SMEs are the lifeblood of the UK economy, but there is a danger that, without the right funding and policy support, they could fall behind when it comes to digitalisation and automation. We all have a vested interest in making sure that doesn’t happen, writes ABB UK managing director David Hughes.
Equipping the estimated 5.5 million small and medium-sized enterprises1 (SMEs) in the UK with the digital skills and tools they need, to compete from a position of strength in today’s competitive and increasingly globalised market, must be a priority for government and the manufacturing sector.
However, this is no small task and will require not just visionary policies and meaningful funding but also forging closer links between industry and colleges and universities to ensure that courses are fit for purpose in today’s tech-driven world. Perhaps most importantly, many UK companies need to alter their mindset and become less resistant to change when it comes to digitalisation and automation.
Digitalising SMEs also requires collaboration across multiple sectors and stakeholders, from the Government to specialist technology providers like ABB. Lastly, there needs to be morerecognition from Government and industry of the vitally important role SMEs play in the economy (making up 99.9% of the UK business population in 20212) and UK PLC as a whole.
Collaboration and mentoring: a Smart move
A great example of collaboration and innovation in action is the Made Smarter coalition. By combining digital technology leaders and innovators from government, academia and technology companies, it offers support and mentoring to SMEs on their journey to digitalisation, backed by strategic funding.
The industry-led Made Smarter review3 into how UK manufacturing can maximise the benefits from increasing adoption of digital technology identified four key focus areas:upskilling (including future skills), leadership training, adoption advice and innovation. The power of mentoring should never be underestimated: a highlight from the 2021 North West productivity forum were the sessions during which SMEs learned from larger organisationsabout the steps required to successfully automate and digitalize.
In addition, SMEs must feel empowered to partner with large scale organisations with theexpertise and funding to support the potential of a digital/automation project and bring that solution to the right market at the right time.
What is frustrating is that SMEs are more often than not the birthplace of disruptive technologies in the UK, yet many don’t possess the confidence or the support to scale up a great idea so it can be applied to multiple projects. Only then will SMEs and their partners see real value from innovation.
Stepping out of the comfort zone
Short-term thinking is often the enemy of innovation and growth. Less than 20% of the SMEs ABB talked to had a medium-term business plan. Others are too focused on ROI, rather than measuring CAPEX against longer-term productivity and reduced equipment downtime. This is understandable given the challenges of today’s operating environment, but it can be overcome.
Additionally, many SMEs still believe that productivity means working a few extra hours a week, rather than investing both time and money in truly innovative digital and automation solutions in the long term.
A recent report, ‘The State of Small Business Britain 2021’4, published by the Enterprise Research Centre, cites OECD statistics that suggest UK firms have been slower adopters of digital technologies than those in other countries and that “limitations in UK SMEs’ absorptive capacity are reflected in their level of ‘digital readiness’ – or their pre-disposition or propensity to adopt digital technologies.”
The possible reasons for this? One is likely an entrenched workplace culture that has persisted since the post-war years, one that values maintaining what it has rather than investing in something new.
Another is the perception that technology equals redundancies is still pervasive (whereas statistics show that in reality automation actually creates higher skilled jobs). The Made Smarter initiative emphasises the importance of engaging and upskilling staff as part of the ongoing digital transition.
Then there is the need for long-term relationships between SMEs and higher education –outreach programmes, internships and work placements, for example – to ensure UK graduates leave college or university with the requisite real-world skills to enable them to compete, just as digitalisation is crucial to enabling UK businesses to secure opportunitiesabroad in light of post-Brexit free trade deals.
Future-proofing UK SMEs
Despite the challenges outlined here, I remain optimistic that, with the correct funding, support and mentality, UK SMEs can successfully embark on or continue their digital and automation journey and take maximum advantage of industry 4.0 in terms of productivity, sustainability and cost benefits.
We must be realistic, however. Every company is at a different stage in their technological evolution and one size does not fit all. Some may not be sufficiently aware or underestimate the challenge of installing new digital technologies. In other words, digital and automation strategies must be customised to each enterprise, and investment decisions made based ona coherent, informed business objectives.
We can’t expect to change workplace culture overnight. What we can do is reemphasise theimportance of SMEs to the economy, recognise that they are often hotbeds of disruptive technology and innovation – and give them what they need to continue to prosper in the future. By supporting the SME’s we can give them the confidence to try something new, with no fear of a penalty for trying.
Sources
1,2 https://www.fsb.org.uk/uk-small-business-statistics.html
3 https://www.madesmarter.uk/about/what-is-made-smarter/
