Digimeter: the digitalization of domestic SMEs appears to be stopped
21. 01. 2022.
After 2020, the Digimeter measured the digitalization of Hungarian small and medium-sized enterprises (SMEs) again this year. The value of 40 in the main index (on a scale of 100) has not changed, there has apparently been no significant shift from last year. However, looking at data in-depth, we can be aware of several small discrepancies that can be a prelude to longer-term changes.
Domestic digitalisation is characterized by a strange duality: while employees and business leaders use state-of-the-art digital tools and services as individuals, they often lack them at work. There are exceptions, of course, which is why the consortium behind the measurement launched the Digimeter Award in 2021 to highlight examples to follow.
Among the sub-indices covering 6 areas, the outstanding change in the digital presence is that the proportion of people with a Google My Business has increased significantly (from 16% to 30%), while the proportion of companies using a customer service chat or chatbot has decreased (from 17% to 8%). And when measuring the IT security sub-index, it was found that more and more companies use VPN (24% instead of 19%).
The Digimeter digital “meter bar” examined the digitalization of companies in 6 areas with nearly 50 questions (digital presence, digital everyday life, business management, sales and marketing, digital finance, IT security) in the same way as last year. The hybrid, online and telephone data collection conducted in August-September 2021 paints a nationally representative picture of the domestic situation based on the responses of 757 Hungarian SMEs.
Main index stability
The most striking component in the Digimeter results is the lack of change. The stability of the main index also surprised the creators of the measurement, who expected that the development of domestic companies in the studied areas would be felt, albeit to a small extent, year by year. The most likely explanation seems to be that the 1,5 years behind us was also special in the lives of SMEs. After March 2020, most companies went through forced digitalization, introducing several innovations (such as trying out new online sales solutions, moving to telecommuting), but some of them did not work out or it was easier to return to the well-used old processes that lack the modern digital solutions.
Thus, the survey of last year’s autumn (2020) showed a partially “turbocharged” state of firms – we would probably have seen a bigger jump between 2019 and 2020 if the research had started a year earlier. This can be offset by the stagnation experienced in 2021. Digital finance is an exception and remains the most advanced area for business digitalization.
“It is clear that in the field of finance, the regulations have helped to start and speed up the digitalization process. If businesses start using the invoicing program, they will soon realize that they can significantly reduce the time and resources spent on financial administration with additional automations. Of course, serious educational efforts are also behind it, our goal is to help entrepreneur find the best solutions for their own goals,” said Balázs Ángyán, CEO of Számlázz.hu. “We are confident that businesses will become more aware of their finances and ‘catch up’ on digitalization through billing programs and the development of more complex financial automations.”
Data in more detail
If we look deeper into the data, the immobility on the surface hides more tiny but more interesting changes. For example, if we look at the size of businesses, we can see that larger SMEs (employing 50-249 people) have been able to grow: their main Digimeter index has risen from 49 to 52 – this is only offset by a decline or stagnation in smaller companies. We can also see differences according to the location of the enterprises: the index of Central Transdanubia companies decreased from 41 to 36 last year, that of South Transdanubia companies from 39 to 33, and that of Northern Hungarian companies from 39 to 35, which at the level of the main index is obscured by the development of companies in Central Hungary.
The changes in depth are presented in detail in the 2021 study available on the Digimeter page. The most important of these are:
- digital presence: compared to 2020 (18%) fewer companies have a web store (13%), while the proportion of people with a Google My Business account has risen significantly (from 16% to 30%) and the number of companies using a customer service chat or bot has dropped significantly rate (from 17% to 8%).
- digital everyday: while the opportunity to work from home has not changed (23% of companies provide it), the proportion of companies using teleconferencing software (27%) and collaborative chat software has increased slightly (to 10%).
- business management: the proportion of companies with a corporate governance system has decreased (from 45% to 34%), but the proportion of companies using paper-based aggregations has increased (to 33%) and more companies are collecting data to support their decisions (74% instead of 66%).
- Sales and marketing: not significantly, but the share of online advertising companies decreased (to 41%) and the use of online customer acquisition tools (to 26%).
- digital finance: this area remains the most advanced out of the six, as domestic regulation requires digitalization. In the last year, the proportion of billing system users has increased (from 79% to 86% overall, from 16% to 19% of those who also use the cloud system) and the proportion of those who do not issue / accept electronic invoice has decreased (from 18% to 11%), while the use of mobile banking cards dropped (from 58% to 48%).
- IT security: more companies use VPN (24% instead of 19%), but the use of antivirus software has fallen (overall from 88% to 84%, from 15% to 8% for (also) cloud users) and fewer companies do not issue back up (17% last year, 14% this year)
Hungarian SMEs vs. population
There is a kind of duality in the digitalization of small and medium-sized enterprises. While the managers, decision-makers and employees of the companies, as individuals, are not likely to differ significantly from the Hungarian average in their use of the Internet and digital devices, they are still satisfied with the existing processes and analog solutions at their workplace and company.
On behalf of Digiméter, Reacty Digital, participating in the consortium, conducted a representative survey of the Hungarian population aged 18-79 in September 2021 to reveal the differences between the practices of Hungarian SMEs and the population. This investigation shows that 71% of adults tend to buy a product or service through online advertising, while 41% of SMEs advertise only online. While 92% of Hungarian adults search for a product or service on Google and 78% search for shops, offices and restaurants using Google Maps, 27% of SMEs can be found on Maps, 30% have a Google My Business account, 25% advertise with Google Ads, 11% use Google Shopping and 7% search engine optimization (SEO).
88% of the population chat with family or friends and 59% video chat (e.g. Zoom, Google Meet), compared to only 27% of companies that use teleconferencing software and 10% using chat to work. Therefore, Hungarian SMEs lag behind the population in many areas, do not take advantage of the opportunities offered by digital devices, and do not take advantage of the existing digital skills of their employees.
Aid in Development – Digimeter
Digiméter, of which Számlázz.hu has been the main sponsor for the second year in a row, is not only suitable for presenting the lag, but also helps companies to develop. In 2021, the Digimeter consortium launched an award to find the most competitive business of the 757 small and medium-sized enterprises participating in the survey. In 2021, the winner of the Digimeter Award was BonAir BG Kft., which scored 86 points out of 100, and can set an example for others to follow with its balanced performance. In addition to the glory, the first-place prize is a half-year free service in SimplePay by OTP Mobil’s online payment system or SimpleBusiness.
In conclusion, it can be seen that the digitization of domestic SMEs seems to be stagnating in one place, with some companies improving their processes in the background. At the same time, there is another significant potential in the digitalization of Hungarian companies, they just have to learn to make better use of the digital skills of their employees and to comply with the everyday online practice of their customers.
The full analysis of the research is available at https://digimeter.hu/kutatasok/.
About the Digimeter
The Digimeter – Digital Competitiveness Index was launched in 2020 with the participation of professionals with two decades of digitaization experience in the implementation of SmartCommerce Consulting, Reacty Digital, eNET and Virgo, as well as the main sponsors of Számlázz.hu and Vodafone Business, SimplePay by OTP Mobil and Intern. Other partners: Cégjelző – as a sponsor; MKIK Modern Enterprises Program – as a professional partner, Digital Hungary and HVG – as media partners. The results of the measurements are available on the website of the program: https://digimeter.hu/. After the publication of the measurements, under the menu item “My Digital Room”, SMEs that did not participate in the research can also fill in the questionnaire and compare themselves to their competitors in the given field.