SMEs need better connectivity and skills to embrace digital transition, experts say

The 25 millions SMEs that operate within the EU "are not yet fully equipped to face the needs of our digital transition", noted Outi Slotboom from the European Commission [PanuShot/Shutterstock]

While the COVID-19 pandemic accelerated the digitalisation of SMEs in the EU, experts argue that policymakers’ focus should now move to infrastructure and education in order to bridge the remaining digital divide.

The 25 million SMEs that operate within the EU “are not yet fully equipped to face the needs of our digital transition”, noted Outi Slotboom from the European Commission’s service on the internal market and SMEs.

Alongside other panellists speaking at an event hosted by EURACTIV, Slotboom stressed that infrastructure and skills are the two areas policymakers should collaborate on to get SMEs to take another step towards complete digitalisation.

According to the Commission’s figures from before the pandemic, 17% of the SMEs had successfully integrated digital technologies, compared to 54% of large companies.

“The Covid-19 has been an eye-opener” on the digital divide and knowledge gap, said the social-democrat MEP Josianne Cutajar.

Murielle Lorrilloux, EU Cluster and Enterprise Americas & Asia Pacific Director at Vodafone Business, argued that infrastructure, and specifically access to connectivity, is one of the elements causing SMEs to lag behind in their digitalisation.

“It’s really critical having access to high-speed connectivity”, she said, stressing that this access should be affordable. “This is the foundation of any further digital transition”, she added.

“We have to go one step beyond the connectivity”, added Sebastiano Toffaletti, Secretary-General at the European DIGITAL SME Alliance, claiming that “digitalisation means reinventing companies’ business model to generate value through technology.”

Policymakers should also focus on developing skills, which would translate into more ICT specialists across the bloc to meet ever-growing demands for qualified people, but also into educating society as a whole to make the most of the digital revolution’s opportunities.

“Not all problems can be solved with more money”, warned Sjoerd Hauptmeijer, CEO & Founder of The Young Digitals. Member states should “rethink the way we organise education regarding digital skills” when it comes to school teaching or trainings offered to professionals at a later stage.

Recovery fund: a “game-changer”

“The divide has decreased but as long as there is a digital divide, we have to continue addressing it”, said MEP Cutajar, adding that “SMEs face some common challenges” but differences remain on the national level.

Data shows that Member States are not all at the same stage in their digitalisation.

Last November, the European Commission published its 2021 Digital Economy and Society Index (DESI) assessing the digital performance of the EU27.

Denmark, Sweden and Ireland topped the overall ranking while Greece, Bulgaria and Romania came last, but huge discrepancies appear when it comes to digital skills or high-capacity networks.

Data show mixed situations across EU states on digital transition

The European Commission has set a number of objectives for the digital transition of member states as part of the EU’s “2030 Digital Compass”, and the annual progress report, released on 12 November, showed mixed results across the bloc.

The 2021 index was adjusted to reflect the four main points of the “Digital Compass”: skills, infrastructures, digital transformation of businesses and public services. This strategy, presented last March, put forward quantified targets that European states are to achieve by 2030 such as 80% of their citizens having basic digital skills or “gigabit for everyone, 5G everywhere”.

To that extent, the post-COVID Recovery and Resilience Facility will be a “game-changer”, argued the Commission’s Slotboom.

The €672.5 billion funds are being distributed to EU countries in order to mitigate the economic fallout following the pandemic. At least 20% of that money is to be dedicated to digital transition and towards achieving the “Digital Compass” targets.

Consulting giant Deloitte estimated last summer, however, that the investment proposed by the EU27 are falling short of these goals.

Recovery plan analysis says EU will fall short of meeting 2030 digital targets

An analysis of 12 recovery plans submitted by European Union member states and seen by EURACTIV ahead of publication indicates that the investment proposed will see the bloc falling radically short of the digital targets it has set itself for the end of the decade.

[Edited by Luca Bertuzzi and Benjamin Fox]

Subscribe to our newsletters