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Together we can accelerate SME Digitalisation across Europe

17 May 2021Viewpoint
By Joakim Reiter, Vodafone Group External Affairs Director

Small and medium enterprises are the beating heart of Europe’s economy, providing jobs and driving economic growth.  They are essential to every regional economy, and their importance increases the further away you travel from Europe’s major cities with SMEs accounting for 75% of employment in rural areas.

Over the last year, as Vodafone’s research has also highlighted, it has become ever more clear just how digitalisation will be crucial for SME’s ability to compete – to deliver goods and services in retail and commercial environments which have been impacted by COVID-19, and to attract and retain talent.

Yet, the pandemic has also left many European SMEs more vulnerable than ever. The OECD has found that more than half of SMEs face severe losses in revenues due to COVID-19, with one third fearing for their future without further support.  Vodafone Business research showed that 39% of small businesses with 10-499 employees expect some or significant reduction in the coming year, compared with 19% pre-COVID-19.

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Digitalisation is one way to overcome this dire situation facing many SMEs in Europe today. Encouragingly, we have found that those businesses that had digitalised earned, on average, 26% higher revenues compared to non-digitalised ones.  The scale of the opportunity across Europe is enormous – if we digitised only 100,000 out of the 1.2 million European SMEs with less than 250 employees and that currently lack digital tools, this would lead to a total increase in turnover of €148 billion.

While the financial benefits of digitisation remain obvious, so too are the opportunities for SMEs to play a central role in driving better inclusion in our societies, as well as in the EU’s green transition. For the greening of the economy to be as inclusive and wide-reaching as possible, SMEs will need to digitalise their processes, deliver more goods and services digitally, and reduce waste associated with the ‘material’ economy.

But, to achieve this, we need to tackle the underlying digital SME gap: SMEs still lag large corporates in successfully integrating digital technologies. Despite representing around 90% of Europe’s businesses and contributing €4 trillion to the total added value of the EU, SMEs only 17.5% sell their products and services online.

I am delighted that today Vodafone Business has launched new ‘businesses boosting’ packages designed to support SMEs in Europe on their digital journeys.  We’re bundling together a range of tools to help SMEs create or improve their online presence, reaching new customers and overcome challenges they face in achieving their growth ambitions.

These packages are available initially in the UK, Italy and Spain, and will be rolled out across other Vodafone markets in Europe over the coming months.  Vodafone UK has also launched business.connected in partnership with Enterprise Nation, giving free, expert training to 100,000 UK SME businesses to help them digitally transform.

Across Europe, Vodafone already supports 3.65 million SMEs and SOHOs through their digital journeys, helping small businesses recover and prosper as they embrace digitalisation.  Our free digital business advice service V-Hub is already available in the UK, Spain, Italy and Germany, giving expert support to on topics such as website construction, security, remote working and digital marketing

More than 1.2 million European businesses have already used our V-Hub Knowledge Centre, which provides access to online guides, videos and webinars, plus a chat and phone service to put SME’s directly in touch with experts.

Also, to assist businesses most at risk from the pandemic within Vodafone’s own supply chain, in March 2020 we announced faster supplier payment terms to micro and small enterprises who may have suffered liquidity challenges. For orders issued between 1 April and 1 October 2020, we reduced payment terms for micro and small suppliers in Europe to 15 days from the customary 30-60 days.  More than 1,200 micro and small suppliers have benefited from our COVID-19 payment term relief, with over €222 million paid to our most vulnerable supplier base on average 53 days earlier year-over-year.

Similarly, Vodafone’s Fast Track Service continues to ensure that innovative new small businesses with less than 100 employees get a fair opportunity to supply us.  I’m proud that Vodafone was named one of the world’s top 25 companies for supporting innovative start-ups by the International Chamber of Commerce in December 2020, but even more pleased with the outcome for the small businesses who are now our partners.   To date, 90 unique start-ups have been onboarded since we launched the service in 2018, with more than €10 million in purchase orders awarded. 

We are convinced that the public and private sector both have a significant role in ensuring a more prosperous future of small businesses in Europe.  European member states face different challenges in ensuring their SMEs digitalise – they have different levels of adoption of core digital tools, and levels of high-speed broadband access vary.

Notwithstanding such differences, our recent SME study shows that there are some key policies that all national governments can adopt as part of their national priorities for the EU reconstruction plan. Importantly, in partnership with SMEs and industry at large, governments can and should:

  • address availability gaps by supporting investment in areas where infrastructure is not available to SMEs, or by offering free or subsidised high-speed connectivity to those sectors in greatest need;

  • offer grants or vouchers for digital investment so that SMEs have the capacity to find solutions based on their individual needs; and 

  • deliver support measures, including curated online resources, training and incentives to encourage take-up.

We welcome that the European Commission placing focus on digitalising SMEs as part of the Digital Decade 2030 targets announced in March this year. By the end of the decade, the goal is for more than 90% of SMEs to reach at least a basic level of digital intensity. ‘Basic’ is a starting point, but our ambitions should be set higher.

We believe that together we can accelerate digital adoption by SMEs across Europe – ensuring that we close the deep digital divide that SMEs have been exposed to, and, if investment is targeted in the right areas, ensure that no small business is left behind.

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