October Comments on the Ongoing Digitalization in European SMEs

The phenomenon of digitalization is becoming a vital part of our daily life, according to an update from October.

So, considering digitalization in European SMEs, the team at October looks into where we currently stand.

While new digital solutions are increasingly being used in the market, it would be wrong to assume that all firms have adapted to this digital transformation,  October wrote in a blog post.

Even though all EU Member States have “made progress in the area of digitalization; the overall picture across Member States is varied.”

The gap between EU’s “frontrunners” and the lowest ranked ones “remains large and there is still room for improvement,” according to October.

All Member States will “need to make concerted efforts to meet the 2030 targets as set out in Europe’s Digital Decade,”

October also shared insights on the current state of digitalization in European nations,

The firm has analyzed the results of DESI, the Digital Economy and Society Index.

DESI and October’s pan-European perspective

October pointed out that the European Commission has been “monitoring Member States’ digital progress through the Digital Economy and Society Index (DESI) reports since 2014.”

Each year, the Digital Economy and Society Index (DESI) “provides information on the state of digitisation of EU member states.”

In an increasingly competitive and challenging market environment, the European institutions “consider it essential to monitor the development of this phenomenon.”

DESI Digital Economy and Society Index ranking

As covered, October is a Fintech company “active in business lending to small and medium-sized companies.”

Leveraging both technology and data, October “offers innovative, simple and easily accessible credit solutions to European companies by securing funds from both private lenders and institutional investors.”

The combination of these two financing channels “allows companies to access capital from international markets.”

October further noted that “operating in five European countries, [they] studied the progress in terms of digitalization of the economies and societies, as well as SMEs, in Italy, France, Spain, the Netherlands and Germany.”

Digital skills (or human capital)

The human capital dimension of the DESI “covers ‘internet user skills’ and ‘advanced skills and development’.”

Connectivity

This is “the area of broadband connectivity.”

The connectivity dimension “looks at both the demand and the supply side of fixed and mobile broadband.”

Integration of digital technology

This dimension “measures the digitalisation of businesses and e-commerce.”

Use of digital in public services

This indicator “considers out of all internet users, the percentage of individuals who used the Internet in the last 12 months for interacting with public authorities.”

In the DESI 2021, Italy “ranks 20th out of 27 EU Member States.”

Only 41.5% of the Italian population “aged between 16 and 74 have basic digital skills.”

In addition to this, Italy has “a very low percentage of graduates in the ICT sector, accounting for only 1.3%.”

Although Italy is not one of the top performers in terms of digital performance, there is room for improvement.

In 2021, the Italian government promoted digitalization through new initiatives and strategic plans. One of these is The National Recovery and Resilience Plan.

The Italian Recovery and Resilience Plan is “the largest in the EU, accounting for a total of around EUR 191.5 billion.”

October further noted that “the 25.1% of it (i.e. approximately EUR 48 billion) is devoted to the digital transition.”

This plan would “enable Italy to digitize the public administration and the judicial system.”

It would also “contribute to the strengthening of the healthcare system through digital technologies and the modernization of businesses through the uptake of advanced technologies.”

Gigabit connectivity “would also be implemented throughout the country.”

Moving on to SMEs, which are becoming increasingly receptive to online opportunities, “as seen from by the strong growth of direct lending in recent years.”

According to DESI, Italian SMEs “perform very well in the employment of e-invoices, although the use of big data and technologies based on Artificial Intelligence remain low.”

The uptake of e-commerce and the use of ICT for environmental sustainability “are also below the EU average.”

Most Italian SMEs have “at least a basic level of digital intensity (69%, well above the EU average of 60%).”

Technology in The Netherlands

The Netherlands “ranks 4th out of 27 EU Member States in the 2021 edition of the DESI.”

Therefore, it “remains one of the top performers across Europe, with a widespread uptake of digital technologies among companies and use of online services.” As well as “high levels of basic and advanced digital skills.”

Despite being an already highly digitised country, the Netherlands “has taken new measures to further optimize its digital transformation.”

The Dutch Digitalization strategy, “first adopted in 2018 and updated in 2019, 2020 and 2021, is based on three solid principles.”

In 2020, despite the pandemic, 155 Code Week activities “were organized in the Netherlands”.

EU Code Week is “a grassroots initiative which aims to bring coding and digital literacy to everyone in a fun and engaging way.”

In 2020, the adoption of the National Growth Fund “was worth EUR 20 billion, which was reserved for infrastructure, innovation, and R&D, including sizeable portions allocated to AI, health data infrastructure, digital education technology and quantum technology.”

As noted in the update, 75% of Dutch small and medium-sized enterprises (SMEs) “have at least basic levels of digital intensity.”

Furthermore, the Netherlands is “a signatory to the declaration on the European Cloud Alliance.”

In signing this, it agreed “to drive the uptake of more secure, interoperable and energy-efficient data centres and cloud services, in particular, for SMEs, start-ups and the public sector.”

France, the homeland of European Fintech

France “ranks 15th of the 27 Member States in the 2021 edition of the Digital Economy and Society Index (DESI).”

The country is “in line with the EU average in terms of digital skills, both basic and advanced, and still has the chance to move closer to the EU front runners.”

To achieve this, France is “investing significant resources in connectivity, the education system and the use of digital technologies.”

The French Recovery and Resilience Plan (RRP) will “contribute to supporting the country’s digital transition with an overall contribution of EUR 8.4 billion.”

The digitalization of healthcare, in particular, will be “supported with an investment of EUR 2 billion.”

The aim is “to improve the sharing of medical records to set up the digital health platform and to ensure interoperability among software of actors in the public and private sectors.”

At the moment, a project is “being implemented in cooperation with the Ministry of Labour, focusing on the use of AI for companies, in particular SMEs.”

For more details on this update, check here.

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