Digitalization in the SME sector: making use of subsidy opportunities
Procurement departments in Germany, especially in small and medium-sized enterprises, are still very reluctant to take advantage of the opportunities offered by digitalization. This is something we experience time and again in discussions with customers. But digital processes are advantageous to companies of all sizes. Small and medium-sized enterprises (SMEs) can invest in their future by turning to subsidy programs such as “Digital Jetzt!” (Digital Now!) from the German Federal Ministry for Economic Affairs and Energy (BMWi) or a loan from the German state-owned development bank KfW.
The digitalization pressure is particularly high in SMEs and craft businesses – and yet, according to the Federal Ministry for Economic Affairs and Energy (BMWi), more than half of small and medium-sized enterprises in Germany only have "average" levels of digitalization, while 29% have a "low" level of digitalization. The COVID-19 pandemic has accelerated the digitalization process significantly. According to a study by Bitkom Research, however, implementation is still proving a problem: most companies currently still rate their own progress in in-house digitalization projects as "satisfactory" and see themselves more as digitalization latecomers than pioneers. As a result of the changes in the overall environment triggered by the pandemic, many companies now realize that they urgently need to act. However, a lack of basic understanding of digitalization processes, fear of hefty costs and complicated data protection measures are still major limiting factors.
There is no doubt that digital processes save a great deal of time and money in the long term and allow companies to boost their efficiency. What is more: there has hardly been a better time to invest in digitalization measures. Why?: attractive subsidy programs and development loans make it easier to get started with digitalization projects.
“Digital Jetzt!”: BMWi provides support to small and medium-sized enterprises
The BMWi's “Digital Jetzt!” (Digital Now!) subsidy program supports small and medium-sized enterprises from all sectors, as well as craft businesses, that employ between three and 499 people and have a permanent establishment or branch office in Germany.
The most important prerequisite for a subsidy application is that the companies plan to invest in software or hardware, for example, or in training for their employees. Depending on the size of the company, the German government grants partial funding of between 30% and 50% of the total amount for the digitalization project. There are also increased subsidy rates for certain projects or scenarios, e.g. if several companies within a value chain or network invest simultaneously in an activity that links them up with each other
"Digital Jetzt!" is set to run until the end of 2023, which means that companies must have submitted their application by then. Further information on the subsidy program is available here.
State-owned development bank KfW: loans for digitalization projects
Alternatively, SMEs and craft businesses can also obtain support from the German state-owned development bank, KfW. KfW offers an ERP Digitalization and Innovation Loan to promote digitalization and transformation in the corporate sector. The focus is on investments and resources in the areas of innovation and digitalization, which KfW supports by granting loans of between EUR 25,000 and EUR 25 million, as well as supplementary promotional subsidies. The program is aimed at SMEs, freelancers and start-ups headquartered in Germany. Find out more.
Digitalization in the SME sector starts with procurement
Digital processes boost efficiency throughout the company. A good starting point for many SMEs is procurement: digital procurement platforms such as Wucato, for example, allow operating materials and C parts to be purchased online. These solutions also support companies in optimizing, digitalizing and automating their purchasing processes, allowing them to save time and money. This allows companies to focus on their core business, while the procurement department can concentrate on strategic considerations. Wucato supports its customers with their digitalization projects and is also on hand to assist them with subsidy programs.
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