The role of Gigabit Connectivity in Accelerating SME Digitisation and Resilience

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

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[GIGAEurope]

This article is part of our special report DSA: Re-establishing trust in the internet society.

The impact of COVID-19 has been global and indiscriminate. The current situation requires us to think, plan, and operate differently. While it touches us all, the direct impact on businesses and individuals differs – notably the disproportionate impact on small and medium-sized enterprises, and on those who rely on them.

Irina Varlan is the Managing Director of GigaEurope.

Characterised as the ‘heartbeat’ of the European economy, SMEs account for more than half of Europe’s GDP and employ over 100 million people, according to the 2020 Commission Communiqué, “An SME Strategy for a Sustainable and Digital Europe.” In addition to spurring local, regional, and national economies, these enterprises provide services to EU citizens living in rural and remote communities.

SMEs are heterogeneous and span across a variety of industries and sectors, such as hospitality, tourism, fintech, telecoms, construction, and defense. Still, most face the commonality of being disproportionately impacted by the pandemic and encounter greater barriers to future-proofing their businesses.

The pandemic accelerated digitalization, which has enabled SMEs to leverage online platforms for business intelligence services, improve productivity, and lower operating costs. Ubiquitous applications, such as cloud solutions, e-commerce capabilities, and e-banking are now vital. A 2021 OECD study, “SME Digitalisation to Build Back Better,” shows revenue rises among SMEs that engaged in digital sales or advertising.

Connectivity and a willingness to incorporate new digital solutions will enable businesses to survive and thrive in the future. A recently released report by Vodafone Business, in partnership with the London School of Economics – “Fit for the Future”, highlights the importance of business owners embracing change and actively planning for the technological future of their companies. It also outlines how being ‘future ready’ has helped businesses of all sizes.

In order for businesses to realise the full potential of digital tools, such as click and collect, online delivery, virtual events, and video-conferencing, they must have access to fast and reliable broadband connectivity as a prerequisite. Successful digital transformations among SMEs, in particular, also require enhanced digital literacy and a supportive policy environment. An EU study revealed that over 33% of SMEs report encountering administrative and legal barriers to making their business more resource efficient. The study also reports that only 17% of SMEs successfully implemented digital technology.

The European Union has set ambitious targets under the Digital Decade initiative. We welcome these targets and call for a multi-sector and multi-faceted full SME ecosystem approach. No one can surmount these challenges alone. Programmes such as “Horizon Europe” aid innovation and access to relevant technology. The EU must also pair these financial resources with policies that reduce the regulatory burden on SMEs and proliferate digital literacy, thus improving market access for SMEs. A supportive policy environment builds on existing policy frameworks and mitigates against overly burdensome compliance requirements, which disadvantage SMEs.

Moreover, European Parliament recommendations to harmonise regulations across the EU-27, modify legislation ill-equipped to respond to evolving technologies, and further clarify the definition of a SME could have an enduring impact on the health and resilience of enterprises.

In addition to policy support, all players in the digital ecosystem need to collaborate and create a positive environment facilitating digital transformation of SMEs. During the next Digital Debate Series, GIGAEurope will explore how the gigabit connectivity sector can play an important role as part of a multistakeholder approach to supporting SMEs manage their digital transformation.

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