Report: Digitalisation of German SMEs lagging despite efforts

"The funding landscape and the opportunity for companies to get help is better than ever," said Michaela Scheeg, a consortium partner of the Mittelstand 4.0 competence centre in Berlin. But Marianne Janik, managing director at Microsoft Germany, stressed that successful digitalisation also requires a change in thinking among SMEs because "the great potential of digitalisation still needs to be tapped." [SHUTTERSTOCK]

Small and medium-sized enterprises (SMEs) traditionally form the backbone of Europe’s largest economy, yet they are still lagging behind in terms of digitalisation compared to the international competition, according to a recent OECD study. EURACTIV Germany reports.

Cloud computing and e-commerce are areas in which German SMEs, known as the Mittelstand, remain particularly behind, according to the study published on Monday (28 June), adding that this could have a negative impact on the country’s post-pandemic economic recovery.

The findings come despite a number of government initiatives to make SMEs fit for the digital age.

“We have set a lot in motion here,” Economy Minister Peter Altmaier told Monday’s Digital Agenda conference.

Germany has “set international standards,” in the process of digitalising industry, otherwise referred to as Industry 4.0, Altmaier said. Still the competition never sleeps, he added.

“Whoever advances first with this will then also have the largest share of value creation. We are an industrialised country, we want to remain an industrialised country and that is why we are standing on our hind legs,” he added.

Promoting the digital readiness of SMEs

Among the multitude of initiatives launched in recent years are the 26 Mittelstand 4.0 Competence Centres set up to help firms “to find out what digitalisation options are available to them,” said Altmaier.

The support structures have been welcomed by industry representatives.

“The funding landscape and the opportunity for companies to get help is better than ever,” said Michaela Scheeg, a consortium partner of the Mittelstand 4.0 competence centre in Berlin.

But Marianne Janik, managing director at Microsoft Germany, stressed that progress requires SMEs to change their thinking and tap into “the great potential of digitalisation.”

“Corporate culture must change,” said Janik, noting that targeted education and training, and cooperation between politics, business and science should be better promoted.

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.

Investment offensive

Germany has also launched an investment offensive in recent years to drive digitalisation forward with its flagship Future Fund project, which allocates €10 billion for future technologies and aims to support startups, particularly in their growth phase.

The project, launched in mid-April, provides together with other public and private partners around €30 billion in venture capital for start-ups to promote the emergence of European digital platforms.

Digital Now is another initiative aiming to help SMEs with digitisation. The funding programme has been extended and now offers a funding pot of €250 million, the economy ministry announced on Friday (25 June).

The government is also dedicating a further €2.9 billion from the EU recovery fund to the digitisation of SMEs, a report by consulting firm Deloitte shows. According to Altmaier, such funding initiatives puts Germany ahead of other EU countries in terms of digitisation.

However, Germany has some way to go in the coming years if it wants to achieve the EU’s digital goals for SMEs by 2030.

Gaia-X for SMEs

Internationally, German SMEs are still lagging behind, particularly when it comes to the use of cloud services. Only 12% of companies are currently using cloud computing services, far short of the EU’s target of 75%.

To close the gap, Germany has launched the Gaia-X project together with France, which according to Altmaier has the “potential to become a very big European solution.”

The project, which targets SMEs in particular, aims to develop a data and cloud infrastructure in Europe and promote EU digital sovereignty.

However, according to the German parliament’s digital agenda committee chairman, Manuel Höferlin, Gaia-X would have to be expanded further to become a genuine platform for SMEs.

“We have to keep the value creation that takes place in the digital world in Europe and Germany as well. And Gaia-X is the opportunity par excellence for this if we tackle it properly,” Höferlin said.

With regards to Industry 4.0 and the internet of things, the network of internet-connected objects, value creation will no longer come from the objects themselves, but from the digital ecosystem in which they are embedded, Höferlin told the conference.

“And we still have a chance to play along and shape the transformation in such a way that value creation remains in Germany and Europe,” he added.

Gaia-X cloud infrastructure project close to becoming operational

The European flagship cloud project Gaia-X, which aims to ensure Europe has its own trusted data and cloud infrastructure, came one step closer to becoming operational after the first specification round of the Federation Services was completed on Wednesday. EURACTIV Germany reports.

[Edited by Josie Le Blond and Luca Bertuzzi]

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