The reason is surely the fact that the country’s business fabric is made up of more than 90% small and medium-sized enterprises. The same ones that in the year of the pandemic took a small step forward and started a digitalisation process to survive a long period of crisis. A digitalisation that mainly involved digital sales and marketing processes.
Where does Italy stand?
Globally, the pandemic has been a huge driving force behind digitalisation. In fact, a study prepared by Markets and Markets showed that the digital transformation market is expected to grow from USD 521 to USD 1250 billion by 2026, at a compound annual growth rate of 19%. In Italy, instead, according to data published by ISTAT, in 2021 60.3% of Italian small and medium-sized enterprises reached at least a basic level of digital intensity. This means that for almost two out of three companies (i.e. 60%) digital infrastructure remains a problem. We are talking about 206 thousand companies, less than 5% of the total number of active companies, which alone contribute to more than 41% of the entire turnover generated.
Yes, because it is not enough to have digitised online sale processes, to ensure a real transition it is also necessary to take care of production and administrative processes and the management of human resources and legal aspects. Even in terms of the integration of digital technology integration and digitalisation paths, small and medium-sized enterprises seem to be stuck. There are considerable delays, especially in the area of web presence, Big Data and technologically advanced infrastructure.
What is needed, therefore, is a greater driving force. Only then will it be possible to achieve Goal Number 9 of the 2030 Agenda, i.e. to build resilient infrastructure, promote sustainable industrialisation and foster innovation. Italy is clearly lagging behind. This is unfortunate given that, according to an estimate prepared by the European Commission, the value of the data economy will go from 2.4% in 2018 to 5.8% of EU GDP in 2025, for a total of 829 billion euros. The number of digital professionals is also expected to increase, almost doubling, with 10.9 million experts in 2025 compared to 5.7 in 2018.
At this point, ignoring the role of digitalisation as an opportunity for achieving a long-term sustainable paradigm is unthinkable.
SMEs are not investing in digital training
The health crisis caused by Covid-19, as mentioned, has certainly provided momentum. In fact, during the months of the pandemic, digital technology was the only tool for SMEs to ensure business continuity, a necessary condition to remain competitive and thus survive. While SMEs have accelerated some aspects of digital transformation to streamline resources, reduce costs and ensure working flexibility, they lacked a strategic approach and a long-term vision. This can be seen in the ability to take advantage of digital marketing and communication media. According to the report prepared by ISTAT, 80% of companies say they have their own web platform, but very few have optimised it and made it function effectively. And even though the pandemic has seen a 50% growth in the use of e-commerce platforms, SMEs still stand at a significantly lower figure than the European average (17.5%). This happens because the predominant trend sees SMEs turning to third parties. Consequently, there is no effort to develop propriety platforms for the creation of which economic resources, in-house digital skills and the ability to adapt business structures and processes are lacking.
Where does the underlying reason for this situation lie? Alessandro D'Arpa, Chief Product and Data Officer and Board Member of Credimi, a company that acts as a financial intermediary supervised by the Bank of Italy, asked: “According to the DESI (Digital Economy and Society Index), the index created by the European Commission to track the progress of EU countries in terms of digital transition, the digitalisation of SMEs in Italy is at levels below the European average, even if in 2021 it ranked 20th out of 27 EU member states, compared to 25th in the previous edition. One of the country’s knots seems to be skills: in the DESI 2020 Italy was last on human capital, and this year ranks 25th out of 27 States. Only 15% of Italian companies provided ICT training to their employees, five percentage points below the EU average”. Lack of training leads to lack of skills, which in turn leads to poor use of digital solutions in the company. Digitising processes means above all simplifying, automating, dematerialising, adopting data-driven processes, optimising, saving money and gaining competitiveness by bringing digitisation into one’s decision-making and organisational processes. But it cannot be done without people who have been trained and are increasingly familiar with new technologies.
Benefits of digitalisation
The digital revolution, therefore, brings potential and numerous benefits for both companies and workers. Just think of solutions such as smart-working and videoconferencing that have made it possible to minimise business travel and thus reduce transportation emissions. By automating a large part of their routine, workers can enjoy more free time and significantly improve the work-life balance. The growing evolution of digital technologies represents advantages in terms of competitiveness, productivity and efficiency. Automated machines minimise errors and help reduce waste.
Therefore companies, even the smallest ones, should take advantage of digital tools to become more competitive and grow, even if they sometimes do not seem to affect business objective. “Data, in fact, show that this is not the case,” underlines D’Arpa. “Analyses by the Osservatorio Innovazione Digitale Nelle PMI (Digital Innovation Observatory in SMEs) of the Politecnico Institute of Milan show how digitally mature companies achieve better economic-financial performances: on average +28% of net revenue, +18% of profit, +11% of EBITDA.” Thus, going along with Goal 9 of the 2030 Agenda means building resilient infrastructure, promoting inclusive and sustainable industrialisation and fostering innovation.
SMEs: next steps towards digitalisation
To bring Italy’s small and medium-sized enterprises in line with the rest of the world by 2030, resources will have to be deployed efficiently and intelligently, and clean and environmentally friendly technologies and industrial processes that are capable of valuing labour and workers will have to be encouraged. “Now is the time for SMEs to ride the digital wave and change pace: in fact, the opportunities offered by the Italian Plan for Recovery (PNRR) will be an important guide for companies throughout 2022,” concludes D’Arpa. “In the next few months, the PNRR – which joins the Fondo Complementare – will provide Italian companies with nearly 50 billion euros to invest in digital infrastructure with the aim of helping them embark on a path of technological evolution and succeed in being more competitive in the market. This is why SMEs in Italy must also commit themselves to take up this challenge and to bring digitalisation to every area of the company; from online presence to administration and human resources, to the management of legal aspects, to cash flow and budget management, to financing, and digitalisation of production lines.”
Specifically, in order to encourage this digital process, SMEs will have to focus on optimising internal processes and fostering and making data and information collection and management more efficient. Data management becomes central, as well as real traceability of processes, to gain a strong competitive advantage. The data and the tools put in place to analyse it allow drawing important insights that translate into concrete strategies.