New Data suggests SME companies lack behind in digital technology

Debate in Børsen: Worryingly many SMEs lag behind digitally, and this can develop into a ticking time bomb for companies

Every third SME does not have the resources to make use of digital technologies, and every fourth finds that the benefits of the technologies are too unclear.

By Annemarie Vitoft, Chairperson for Erhvervsudvalget in Dansk IT

Christian Vintergaard, adm. direktør in Teknologipagten

Camilla Hesselby, konstitueret adm. direktør in FSR – danske revisorer

Lack of digital skills, limited resources and uncertainty about the value and growth that digitization can create. These are some of the reasons why too many small and medium-sized companies in Denmark are lagging behind with digitalisation.

Digitization holds the potential to create a stronger and more competitive Danish business life. Digitization can, however, also develop into a ticking time bomb for those companies that react passively to the development, while competitors both at home and abroad are in full swing with the digital transition.

Too many small and medium-sized companies are missing out on the potential for growth that digitization holds. Overall, according to the Ministry of Business, SMEs make up approximately 99 percent of all Danish companies and account for approximately 50 percent of employment. Denmark therefore has a significant challenge, because while the large Danish companies and groups are perhaps digitally mature, work purposefully with digital innovation and are generally well underway with the digital transformation – yes, the trends look different and worrying when you look at the situation in the SME layer.

Worrying figures for the development

A new analysis from the Technology Pact, Dansk IT and FSR - Danish auditors documents the problem with SMEs' lack of digitalisation. The questionnaire survey, prepared by Seismonaut on behalf of the three organisations, is based on responses from 1029 Danish SME companies and 131 approved auditors.

The analysis shows that it is actually one in ten SMEs that today do not use digital technologies in their business. Not even relatively simple digital technologies such as financial and accounting systems, electronic invoicing, online meeting services and the like. This is a worryingly high proportion of companies all the while that digitization in the business world in general has been going on for several decades.

Every third SME in the survey estimates that they do not have sufficient resources to make further use of digital technologies. One in four SMEs find that the benefits are too unclear, while a similar proportion assess that their employees lack skills.

Focus on strategy and competencies

Fortunately, there is much that the SMEs themselves can do to get started with the digital transition. Overall, there is a need for a strategy for how digitization can be best utilized to strengthen the company today and in the future.

Both employees, management and boards of Danish SMEs need to strengthen their knowledge and skills in the digital area. The managements and boards must be able to designate a digital direction for the companies, and this presupposes that you have a basic understanding of what digitization is all about and that you have enough insight to be able to see the new opportunities for the company - and how they can be utilized. Therefore, it is also thought-provoking that only about a tenth currently use the company's board to get strategic advice on digital technologies.

To avoid the digital transition becoming an unmanageable mouthful, it should be divided into many smaller chunks. Each small project can in itself deliver value and help contribute to the general transition. Every time you start new digital initiatives, you become a little smarter - and that learning can be drawn on for future digital projects.

Ask others for advice

The challenges of utilizing the new technologies mean that many SMEs seek external advice. Half of the SMEs today use advice on digital technologies. This is especially from IT consultants and personal networks, but also from accountants and other advisers. Approximately one in five SMEs state that they have received advice from accountants or audit firms to utilize digital technologies.

The advantage of using accountants more actively in the digital transformation is that they come into the companies on a daily basis. It is obvious to use the accountants' close contact with the customers to push digital development in the SMEs. Therefore, it is also important that more accountants acquire digital skills and use them actively in advising clients. In this way, we can speed up the digital transformation further and keep an important engine for the economy going.

Read the debate in Børsen https://borsen.dk/nyheder/opinion/bekymrende-mange-smver-halter-efter