Uncovering the hidden potential for improving SME digitalization
Digital targets of the European Commission are truly ambitious. By 2030, it aims for 80% of the European population to have at least basic digital skills, or for 90% of SMEs to have at least a basic level of digital intensity, among other measurable goals. By reaching even some of those specific targets, Europe would become more innovative, more competitive and more secure. To fulfill this vision, a lot of work has to be done. When talking about SMEs, these ambitions represent far-reaching goals for enterprises in the individual countries. Let’s look into some numbers on the current state of digitalization of SMEs in several EU Member States and describe one of the concrete practical solutions established by the European Commission to help SMEs digitize in the Member States - the European Digital Innovation Hubs.
In this article, we will primarily focus on Slovakia, Czechia, Poland and Hungary as the League for Digital Boost countries of primary interest. In addition to this, we will explore the potential of Croatia, Slovenia and Romania.
To map and sum up the current situation of SMEs and their digitalization, we look at the data gathered by the European Commission and other relevant sources. Each year, a number of Indexes are prepared. They give us a general overview of SMEs performance in various areas, or measure progress in the priority areas across different sectors of the economy. The two most relevant Indexes for the purposes of this article are The Digital Economy and Society Index DESI 2022 by the European Commission, and the other one is The 2022 Green, Digital and Competitive SME Index created by the Lisbon Council.
DESI 2022
When looking into the DESI 2022, a number of concrete steps has to be taken from the long term perspective in most of the CEE countries to increase the particular digital areas in order to reach the level of an effective digital economy. All our target countries, except for Slovenia, which ranks 11th, are ranked far behind the EU average. To be concrete, Czech Republic ranks 19th, Croatia 21st, Hungary 22nd, Slovakia 23rd, Poland 24th, and Romania 27th.
In comparison to other countries of focus, Slovenia ranks differently in measured areas. It placed best within the Integration of Digital Technology indicator, followed by Connectivity, Digital Public Service and Human Capital, while the remaining countries performed well in Human Capital and worst in Connectivity (except Hungary and Romania) and Integration of Digital Technologies. Further comparison is available in the following table.
The 2022 Green, Digital and Competitive SME Index
The Index ranks 27 EU member states according to three topical pillars - green transition, digital transition and SME competitiveness, while each pillar consists of several categories and sub-categories. Traditionally, Scandinavian countries rank among the top countries in terms of the overall score - Sweden is 1st, the Netherlands 2nd, Denmark 3rd. To compare the ranking of our target countries, Slovenia ranks 11th, Hungary 16th, Slovakia 18th, Croatia 19th, Czechia 20th, Poland 23rd and Romania 27th. Besides the above mentioned areas for improvement, the topic of data analytics shows as another area to strongly focus on in the upcoming months and years. One of the goals described in the European Digital Compass is a 75% adoption rate of big data/cloud/AI. The Index assigns Malta the leading role in this indicator with a 35% adoption rate; Romania and Slovakia rank last with an adoption rate of only 5%. Data analytics therefore present a huge challenge, but also an opportunity to elevate the power and competitiveness of SMEs. We have compared several indicators from the Index and collected them in the following table. The data clearly suggests that there is still a huge unused potential that individual countries should focus on.
How could the European Digital Innovation Hubs contribute to boosting more digital SMEs?
European Digital Innovation Hubs (EDIHs), established by the European Commission, are one-stop shops supporting companies to respond to digital challenges and become more competitive. They are one of the practical steps for improving digitalization of businesses, but also public administration across various industries and areas described above. They provide practical support, workshops and trainings, tailor-made solutions, know-how and cutting-edge research, digital infrastructure and much more. If their mission succeeds, they could help enable SMEs to become more skilled, more digital, and therefore more competitive. There are several EDIHs in the region focusing on increasing the digital transformation of SMEs and we bring attention to some of them.
HOPERO in Slovakia, with the ambition to upgrade the digitalization of businesses, increase the level of digital knowledge within the companies, and to help them move forward the digital era. It will help to strengthen and expand the community of innovators, share knowledge, improve access to funds or adopt artificial intelligence.
EDIH CTU is one of the consortiums in the Czech Republic in the field of AI and Machine Learning, providing a set of activities to companies, in particular SMEs, and to public administration in the areas of industry, health, transportation, and energy.
HPC4Poland EDIH with its main goal to co-create and provide advanced high performance computing tools, addressing the real-life demand of Polish manufacturing companies and public organizations.
DIGI-SI provides a comprehensive set of digital innovation services and community platforms to support the digital transformation of SMEs, covering a wide range of industries, public administration organizations and the wider society.
European Digital Innovation Hub CROBOHUB ++ is a Croatian consortium specializing in three key areas - AI, cybersecurity, high-performance computing and providing services to SMEs, but also public administration to become more data-driven.
Digital transformation is one of the key drivers of productivity growth. Therefore, an increase of digitally advanced SMEs should be one of the key priorities for governments. The need for digitalization should be actively discussed and encouraged and communication between state authorities and SMEs should be driven through electronic tools that enable users to collaborate or interact digitally.
The League for Digital Boost is a Central European initiative founded and led by the Slovak Alliance for Innovation Economy (SAPIE). The initiative aims to mobilize key players in the field of digitalization of SMEs in the CEE countries to highlight the critical challenges of this topic and propose solutions for policymakers and businesses in the region in order to increase the digital transformation of SMEs. The main ambitions of the League are to connect public, private and non-governmental actors, to raise awareness about the importance of SMEs digitalization, to link business needs with policy-making in the region, and to encourage and facilitate the sharing of good practices.
