The COVID-19 pandemic has posed unprecedented challenges for small and medium-sized enterprises (SMEs) in Europe, but also opened up new opportunities for digital transformation. According to a recent report by Fibre2Fashion, 85% of European SMEs rely on digital technologies for growth and resilience in the face of the crisis.
SMEs are the backbone of the European economy
SMEs represent 99.8% of the total number of businesses and account for nearly two thirds of employment in the European Union. They are also a key source of innovation and competitiveness, contributing to more than half of the EU’s gross domestic product (GDP).
However, SMEs face many barriers and challenges in adopting and using digital technologies, such as lack of skills, access to finance, infrastructure, and regulatory frameworks. The pandemic has exacerbated these difficulties, as many SMEs had to close their physical premises, reduce their workforce, or adapt to new consumer demands and market conditions.
Digital technologies offer a lifeline for SMEs
To cope with the pandemic and its aftermath, many SMEs have turned to digital technologies to maintain or increase their productivity, efficiency, and customer satisfaction. According to the Fibre2Fashion report, 85% of European SMEs say that digital technologies are essential for their growth and survival, and 75% plan to invest more in digital solutions in the next 12 months.
Some of the most popular digital technologies among SMEs are cloud computing, e-commerce, social media, and customer relationship management (CRM). These tools enable SMEs to access and store data, sell and market their products and services online, communicate and interact with their customers, and manage their operations and workflows.
The EU supports the digital transformation of SMEs
The European Union is aware of the importance and potential of digital technologies for SMEs, and has launched several initiatives and programmes to support their digital transformation. For example, the Digital Europe Programme, which has a budget of €7.5 billion for the period 2021-2027, aims to enhance the digital capacities of SMEs and provide them with access to advanced digital technologies and skills.
Another example is the European Digital Innovation Hubs, which are one-stop shops that help SMEs access the latest digital technologies and expertise, and provide them with training, testing, and networking opportunities. The EU plans to establish at least one hub in every region of Europe by 2027, with a total funding of €1 billion.
The EU also supports the development of a single market for digital services and goods, which would allow SMEs to benefit from a larger and more integrated market, lower costs, and less administrative burdens. The EU’s Digital Services Act and Digital Markets Act, proposed in December 2020, aim to create a fair and safe online environment for businesses and consumers, and to foster innovation and competition in the digital sector.
The future is digital for European SMEs
The digital transformation of SMEs is not only a necessity, but also an opportunity for growth and resilience in the post-pandemic era. Digital technologies can help SMEs improve their performance, reach new customers and markets, diversify their products and services, and enhance their competitiveness and sustainability.
However, SMEs also need to overcome the challenges and risks associated with digital technologies, such as cyberattacks, data protection, ethical issues, and digital skills gaps. Therefore, SMEs need to adopt a strategic and holistic approach to digital transformation, and to collaborate with other stakeholders, such as the EU, national and regional authorities, industry associations, and digital innovation hubs.