Brief overview
While small and medium enterprises (SMEs) employ 56% of Germany’s workforce, few have engaged seriously in digitalization projects due to a lack of basic understanding and fears surrounding costs. The German government has sought to change this via two distinct but adjacent programs: “go-digital”, which provides for subsidized consulting and implementation services of digitalization projects; and “Digital Now!”, which subsidizes investments in digital technology and employee training for digital transformation. The government’s pursuit has triggered revenue growth totaling approximately €447.1 million among participating SMEs, reaching companies of all sizes and across all industries and regions.
Challenge Addressed
While SMEs comprise 99.3% of all companies in Germany and employ 56% of the workforce, more than half of them possess “average” levels of digitalization and 29% have a “low” level of digitalization, with less than half engaged in digitalization projects. To change this, the German government sought to address limiting factors like a lack of basic understanding of digitalization processes and fears of large costs. Both programs partially alleviate the costs of digitalization, with “go-digital” improving understanding via consulting and “Digital Now!” through employee training.
Solution & Implementation
These projects have been pursued by Germany’s Federal Ministry for Economic Affairs and Climate Protection (BMWi) to boost the digitalization of small and medium enterprises (SMEs) in Germany.
“go-digital” Program
- Mechanism: Subsidizes digitalization projects with budgets of up to €16,500 at 50% via consulting and implementation services from authorized companies like codafish and ACOPA.
- Structure: Sectioned into five thematic areas, including:
- Creating new and improving existing digitalization strategies.
- Improving the level of IT protection.
- Increasing the proportion of digital business processes.
- Increasing data literacy.
- Improving digital presentation quality and reach.
- Timeline: Available from 1 January 2022 until 30 June 2024.
- Requirements: No more than 100 employees; Prior year sales or balance sheet total of no more than €20 million; Has a business or branch in Germany; Eligible under the de minimis regulation.
“Digital Now!” Program
- Structure: Module 1 focuses on investments in digital technology (e.g., AI, cloud computing, big data, sensor technology, IT security); Module 2 focuses on employee training for digital transformation.
- Funding: Allocates €230 million; Maximum funding of €50,000 per company, but for investments in value chains and/or networks, it is €100,000 per company; Subsidy is proportional to investments costs, or 40% for companies with up to 50 employees, 35% for those up to 250 employees, and 30% for those up to 499 employees.
Timeline: Available from 19 May 2020 until 31 December 2023; Implementation must occur within 12 months of approval, with funding provided upon successful completion.
Challenges Faced & Mitigation Strategies
No notable challenges were reported to have been encountered with either of these programs.
Results & Impact
- Economic Growth: Triggered revenue growth totaling approximately €447.1 million.
- Wide Impact: Reached companies of all SME sizes, across all industries and regions; service and industrial companies accounted for the largest share at over 25% and 17%, respectively.
- Program Continuity: Final report recommends that support should continue to cover a broad spectrum of digitalization-related topics, including IT security and artificial intelligence.
Key Takeaways & Lessons Learned
- Public Funding: Improves digital infrastructure and digital competence among SMEs, which translates to tangible revenue increases.
- Beneficiary Commitment: Improved by requiring implementation within one year and providing funding upon project completion.
- Efficacy: Objectives are better reached by designing programs to combat known barriers.
References & Further Reading