It's not easy to assess the digital maturity of SMEs in Luxembourg. Some major surveys, such as the Digital Economy and Society Index (Desi) and the Digital Decade report, produced in the various countries of the European Union, present performance indicators around major themes linked to digitalisation. They provide information, for example, on the percentage of SMEs with at least a basic level of digital intensity, in other words, those that use at least four of the technologies considered key by the European authorities.
In Luxembourg, 57.8% of SMEs (according to Desi 2024), or just over one in two, have this 'basic level of digital intensity'. This is better than a few years ago. The country has in fact caught up with the European average (57.7%). In the Desi 2022, the proportion of companies with a basic level of digital intensity was 54% (compared with 55% for the European average). And if we go into more detail? The adoption of cloud services by businesses in Luxembourg, for example, is rising, reaching 32.6% in 2023. This is well below the EU average (38.9%). The positive annual growth in cloud adoption, at 6%, is also slightly below the EU average (7%).
On the other hand, 32.4% of Luxembourg companies said they were using data analysis approaches. In this respect too, the country lags behind the rest of Europe (33.2%). In terms of AI, by 2023, adoption by companies in Luxembourg had risen to 14.4%, with average annual growth of 5.2%. On this subject, Luxembourg companies seem to be ahead of the game, with the European average standing at 8%. However, these results still fall far short of Europe's ambitions in terms of digitalisation. The ambition is for this 'basic level' to be achieved by more than 90% of SMEs by 2030, and for three out of four businesses to be using advanced technological services such as the cloud, big data and artificial intelligence. Currently, 52% of businesses use these three technologies, which is below the EU average (54.6%).
Everything to digitise
On the ground, there are widely varying levels of maturity from one company to another, across all sectors. These indicators show that the main focus of our efforts today must be on technology adoption. If we look at the other components needed to support the digital transformation of the economy, we see that Luxembourg has everything it takes to move in this direction. When it comes to deploying digital infrastructures and cutting-edge connectivity - the fibre network, the 5G network, data centres - Luxembourg is a top performer, far ahead of other European countries. Digital skills are more widely acquired among the population than in other European countries.
Information and communication technology specialists account for 8% of employment, which is well above the EU average (4.8%). "We realise that in terms of connectivity, skills and expertise, Luxembourg has all the ingredients to enable the country's economic players, whether manufacturers or commercial or craft businesses, to carry out a high-quality digital transformation," comments , senior advisor and digital community coordinator at Luxinnovation. "However, for many business leaders, the concepts of transformation and digital maturity sometimes seem far removed from their day-to-day reality.”
The Digital Innovation Hub (L-DIH in Luxembourg), managed by Luxinnovation, plays a key role. It is at the forefront of developments in the digitalisation of industrial companies. Thanks to its digital maturity assessment service, it enables companies to identify their strengths and weaknesses and to develop appropriate strategies to accelerate their digital transformation. The numerous efforts made by the Ministry of the Economy, federations and professional chambers to encourage SMEs to go digital have not borne fruit.
"Managers are aware of the importance of technology to their development. They know that it is an essential lever for improving their competitiveness and productivity," said Rémi Grizard, SME performance advisor at Luxinnovation. "Many of them are also becoming aware of the risks involved in not getting involved in a transformation process when their competitors are not hesitating to invest."
Inspiration and concrete action
"It's important to understand these obstacles, so that we can better plan how to overcome them", says Sanitas. "The main challenge is to show companies what this can do for them in concrete terms, through examples and case studies. We can't advocate digital technology by force, applying the same approaches everywhere. No two cases are the same. That's why it's important for managers to stop for a moment and take advantage of an outside perspective, which can show what can be done and how other companies have been able to take advantage of technology. It's all about inspiration, support and guidance. At the end of the day, it's all about making sure that the manager can find their way around.”
While the concept of AI is much talked about and has significant potential for transformation, the technology will only be implemented if managers understand what it can do for them. More basic solutions, far from the latest buzzwords, should enable every company to easily reap productivity gains or evolve more effectively within their market.
