In a digital era paradigm shift, an overwhelming 85% of European small and medium enterprises (SMEs) are deeming digital technology indispensable for their growth strategies, according to a comprehensive report by Sage titled ‘Empowering SMEs in The Digital Decade: The 600 billion EUR opportunity.’ This study highlights that 84% of SMEs recognize the pivotal role of technology in enhancing operational efficiency and cost management.
Reflecting an optimistic stance toward cutting-edge technologies, 34% of SMEs have already embraced Artificial Intelligence (AI), marking a significant surge from the 8% recorded in 2021. Additionally, 80% of SMEs express confidence in the potential benefits of implementing a digital ID system.
Despite successful digital initiatives, barriers to widespread adoption persist. On average, European Union SMEs increased tech investments by a modest 16% over the past year, with financial constraints limiting this figure to 9% for certain businesses. Late payments continue to be a significant challenge, with cash flow and liquidity concerns ranking second only to rising costs as growth impediments.
The research underscores the potential for SMEs to catalyze a high-growth digital economy with the right policy framework and support. Accelerating digital transformation, especially for slower-to-adopt SMEs, could contribute a substantial €628 billion to the European economy. These findings emphasize the need for strategic policies and financial assistance to empower SMEs in navigating the digital landscape and unlocking their full economic potential.