Manila The Covid-19 pandemic has increased the interest of small and medium businesses (SMEs) in digital technology, but many barriers prevent them from adopting the technology needed to overcome challenges related to the pandemic, according to a recent report by the World Economic Forum (WEF).
A new survey by the World Economic Forum finds that despite increased awareness of the importance of digital technology, many small and medium-sized businesses have admitted to either putting their digitization plans on hold or having no plans at all to implement them due to financial pressures.
Only 23 percent of small and medium-sized businesses said the pandemic has accelerated their digitization goals, suggesting that significant barriers remain to digital adoption.
Barriers include limited availability and access to financial resources, lack of skilled workforce, and infrastructure barriers to support digitalization.
“In general, SMEs are increasingly interested in digital solutions. Flexibility and flexibility in operations have emerged as top priorities above raising productivity and reducing costs, which were previously the primary goal of most companies. In addition, technologies that enable remote work and collaboration have topped the priority list of use cases. digital technology”.
The survey of 141 SMEs from six countries (Azerbaijan, Brazil, Colombia, Kazakhstan, South Africa and Turkey) showed increased demand among SMEs to integrate digital technology into business operations, particularly related to the Industrial Internet of Things (IIoT), cloud computing, big data and artificial intelligence.
Most SMEs have expressed interest in deploying technology to improve operations, ensure safety and security, facilitate quality management, manage workforce training and collaborate.
Small and medium businesses represent more than 90 percent of all businesses globally and are the primary driver of social mobility, providing seven out of 10 jobs. Unfortunately, these companies are struggling to embrace the fourth industrial revolution (industry 4.0). Larger companies (with more than 500 employees) are six times more likely to use the Industrial Internet of Things than small and medium businesses. This month’s white paper said this risks exacerbating economic inequality, stifling opportunities for social mobility and declining global industrial productivity.
Remote working is the most notable change in the way we do business due to the pandemic.
The World Economic Forum said the combination of on-site and remote work is likely to become a permanent advantage the longer the crisis continues. This increases the urgency of SMEs to adopt digital technology to adapt to the new reality, while attracting talent and maintaining competition.
The report notes that most SMEs remain at a low to medium level of technological maturity, preventing companies from taking full advantage of digital technologies, limiting the potential return on digitalization investments, and discouraging the spread of digital transformation.
The most common challenge of said digital transformation is financial constraints. Uncertainty in the business environment has led SMEs to focus more on short-term goals and plans and on day-to-day operations and survival.
“The COVID-19 crisis has forced companies to funnel funds into other areas such as health, safety and employment protection,” the newspaper said.
This problem is compounded by the continued lack of access to finance for small and medium enterprises, as banks prefer to give loans to large enterprises due to the risk of default.
Another important barrier is the lack of skilled labor needed to support digital transformation.
The majority of respondents mentioned skill gaps in a wide range of areas, such as big data analytics, robotics technicians, and IT managers.
In addition, SMEs face stiff competition from large firms in attracting workers.
Infrastructure barriers observed include challenges related to Internet access and speed and lack of adequate data center availability, particularly in rural and remote areas.
Respondents also highlighted the unavailability of digital solutions in the local market, which was exacerbated by the lower level of R&D and innovation compared to advanced economies.
Moreover, many SMEs are now focusing on local markets, which have less intense competition compared to the global market. This reduces incentives for SMEs to fully embrace innovation.
The survey also showed the dissatisfaction of small and medium-sized companies with the level of government support. When asked about the most attractive state support tools for increasing digital adoption, respondents said they preferred tax incentives, grants and subsidies, employment support, and debt financing.
Moreover, the lack of industry standards increases the actual and perceived costs of investing in digital technology and discourages SMEs from investing in digital technology.
The report said that there is a lot of potential for small and medium-sized companies to use digital technology, and politics has an important role to play in promoting this uptake by focusing on providing financial support, improving business skills, and enhancing infrastructure.
First, the government can provide financial support tools and measures to support worker training and skills development.
At the same time, making high-speed broadband internet available at an affordable price and focusing on cybersecurity training and policies will also provide an enabling environment for greater technology adoption among businesses.
“Building an effective ecosystem for SMEs has the potential to accelerate their adoption of digital technology. This requires key stakeholders such as industry, government, NGOs and academia to collaborate in improving the technological development of companies. (Public relations)