The Digital Profile of Greek SMEs (February 2016)
The degree to which digital technology is adopted and used has become, at the international level, a basic component of competitive advantage for enterprises. According to the Digital Economy Index produced by NBG's Economic Analysis Department, Greece lags substantially behind the European average – with the divergence remaining roughly the same over the past 5 years (36 per cent below the EU average). Specifically, the broad factors affecting the technological upgrade of the economy (business environment, infrastructure and human resources) are less supportive than the European average – with the human resources component presenting the biggest gap. As a result, the use of digital technology by all types of users lags behind the European average.
Focusing on the apparent weak link (the business sector), our analysis highlights the fact that by upgrading its digital profile a company can gain competitive advantages, both in terms of sales and in terms of profitability. Specifically, according to a questionnaire sent to a sample of 1,200 SMEs, enterprises that invested in digital technology in the past 5 years mitigated the decline in turnover in the period 2008-2014 by circa 18 pps and posted smaller loss of profitability (4 pps drop in profit margin vs. 13 pps in the rest of the segment).
An examination of the digital footprint of Greek SMEs shows that one in three enterprises does not use any digital tool (neither for improving internal operations and production processes nor online tools for enhancing communications with customers and suppliers, e.g. e-commerce). Likewise, digital upgrade in Greece seems to be still in its infancy, as only 4 per cent of enterprises possess an integrated digital system (i.e. an effective combination of the aforementioned digital tools), while 25 per cent of enterprises (⅓ of those that have at least one digital tool) state that they simply have a website or presence on social networks.
There is a significant digital gap between medium and micro enterprises, while significant differences are found in digital development across the sectors which are not all in line with their structural dynamics (given the average digital profile in Greece):
- As regards use of IT systems for the internal organization of the enterprise (ERP – Enterprise Resource Planning), the transport sector presents notable dynamism, while manufacturing presents a relative lag.
- As regards the availability of online transactions (e-commerce), the trade sector (mainly wholesale) shows dynamism, while hotels present a relative lag.
Positively, Greek SMEs have realized their position and plan digital investments which would bridge part of the gap with Europe. Specifically, based on planned investments, we estimate that the percentage level of digitally advanced SMEs will rise to three out of four enterprises in 2018, from two out of three today. If this forecast materializes, it will likely enable Greek enterprises in 2018 to reach the current digital levels of the average European enterprise. Specifically, it is estimated that 22 per cent of Greek SMEs will be using a basic ERP system in 2018 (vs 9 per cent in Greece and 36 per cent in the EU in 2015). Similarly, it is estimated that 16 per cent of Greek SMEs will be offering e-commerce options to customers in 2018 (vs 10 per cent in Greece and 17 per cent in the EU in 2015) – with the most impressive improvement expected in the hotel segment.