On 26 April 2023, PPMI hosted the workshop 'Unlocking the business potential of digitalisation: lessons from five industrial SMEs' in collaboration with the European Commission. The workshop presented the results of 6-month-long digitalisation pilots in 5 European industrial SMEs from five sectors: agrifood, automotive, construction, retail and textile. The pilots took place in the scope of the Smart Industrial Remoting study.
During the workshop, Digital Innovation Hubs (DIHs) and an SME discussed how successful collaborations can be built. The panel featured Irina Toma, Coordinator of FIT EDIH; Gabor Vicze, Partner & CEO of Innomine; and Anca Sandu, Managing Partner of UNITH2B. The panel was moderated by Barbora Kudzmanaitė from PPMI.
The transcript of the panel discussion is presented below, broken down into main discussion points: establishing links and trust between DIHs and SMEs; the most relevant services DIHs can provide and how they can be tailored to companies; and how sustainability of digitalisation can be fostered in SMEs. The recording of the panel is also available below.
Note: the text below is the original text of the panel that has been edited to improve readability.
Barbora Kudzmanaitė, PPMI: As the last part of this workshop, we will further explore some of the main themes we were discussing today. In the panel, we are joined by Irina Toma who is the coordinator of FIT EDIH in Romania – the Hub that was supporting the digitalisation pilot in the construction industry. We have Gabor Vicze, the CEO of Innomine, which is the Digital Innovation Hub that was supporting the automotive digitalisation pilot in Hungary. And finally, we have Anca Sandu from UNITH2B, a construction and engineering company based in Romania, which was involved in the construction pilot as well.
Establishing contact between Hubs and companies
Barbora Kudzmanaitė, PPMI: Before we start, I have a quick poll for the participants in the room and the panellists. As we will start with the topic of collaborating and reaching out to the companies beyond the Hubs’ network – let’s see how this can be done, how the Hubs can successfully reach out to the companies outside their networks.
Summary of answers submitted to the question 'What can hubs and companies do to expand their network?'
According to the poll results, there is a clear trend that all of the above seems relevant. Irina, your Hub organised an open call for the digital innovation pilot with the goal to reach out to a company that was not part of your network. Maybe you can share some insights or lessons learned about this approach?
Irina Toma, FIT EDIH: For us, construction was a new industry to tap into. We didn't know a lot of companies and the ecosystem at first. And we had to rely on building an ecosystem and on existing partners who are dealing with digitalisation in the construction industry or with the construction and architecture industry as a whole. Starting with the mapping of the ecosystem through short research of the sector, we identified a BIMTech association that deals with promoting digitalisation in the construction industry. They were very helpful in highlighting both what is happening within the sector and also who are the actors we should be reaching out to. We also engaged with the Order of Architects in Romania who promoted our call. This is how we got in contact with UNITH2B, the architecture company that Anca is representing and who participated in the pilot project. In the end, we had more than 20 companies that have registered but only ended up selecting 1.
If I may already say something about the pluses and minuses of this, I would say as a plus, we already had a mapping of needs by asking so many companies about their needs and how we could collaborate during the pilot. But as a minus, we encountered a lot of complexity in running an open call because the needs are very diverse. We had to both design services tailored to those needs but also try to cluster the needs and see what we can provide. I recommend this for new Hubs but also would encourage them to consider the time necessary for selecting companies.
Barbora Kudzmanaitė, PPMI: Great. Thank you, Irina. Anca, I am also curious, what was the experience from the company's perspective? What motivated you to, first of all, participate in the open call and then to continue participating in the pilot?
Anca Sandu, UNITH2B: Well, first, for us, digitalisation is a constant and a very important aspect in the transformation of our company. To be able to get tailored support from projects such as this – we can see that it's an opportunity. That is why we were very eager to participate, and we were absolutely aware that there is time and effort needed to be involved in a project like this. But in any case, the digitalisation process and the upgrades are constant, and we need to do that all the time. This is thus a great opportunity, and I would advise anyone to participate and to take the time to get to know the opportunities that exist and just be present and put in the effort. We found out from the Order of Architects initially, but it's not too hard to see exactly how such an endeavour would be beneficial for a company such as ours.
