Making data dance: The key to SME scale up?

When we think of data-driven businesses, it is easy to conjure up images of thriving tech centres from Silicon Valley to Shoreditch. Not many will think of French farmland. Yet the data revolution is underway there too. Gaec du Pré Ferré, a dairy producer from Franche-Comté has put big data and robotics at the centre of its business model. Next to the implementation of automated feeding and milking stations, this agricultural SME uses the Internet of Things (IoT). It tracks collars that provide real-time data on cows’ movements, eating and rumination patters, as well as their milk production and quality. This allows the farmers to optimise management of breeding and milking activities and respond to cows’ individual needs.

New data, new opportunities

Gaec du Pré Ferré is one example among a growing number of firms across many sectors, who are embracing the digital transition – a trend which has been fast-tracked in response to the pandemic. And while far from all businesses are deploying robotics, more and more traditional SMEs are making their first forays into digital solutions. As they become more digital, many of them are leaving a growing data trail. This is rewarding them with new insights into production and delivery (process data), transactions (user, consumer and supplier data), and marketing strategies (timing, placement and pricing of products). This data has huge potential to drive SME scale up. It will enable managers to improve efficiency, better target products to the needs of customers, and expand markets and networks – including abroad.

A new thirst for data has also created new markets for business-to-business services.

A new thirst for data has also created new markets for business-to-business services. Start-ups like Winding Tree are now offering blockchain-based transaction services to reduce the distribution costs that SMEs in the hospitality sector face. For example, gîtes and independent tour operators are offering their services through online agencies or global distribution systems. And Woodsense – a Danish SME – has created a product called “moisture meter”. It automatically monitors the moisture in timber structures through IoT sensors as a way to improve energy efficiency through targeted building maintenance.

A bumpy road in scaling up

However, a number of barriers, notably uneven access to data, technology and skills hold too many SMEs back from making the most of new opportunities created by the data economy. Outdated data infrastructure, management practices and cultures are a factor. As are regulatory requirements (e.g. related to personal data protection), as well as limited access to finance, which may further slow the revolution for SMEs. They remain far less likely than large firms to undertake big data analysis – also because the development of digital skills (if practiced at all) is far too often limited to ICT specialists, while they should actually be diffused broadly across employees and managers. A shift in mindset here could not only help develop a stronger digital culture among SMEs, but also help protect them better against data breaches and other digital security risks.

Still too many SME blind spots

More can be done to support SMEs make the most of new opportunities created by the data economy. This is outlined in a report based on a cross-country analysis of 485 policies and 209 institutions across the OECD area. It highlights that public institutions in charge of SME policy are rarely and unevenly involved in data policy making. This creates a risk that SMEs needs and constraints are not systematically considered when policies are developed in this area. As a result, very few policies to date are in place to specifically support SMEs access, exploit or protect data.

A new frontier for SME policy

SMEs have huge potential to generate more and better data to scale up their operations and drive productivity. They make up over 90% of the business population and account for over half of value added and two out of three jobs in OECD countries. Policy makers should support them to do so, including in partnership with private sector providers. Such efforts can take many forms. Spain, through its Agroimpluse initiative, provides financial support (loans) to SMEs for implementing technology-based projects in the agri-food sector and in rural areas . The Netherlands, saw the emergence of Join Data in 2017, an independent platform created by farmer co-operatives to facilitate data sharing in the agricultural sector in a more efficient and transparent manner. Initiatives like these give us reason to hope that many more businesses will be joining the French farmers in making their data dance in the years ahead.

Further reading:

Policy Analyst at | Website | + posts

Lora Pissareva is a Policy Analyst working at the SME and Entrepreneurship Performance, Policies and Mainstreaming unit at the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE). She coordinates analytical work on the scaling up of SMEs and start-ups, with a focus on building an inventory of policies in support of scalers across multiple dimensions, including SME data governance, access to scale up finance, networks and internationalisation, and innovation. In 2014-15, she successfully completed the Mercator Fellowship on International Affairs, which included placements with the International Crisis Group in Lebanon and the German Development Agency (GIZ) in Afghanistan. Prior to the fellowship, she gained work experience as a management consultant at Roland Berger Strategy Consultants in Germany and Iraq, focusing on business environment reform and private sector development. She holds a double diploma in Public Administration and European Studies at the University of Münster and Twente (Netherlands) and a Master’s degree in International Affairs from Sciences Po Paris.

Junior Policy Analyst at | Website | + posts

Juan Felipe RODRIGO LOPEZ is a Junior Policy Analyst at the OECD’s CFE SMEs and Entrepreneurship Performance, Policies and Mainstreaming Unit (CFE). Before joining the OECD, Juan worked as a consultant on competition, regulation, and trade for the World Bank Group, UNESCAP, the Colombian Competition Authority and Politas LLP a special economic zone consulting firm. Juan completed his studies in law and economics at the Universidad de los Andes. He holds a Master’s degree in International Economic Law from University of Barcelona and a Master in Development Economics from University of Paris I Panthéon-Sorbonne.