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Digitalisation of SMEs: Let's take a step and be quicker!

SMEs in Croatia are lagging behind in digitalisation, according to data presented by the Croatian Employers’ Association in November 2023. Referring to the European Commission’s report ‘Europe’s Digital Decade: The Croatian Employers' Association (HUP) has warned that Croatian small and medium-sized companies – the engine of the economy and the generator of a large number of jobs – must enter the digital age more forcefully if they are to remain competitive.^[1]

How to catch up today with new technologies that are changing the economy, public administration and society and harness them to create new value? Are smaller companies in Croatia ready to use them for growth? How can we become more involved in the economy of the future?

There is no simple recipe, except for the well-known principle that those who are educated and transformed in time have a greater chance of success.

Digitalisation is expensive and inaccessible – or not?

The most advanced IT solutions are often designed for large companies and systems, which are also the largest buyers of such products. Such solutions are usually too expensive for small organisations and do not meet their needs. That is why they cannot be the answer to the complex question of the digitalisation of small and medium-sized enterprises.

Creating and maintaining custom software is also not cheap. Investment in tailor-made software is a large item in the expenditures of a smaller enterprise and a public institution. As a general rule, owners and directors decide on this expenditure only when they are satisfied that it will bring them concrete and long-term benefits. This is often preceded by a long evaluation process. It sometimes ends up giving up investment in digitalisation and directing money to other areas of business.

However, this does not mean that SMEs do not have the options and models through which they can make significant progress in digitalisation and become more involved in the digital economy today.

**Free testing and learning through freemium models**

A McKinsey survey concluded in November 2022 showed that in the most developed market, that of the US, more and more small and medium-sized enterprises, more than 20 percent of them, are experimenting with freemium models of digital products and services. In the case of micro-entrepreneurs with only one person employed (solopreneurs) that share is even higher, and it amounts to 30 percent.^[2]

Through freemium the model, companies use the basic functionalities of the software solution free of charge, while the more advanced ones are available to them against payment. This avoids the initial cost and contractual obligation and gives them the opportunity to learn and understand how the tool could fit into their business process. They also have room to assess the potential benefits. Even if in the end they do not introduce it into the business, but the process of evaluation and testing of software brings new insights and knowledge, and strengthens the company's capacity for digitization.

generative AI – probably the biggest technological breakthrough of the last 10 years – can also be tried by almost anyone today, precisely through: freemium model. It is enough to create a free user account on one of the main manufacturers' services (Google, OpenAI). Most will quickly identify possible uses in their own workplace.

Increasing Availability freemium The model for different digital services is also an opportunity for Croatian businesses and public authorities to get even more involved in their testing. Through this process, they will gain a better picture of how to use them to improve productivity, marketing activities, customer relationships and other business spheres.

Ready-made SaaS solutions for many business processes

Today, a number of ready-made solutions are available on the market for the digitalisation of various business needs. Some examples are tools for running communication campaigns via email and messages, simpler CRM systems, job planning applications, project management, productivity, etc.

These tools are generally user-friendly and address the increasingly complex needs of organisations. They do not require complex integrations or specialist knowledge and can be deployed relatively quickly in operations. For the most part, they can be mastered without education. They are most commonly available in the SaaS model (Software-as-a-Service), meaning that they are consumed in an easy way via the internet, with a username and password. The price is sometimes related to the dynamics of use, and they can often be tested before purchase in freemium model. They can be compared to competing solutions through publicly available ratings, comments and experiences of other users.

SaaS tools also bring with them obligations in terms of security, privacy and data retention, so in order to access such solutions, in addition to the username and password, a second verification factor is often introduced, which protects the system from unauthorized access. Finished SaaS tools are also an opportunity for advancements in digitalization, both through process improvement and productivity, as well as through strengthening the digital skills of employees.

Education and support: Take advantage of everything you have to offer

It should also be borne in mind that the governments of European countries, as well as the European Union, strategically support the digitalisation of the small and medium-sized economy and public administration. With quality preparation, it is possible to qualify for various forms and levels of education, but also favourable lending and (co-)financing of digital transformation projects.

Free education available through the EDIH Adria consortium are intended for small and medium-sized enterprises and public administration in Adriatic Croatia. It will be held throughout 2024 and will be led by experts from Ericsson Nikola Tesla and Infobip, as well as from the University of Rijeka and the University of Pula. The training will cover several expert levels. The topics confirmed so far are artificial intelligence, cyber security and many others. Ericsson Nikola Tesla and Infobip, global technology leaders in their respective fields, as part of the EDIH Adria consortium, are holding trainings based on extensive experience and learning through practice. The content of the trainings is adapted to the needs of small and medium-sized enterprises and public administration in Croatia. The trainees will try to get closer to how to approach a specific problem in digitalisation and how to find a solution that suits the situation, with concrete and quickly applicable advice.

Test before invest is also a free service that can be obtained from the EDIH Adria consortium. It is the central activity of the consortium, and it functions as a support in the digital transformation of the public and private sectors in Adriatic Croatia. It allows companies and organisations to check, before investing in new technology in a structured way, whether it will create new value and improve their business. In doing so, the knowledge, expertise and equipment of the consortium members shall be used, and the approach shall be adapted to the needs of each organisation and its long-term objectives.

To reach the EU average, as many as 1,200 small and medium-sized enterprises would need to be digitalised to a very high level in Croatia, the HUP estimated. This means that they should use six or more technologies in their business, and more than 4000 implementations would be needed.^[3]

Do not let your company and organisation lag behind. Get even stronger into a modern digital economy – check out how you can use the services of the EDIH Adria consortium and contact us today!