Local SMEs investments in technology last year, the lowest in the EU, study says

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The European Commission published at the end of June the 2020 edition of the Digital Economy and Society Index (DESI), an annual study that assesses Europe’s digital performance and tracks the evolution of EU member states in digital competitiveness. Romania was ranked 26th out of 28 Member States, based on five key criteria – connectivity, human capital, use of internet services, integration of digital technology and digital public services. Despite its strong IT sector and vital technology start-up scene, Romania still lags when compared with other EU member states on all the possible fronts, that include the digital adoption of both the private and the public sector.

The results of the study, although alarming, do not come as a surprise to entrepreneurs who run technology companies. Most of the Romanian technology companies develop products for foreign markets or target large multinational companies that understand the value-added of advanced technological solutions. It is a paradox that Romania is renowned for its IT experts, but at the same time, many local SMEs are resisting the digital transformation. Digitalization should be considered an investment and not an expense. In some cases, it is not even possible to talk about investment, because it is simply a matter of using digital services. Indeed, the use of these services sometimes requires internal transformations to adapt to automated processes. However, our experience, gained from the collaboration with companies of all sizes, showed us that a company could recover in less than a year the investment in internal reorganization needed to use a digital invoicing platform,” said Liviu Apolozan, founder of DocProcess.

In digital public services and use of internet services, Romania took last place in the EU. For the integration of digital technology, which includes the adoption by local companies of digital solutions, Romania ranked second to last. The study highlighted that only 23% of Romanian companies share information electronically, compared to 34% EU average, while only 8% use social media (EU average: 25%). As of 2019, 11% of Romanian SMEs were engaged in online sales, and only 5% of the total turnover was generated through e-commerce, compared with the EU average of 11%. Additionally, Romanian SMEs were noted as a country that made the smallest investments in technology in 2019.

The DESI study underlined that Romania does not have a national digital transformation strategy for enterprises and that targeted measures are needed to support the digitization of SMEs and raise awareness on the relevance and benefits of adopting digital technologies. The assessment was based on 2019 data, thus before the COVID-19 pandemic, which highlighted the crucial importance of citizens’ digital skills and digitization of the economy.

In the first half of 2020, the demand for digitization services provided by DocProcess increased compared to the same period last year.  DocProcess points out that following the outbreak of the pandemic, a significant increase in the discussions on the process of digital transformation has been seen, especially in the public sphere, however many focused on theory, not on suitable solutions. DocProcess helps local companies and international corporations eliminate paper and repetitive manual work through the development of digitalized solutions that help move the acquisition and sales, logistics processes or contract management online.

The biggest obstacle in the process of digitalization in Romania remains the concern that the investment in the digital transformation will not be returned. Nonetheless, in 2019, DocProcess has concluded a case study on one of its clients, Cora, retail brand operating network of supermarket din Romania. The study showed that the company saved 150,000 euro in 18 months by moving 93% of its suppliers to electronic invoicing. Apart from the saving, the move to eInvoicing resulted in 100% accurate invoices thus reducing the mundane tasks of the financial department staff, faster payment to suppliers, real-time access to information about the cashflow status as well as more accurate legal reporting and faster VAT reimbursement process with the local authorities.

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