Addressing the challenges of the Digital Transition in National RRF plans

• December 22, 2022
• neelam

The working paper, requested by the ECON Committee of the European Parliament, considers initiatives funded by the Recovery and Resilience Facility to support  SMEs in the digital transition. It concludes that while there are  many areas of good practice, risks remain due to the lack of outcome-based targets, the complexity of some schemes and relatively low levels of funding in relation to the ambition in some cases.

Introducing targets based on (preferably harmonised) skills frameworks and digital maturity assessments could help establish the value add of initiatives to support SMEs. Digital technologies are an important driver of economic growth. They can improve internal business processes and support development of products and services, including breakthrough innovations, as well as supporting businesses to expand in new markets and/or new geographies.

The European Commission’s DESI index, which measures digital intensity of businesses in fields such  as the use of e-commerce, cloud services and artificial intelligence (AI), shows that there has been progress in certain countries, but gaps remain and improvements have been gradual, particularly amongst SMEs. For example, in 2021 only 18% of EU SMEs were selling online and 14% of EU enterprises  (of all services) were making use of big data. This falls far short of the Digital Decade targets which  require that more than 90% of European SMEs should reach at least a basic level of digital intensity,  and 75% of EU companies should use cloud, AI and big data.

Initiatives to support digitisation of SMEs under the RRF

The Recovery and Resilience Facility (RRF) aims to provide funding to support initiatives which address this gap. The 26 plans that have been approved thus far contain measures worth €24 billion to support the digitisation of business with a further €18 billion supporting digital-related R&D and the deployment of digital capacities. Some Member States have devoted significant resources via their Recovery and Resilience Plans (RRPs) to business digitisation. 

An examination of the RRPs in 6 Member States reveals several examples of good practice, including:

• Providing “Digital Maturity” Assessments to SMEs and establishing a skills framework 
• Setting concrete outcome-based targets with reference to improvements in digital maturity  and skills and committing to produce an independent report on the achievements of the digital strategy 
• Establishing European Digital Innovation Hubs as a “one-stop-shop” for a range of support to SMEs
• Digital transition and innovation in the production system 
• Initiatives covering multiple facets of support to SMEs and targeted support for quantum computing research
• Establishing a “steering group involving SMEs” to advise on a new Digital Strategy