Digitization Obstacles

Digitization Obstacles

German small and medium-sized enterprises are a crucial part of the German economy. However, they are lagging behind in the area of digitalization. What is hindering the change and what are possible solutions?

German medium-sized businesses are especially faced with major challenges in terms of digitizing their business processes. According to a study only 8% out of 2095 companies of these sizes do not see any further challenges in the implementation.

The challenges to be overcome are manifold. At the top of the list of challenges is the volume of investment expenditures, which plays a role in 36% of the cases. Other challenges are ensuring data protection and IT security (both 31%), lack of time (29%) and technical integration into existing IT systems (28%).

At the same time, there is often a lack of know-how, especially on the side of the company staff. Only 34% of employees are sufficiently qualified to tackle digital transformations. As a result, 37% of the companies are now investing in developing the digital skills of their employees.

One further problem area is the lack of an error culture, which forms a crucial foundation for a flexible new development. Nevertheless, 56% of the companies surveyed are aware of this fact. As a result, they are working on the implementation of this concept.

External factors also contribute to the current state of digitization in Germany. The broadband expansion has been missed in Germany. In an international comparison, Germany is trailing behind in 31st place far away from other European countries like Romania, Hungary, and Sweden which are in the top 10.

Furthermore, there is a shortage of skilled workers, especially in the digital areas. 352 out of 801 professions are currently confronted with a shortage of qualified personnel. Currently, an attempt is being made to address these external factors, e.g. the Skilled Workers Immigration Act, which facilitates access to the labour market for qualified skilled workers.

In the next weeks, we will be taking a closer look at the individual branches and the role of a company´s size when it comes to this topic.