"The concept of digital transformation covers a huge number of areas. The introduction of integrated management software, for example, should make it easier to monitor projects, from the drawing up of a quotation to its invoicing, avoiding, for example, having to re-encode the same data multiple times. In this way, we can save precious time and access performance indicators that make it easier to manage the company", stated Grizard. "We could also mention the advantages of implementing a digital marketing approach, to attract more customers or reduce acquisition costs. Beyond that, AI can help automate many processes. But we need to find the right use cases, to enable the company to reap the benefits." Throughout the year, the L-DIH organises webinars highlighting Luxembourg's expertise in this field and helping to raise awareness among senior managers of the opportunities offered by digital transformation.
Setting priorities
Faced with all these possibilities, getting to grips with digital transformation means setting priorities. To help business leaders make the commitment and take advantage of digital technology, government-funded support programmes are available.
This is the case with Fit 4 Digital. Through this programme, SMEs have access to an adviser who can assess the company's digital maturity, so that they can be better guided in their approach. Thomas Bilocq, managing partner of Vecter, has been a Fit 4 Digital-certified consultant for a number of years.
"In SMEs, managers and employees are involved in operational matters. They often don't have the time or the necessary distance to consider the possibilities offered by digital technology. This is currently the biggest obstacle to digitalisation", says the consultant. "In a difficult economic climate, they face a number of challenges. Digital technology should enable them, if not to do more, at least to do better. In other words, it's about putting in place solutions that contribute to the company's efficiency, improving results without necessarily mobilising more resources or effort. The other major aspect concerns boosting the visibility of online players, in order to attract new customers. In many cases, the investment is quickly recouped.”
The main challenge is to show the company what this can actually do for them.
A virtuous circle
As part of a Fit 4 Digital support programme, the advisor will take the time to work with the manager and his teams to understand the SME's business and its processes, and to identify any areas of friction. "In two days, more often than not, we can take a fresh look at all the elements involved, so that we can project ourselves more effectively. Based on the elements identified and the company's challenges, it is then possible to propose solutions and plan their implementation to enable the business to move forward more effectively", said Bilocq. "In addition to identifying solutions and integrating them into the company's environment, it is also important to ensure that the change process is supported, by adapting processes and ensuring that everyone is involved in the transformation process.”
Once launched, the dynamic often leads to the implementation of successive projects, as part of a continuous improvement approach. In this way, businesses can gradually increase their digital maturity and boost their performance.
33%
An analysis report by the Observatoire de l'entrepreneuriat entitled “La transformation digitale des PME au Luxembourg (2022)”, released by the Chamber of Commerce and the University of Luxembourg, reveals that "digital transformation" is "a major priority" for 33% of businesses and "a normal priority" for 40% of them. For 15%, it is still not considered a priority.
Measuring "digital intensity
The Digital Intensity Index (DII) is a statistical measure developed by Eurostat to assess the level of digital adoption among businesses in the European Union. It ranks companies according to their use of the main digital technologies, based on various criteria. The criteria and technologies concerned are as follows:
These criteria include:
- use of social media;
- the use of a website;
- use of cloud computing services;
- employing ICT specialists;
- the use of ERP;
- the development of e-commerce;
- the use of AI;
- big data analysis;
- deployment of customer relationship management (CRM) software;
- the integration of advanced digital tools and technologies.
A basic level of digital intensity involves the use of four of these technologies. In particular, the aim is to support the use of the cloud, data analysis and artificial intelligence.
Reasons for taking the plunge
There are many reasons to embark on a process of digital transformation. However, for more than 60% of companies, the main motivation is to improve organisation and working methods (collaboration, teleworking, improved processes, etc.).
Reducing costs (for one in two companies), boosting market visibility and acquiring new customers (for 50%), improving customer knowledge (+/- 45%), improving communication and internal knowledge management (+/- 25%), and developing new services (just over 20%) are also cited as reasons for going digital. It is also interesting to note that sustainable development seems to be a growing factor among the reasons for digital transformation, with 15.58% of companies mentioning it.
While the reasons for embarking on this path seem obvious, it is worth asking what are the main obstacles to the transformation of SMEs. If we listen to the managers, the ones most often mentioned are: costs, complexity, incompatibility of processes, lack of skills, security and regulations, change management, etc.
This article was written for the small- and medium-sized business supplement published with the released on 11 December 2024. .
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