Small and medium-sized enterprises (SMEs) are the backbone of the European economy. They account for 99.8 per cent of all companies, generate more than half of the added value and employ nearly two-thirds of the private sector workforce. In an era of global competition and rising customer expectations, digitalisation is no longer an option for them – it has become a condition for survival. However, the latest data from across the European Union paints a worrying picture: while large corporations are departing on the digital express, the SME sector is largely still waiting on the platform.
An analysis of the adoption of the three pillars of modern business – cloud computing, artificial intelligence (AI) and cyber security – reveals a deep and widening gap. This ‘digital maturity gap’ threatens not only the competitiveness of individual companies, but also the achievement of the EU’s ambitious strategic goals, known as the ‘Road to the Digital Decade’.
Two-speed Europe: who is the digital leader and who is being left behind?
To understand the real level of digitalisation, it is not enough to see if a company has access to the internet. The key is how deeply technology is integrated into its business processes. This is measured by the EU’s Digital Intensity Index (DII), which assesses the use of 12 key technologies.
Only 58% of SMEs in the EU have reached a ‘basic level’ of digitalisation, which means using at least four of these technologies. This is a far cry from the EU’s target that more than 90% of companies in the sector should reach this threshold by 2030.
The map of Europe shows a clear division. The Nordic countries are at the head of the peloton, with as many as 86% of SMEs meeting the criteria for basic digitisation in Finland and 80% in Sweden. At the other extreme are Romania (27%) and Bulgaria (28%). Poland, with a score of 43% (data for 2022), is well below the EU average, which signals systemic barriers inhibiting the potential of our companies.
The problem is the difference between ‘being online’ and ‘being digital’. Almost all companies in the EU have broadband, but they often use it passively – for email or social media profiles. The real transformation begins when technology becomes an integral part of the operating model, not just a facade.
Cloud computing: a foundation that shows cracks
Cloud computing is today the cornerstone of flexibility and scalability. In 2023, 45.2% of businesses in the EU will be using it, a steady but slow growth. However, the devil is in the detail.
The biggest challenge is the ‘cloud gap’ between companies of different sizes. While 77.6% of large corporations are actively using the cloud, the figure for small businesses drops to just 41.7%. This is a gap of more than 35 points, showing that SMEs still face barriers to accessing this fundamental technology.
Moreover, companies that are already in the cloud mainly use it for basic tasks: email handling (82.7%), file storage (68%) or office software (66.3%). They are much less likely to use advanced services such as developer platforms (PaaS) or computing power (IaaS), which are essential for building innovation.
The conclusion for managers is simple: the cloud is not just a storage facility for data, but first and foremost a launch platform for AI. Companies that do not invest in a mature cloud infrastructure today will have a double barrier to overcome tomorrow to enter the world of artificial intelligence.
Artificial intelligence: the technology that divides most
If the cloud shows the cracks, artificial intelligence reveals the real divide. Despite the huge interest, AI adoption in European companies remains alarmingly low, at just 13.48% in 2024. This is a result that is dramatically far from the EU target of 75% for 2030.
“The AI implementation gap is gigantic. Artificial intelligence is used by as many as 41.17% of large corporations, but only 11.21% of small companies. This means that large companies implement AI almost four times as often. Poland, with a score of 5.9%, is at the grey end of Europe, ahead of only Romania (3.07%).
Why is the gap so deep? Cloud deployment is often a decision to optimise costs. AI implementation is a strategic investment with an uncertain return, requiring not only capital, but above all competence and a mature data management strategy – resources that SMEs often lack.
If this trend continues, AI, rather than levelling the playing field, will become the ‘great divider’. This could lead to a ‘winner-take-all’ scenario, in which large, data-rich corporations, thanks to AI, will become even more powerful, marginalising smaller players.
Cyber security: the paradox of risk in the SME sector
On paper, the situation looks good: 92.76% of companies in the EU use at least one ICT security measure. However, these are mainly basics, such as strong passwords or data backup. The real picture of digital resilience emerges when we look at proactive measures.
A regular ICT risk assessment – the cornerstone of any mature security strategy – is carried out by only 34.1% of companies in the EU. The difference between large (75.62%) and small (29.35%) companies here is colossal. This means that most SMEs are operating ‘blindly’ without fully understanding their attack surface.
This leads to the ‘SME digital risk paradox’. On the one hand, small businesses are increasingly being targeted, seen as ‘easier prey’ and a gateway to the supply chains of larger partners. On the other hand, they invest the least in strategic defence, mistakenly believing that they are too small to attract the attention of cybercriminals. In the connected economy, SME security becomes a security issue for the entire ecosystem.
How to bridge the digital divide?
Passivity is no longer an option. To survive and compete in the digital decade, SME leaders must take decisive action.
It makes sense to start with strategy, not technology. Before you invest in any tool, define the key business problem you want to solve. Is it increasing sales, reducing costs or perhaps improving customer service? Only then select the right solution.
Use the cloud as a foundation. Migrate core systems (email, files, accounting) to the cloud. This will not only free up resources and increase security, but most importantly create a centralised database – a prerequisite for future AI implementations.
Invest in people, not just platforms. The best technology is useless without a competent team. Take advantage of available EU and national programmes (e.g. Digital Skills and Jobs Coalition, SME4DD) to upskill staff in data analytics, digital marketing and cyber security.
Think security from the outset. Treat cyber security as an integral part of any digital project, not an expensive add-on. A proactive approach is always cheaper and more effective than reacting to a crisis.
