovation process seems to be linked with the share of revenue from new product
0
5
10
15
20
25
30
35
<5%
5-14%
15-29%
30-39%
50-70%
>70%
The share of revenue from products and applications introduced during the last five years
Systematic evaluation of innovation process
No systematic evaluation of innovation process
newcomers
”Globally,topquartileinnovationperformersobtainonaverage13% moreprofitfromnewproductsandservicesthanaverageperformers.”
(ADLInnovationExcellenceStudy,2013)
What you measure is what you get

10. Companies see competitive importance in carbon neutrality and low carbon solution – however lacking economic incentives
Drivers
•Positive brand image
•Company strategy
•Reducing emissions
Obstacles
•No clear economic incentive
•Lack of markets
•Lack of political will
0
5
10
15
20
25
30
Veryimportant orfairlyimportant
Not importantnow, but willbe importantin future
Not important
Carbon Neutrality and Low Carbon Solutions vs. expected impact on competitiveness
Carbon neutrality
Low carbon solutions
Thecompanieswhodon’tseeCNorLCasimportantfortheircompetitivenessaretypicallyfromICTsectororinstrumentproviders

11. Production and emissions in focus now
0 %
50 %
100 %
- in distribution (e.g. freight, logistics)
- in sales, marketing andcommunications
- in sourcing (e.g. materials, resourceuse, supplier conduct)
- in manufacturing (e.g. facilities, resources and emissions)
Very important or fairly important
Not important now, but will be in the future
Not important
Don't know yet
Currentfocusinmanufacturing, futurepotentialinsourcingandsales
Low carbon or carbon neutral solutions are implemented ...

12. Enablerslook for newbusiness
0 %
20 %
40 %
60 %
80 %
100 %
- products or services that enable othersto become low carbon or carbon neutral
- low carbon or carbon neutral productsor services
Very important or fairly important
Not important now, but will be in the future
Not important
Don't know yet
62%ofrespondentsseeitimportanttoofferlowcarbonorcarbonneutralproductsorservices
–howevereconomicfactorsstillseenasonemajorobstacle
The company provides

13. Industrial internet will have a major impact-35% don’t fear the security risks
0 %
20 %
40 %
60 %
80 %
100 %
The topic requires strong efforts frompublic authorities
The related education (IT, machinery) needs to be renewed
Information security risks will stronglyinhibit the growth of new related…
The related expectations are oversized, public debate is in hype
The related impact in economies will bestronger than currently understood
Strongly agree
Agree
Disagree
Strongly disagree
No opinion
85%believeinsurprisinglystrongimpact
35%ofrespondentsdon’tfearthesecurityrisks
82%sayeducationneedstochange

14. Still 2-10 yearsof developmentbeforeIndustrial internet reachesthe”Plateauof Productivity”
Source: Gartner (August 2014)
Internet of things
BigData
Machine-to-Machine communications
CloudComputing

15. Majorityof thecompanieshavea planfor developingcompetencesfor industrialinternet
0 %
20 %
40 %
60 %
80 %
100 %
2014
2015
2016
2017 and later
Share of R&D resources to be dedicated for industrial internet
>30%
10-30%
<10%
0 %
No plans yet
The0%ofR&Dresourcegroupwillvanishinafewyears
Onlyoneoutoftenhavenoplansyet

16. Further discussion in the workgroups
Session and WG number
Topic
Chair
1
WG1
Carbon neutrality markets; what and where?
Jyrki Ovaska, UPM
WG2
Carbon neutrality: How to find the solutions for competitive advance?
Atte Haapalinna, Okmetic
WG3
Carbon neutrality: How to identify the paths towards growth, not just reducing the emissions?
Lars-Peter Lindfors,
NesteOil
WG4
The best practices of managing the R&D project portfolio
IlariKallio, Wärtsilä
2
WG5
From R&D to turnover
Jari Riihilahti,
Metso
WG6
Corporate Venturing
IlariKallio,
Wärtsilä
WG7
Industrial internet: What’s in it for me? Opportunities for growth
Heli Antila,
Fortum
WG8
Industrial internet: Practicalities and challenges
AnttiReijonen, McAfee

17. Thank you!