SMEs are the beating heart of the global economy. In Europe alone, there are 24 million small businesses, employing a total of 95 million people and generating €4 trillion a year. And yet, SMEs are still behind their larger counterparts in the integration of the digital tools that they need to increase productivity, scale-up and innovate.
But SMEs cannot bridge this digital divide without the right support including, crucially, an effective policy environment.
The OECD’s Report ‘SME Digitalisation to Build Back Better’, published this month, offers a timely and valuable contribution to the international policy dialogue in this area. The report collates insights from Governments, SMEs and other private sector players on the SME experience, and the policy and private sector initiatives that are being introduced to support them.
It highlights the increasing importance of digital technologies to SMEs during the Covid-19 pandemic, where the adoption of the right tools was critical to business continuity. In particular, through deployment of digital tools, many SMEs have been able to:
- Continue to serve their customers through an end-to-end digital experience;
- Facilitate new ways of flexible and remote working.
The report demonstrates that, in the future, SMEs will need to go digital to compete, both in developing and delivering products and services, and in attracting and retaining talent.
It is therefore critical that all SMEs can take advantage of the benefits of digitisation. The potential benefits are enormous. If only 100,000 of the 1.2 million European SMEs that currently lack digital tools were to digitise, this would lead to a total increase in turnover of €148 billion.
The private sector plays a vital role here, in developing tools tailored to the needs of individual SMEs and their digital journey, from improving their online presence to ensuring their business is secure. For example, Vodafone has worked closely with our SME customers to curate ‘business boosting’ packages that will help SMEs on their digital journey, from improving their online presence, to ensuring their business is secure.
However, the existence of the right digital tools is not enough. SMEs face a number of hurdles before they even get to the stage of seeking out and adopting new technologies. In particular, and as highlighted in the OECD Report:
- Digital skills gaps prevent SMEs from identifying the tools they would need to support them; and from deploying them effectively.
- SMEs typically have less liquidity and more limited access to finance, which limits their ability to make the upfront investment required to digitise.
- Access to fast and affordable broadband is a pre-requisite to SMEs’ digital transformation: a large gap remains in access to fast broadband between small and larger firms; and this only increases for those situated in rural areas.
This is where governments must step in and develop effective policy frameworks to promote SME digitalisation. Covid-19 Pandemic recovery packages introduced across the globe, such as the EU’s recovery and resilience fund, provide a timely opportunity to do so. This would be best achieved by adopting a framework that:
- Is designed in collaboration with SMEs and technology providers, to ensure the scope of the policy framework meets the needs of SMEs;
- delivers additional support measures to support capability such as curated online resources and training, to encourage take-up;
- offers grants or vouchers for digital investment, so that SMEs have the capacity to find solutions based on their individual needs; and
- addresses availability gaps by supporting investment in areas where infrastructure is not available or offers free or subsidised high-speed connectivity to those sectors in greatest need.
We are already seeing the inclusion of a number of these principles in national SME digitisation policies, and the OECD Report sets out some fantastic examples of the work Governments are already doing to support SMEs in this space. One such example is Spain, where Vodafone and other contributors worked closely with the Spanish Government to co-create a Digital Kit for SMEs.
Yet there remains a huge opportunity for Governments across the OECD and beyond to raise their ambition and empower SMEs with the tools to drive a digital recovery.
Vodafone is delighted to have worked closely with the OECD and other partners in the development of this paper, and we look forward to continuing our partnership with the OECD on this important topic as part of the OECD’s Digital for SME initiative.
Vinod Kumar was appointed CEO, Vodafone Business and member of the Executive Committee on 8 July 2019 with effect from 2 September 2019, reporting to Group CEO Nick Read. He is responsible for Vodafone’s business to business operations globally.
Vinod brings over 30 years of telecommunications experience to Vodafone, gained in a wide variety of global roles spanning Europe, Asia Pacific and the Americas. Most recently, Vinod was Chief Executive Officer and Managing Director of Tata Communications, where he first joined as its Chief Operations Officer in 2004.
Prior to Tata Communications Vinod was Senior Vice President at Asia Netcom, where he was actively involved in the asset sale of Asia Global Crossing to China Netcom, resulting in the formation of Asia Netcom.
Vinod holds a BSc in Electrical and Electronic Engineering and throughout his career has had a passion for creating and developing high performance teams.