NOTESME interest in technology grows, so does barriers: WEF

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ANILA – The Covid-19 pandemic has increased

interest of small and medium sized enterprises (SMEs) in digital technology, but numerous barriers prevent them from adopting technology needed to overcome pandemic-related challenges, according to a recent World Economic Forum (WEF) report.

A new survey conducted by WEF found that despite increased awareness of the importance of digital technology, many SMEs admitted to either suspending their digitalization plans or having no plans at all to implement them due to financial stress.

Only 23 percent of

SMEs said the pandemic accelerated their digitalization goals, indicating that significant barriers continue to hamper the adoption of digital technology, the paper said.

The barriers include limited availability and access to financial resources, lack of a skilled workforce, and infrastructure barriers to support digitalization.

“In general, SMEs’interest in digital solutions is growing. Agility and flexibility in operations have emerged as top priorities above raising productivity and minimizing costs, which used to be the primary objective for most businesses. In addition, technologies that enable remote work and collaboration topped the list of priorities for digital technology use cases,” the whitepaper added. Challenges

The survey of 141 SMEs from six countries (Azerbaijan, Brazil, Colombia, Kazakhstan, South Africa, and Turkey) showed heightened demand among SMEs to integrate digital technology in business operations, particularly related to the industrial internet of things (IIoT), cloud computing, big data and artificial intelligence.

Most SMEs expressed interest in deploying technology to optimize processes, ensure safety and security, facilitate quality management, and manage workforce training and collaboration.

“SMEs represent more than 90 percent of all companies globally and are the primary drivers of social mobility, creating seven out of 10 jobs. Unfortunately, these companies are struggling to embrace the Fourth Industrial Revolution (Industry 4.0). Larger businesses (with more than 500 employees) are six times more likely to use the industrial internet of things than SMEs. This risks exacerbating economic inequality, stifling opportunities for social mobility and dragging down global industrial productivity,” the whitepaper released this month said.

Remote work is the most prominent change in the way of doing business due to the pandemi c.

WEF said that a combination of on location and remote working is likely to become a permanent feature the longer the crisis lasts. This increases the urgency for SMEs to embrace digital technology to adapt to the new reality, while attracting talent and remaining competitive.

But most SMEs are still at the low to moderate level of technological maturity, which prevents companies from fully benefiting from digital technologies, limits the potential return on investments of digitalization, and discourages widespread digitalization, the report obser ved.

The most common challenge to digital transformation cited is financial constraints. Uncertainty in the business environment has led SMEs to focus more on short-term objectives and plans and on dayto-day operations and sur vi val .

“The Covid-19 crisis has forced companies to divert funds to other areas such as health and safety, and employment protection,” the paper sai d.

Exacerbating this issue is a continued lack of access to financing for SMEs, 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.

Majority of respondents mentioned skill gaps in a wide range of areas, such as big data analytics, robotics technicians and information technology managers.

In addition, SMEs are facing tough competition from larger companies in attracting worker s.

Infrastructure barriers noted include challenges relating to internet access and speed and a lack of availability of adequate data centers, especially in rural and remote regions.

Respondents also highlighted the lack of availability of digital solutions in the domestic market, exacerbated by the lower level of research and development and innovation compared to advanced econ om i es.

Moreover, many SMEs are now focusing on local markets, which feature less intense competition compared to the global market.