Barbora Kudzmanaitė, PPMI: Gabor, you are representing Innomine. Your Hub works with quite a wide range of companies. Maybe you also have some additional lessons learned on reaching out to companies beyond your initial network.
Gabor Vicze, Innomine: Yes, Thank you. We as Innomine have a track record of more than five years acting as a Digital Innovation Hub. Therefore, especially in the countryside, we do have quite an intense relationship and network: especially with small- and medium-sized companies and especially in the manufacturing and agrifood sector. And for us, throughout the last few years, the key challenge around digitalisation was to build trust with the companies. Initially, when we started to talk about digitalisation, small businesses said ‘OK, this is good for international companies, for the multinationals, but this is not something for us’. We had to build trust and we had to show good examples of how digitalisation can be an enabler for especially small companies and how the management or the CEO can benefit from a digital solution.
Barbora Kudzmanaitė, PPMI: Great, thank you! I think you mentioned a very important point related to trust-building. We see this in the pilots, and it’s relevant for new companies but also for companies that are already familiar with the Hubs’ activities.
Building trust between Hubs and companies
Barbora Kudzmanaitė, PPMI: We know that trust is indeed a key enabler. Anca and Irina, I will start with you on what worked in your case. Irina, what do you think is the essence of building trust with the companies?
Irina Toma, FIT EDIH: For us, this was an important element, especially since the collaboration with UNITH2B was very new. We had just met each other. At least from my perspective, I think we managed to build trust by focusing on the company’s needs and really trying to understand what their issue was and to connect with them and offer services that were very tailored to their needs. We also brought very strong digital experts in the field and the technology that we were working with – with BIM processes and related technologies. I think this also helped. Following up on the process and making sure that what we offer as a Hub is a value added to the company. These are three elements that I would underline.
Barbora Kudzmanaitė, PPMI: Maybe anything to add, Anca, from your side?
Anca Sandu, UNITH2B: I think it's quite the same.
From our point of view, I would call them the three C's of trust building: competence, consistency and communication.
Competence is the first building block because, as Irina said, there were two types of well-put-together aspects in the project. One was the way the project and the first assessment came from the Hub and the way they approached us in a very professional manner. And the second was their connection with local specialists and associations that were highly experienced and exactly tailored to the construction industry. That was a great mix in managing. In terms of consistency, the Hub was present all the time. Our connection was continuous. We started working on the project, and everything was from start to finish consistently well tied together. And that was done through communication, and I always felt that we had a very good approach to that. So, for us, it was a very good experience from the point of view of trust.
Barbora Kudzmanaitė, PPMI: Great: competence, consistency and communication – note taken. Gabor, something to add here?
Gabor Vicze, Innomine: Well, I think trust-building is key. And for us in the regional ecosystem, it was very important to talk to opinion leaders. That is a very good technique. But I can also recommend to the other Hubs to convince the local opinion leaders – some CEOs, key influencers, people from universities, and even people from the policy level. These people can help a lot to build trust and relationships with the ecosystem players.
Another very important point was to build a common language. Because often, we realised that we had used a language which was too digital, which was not so much known by the CEOs of the companies. Usually, we found out that communication is key, and we had to build different types of communication tricks to get through the message. I think that simplification is the keyword because, very often, we really need to simplify things to be able to reach the proper impact.
Barbora Kudzmanaitė, PPMI: Great. Thank you so much indeed. Opinion leaders and establishing a shared language with the companies that you work with are key.
Most relevant Hubs’ services for SMEs
Barbora Kudzmanaitė, PPMI: We launched a poll asking what type of services is the most relevant for companies, and the responses are quite scattered. Although, we see that defining a digitalisation roadmap is very important.
Participants' responses to the question ‘In your opinion, what support from (E)DIHs is the most important?’
Nevertheless, the pilots show that Hubs have to provide a wide range of services depending on the company's maturity and its needs. I would like to reflect a little bit on your experiences – not just from the pilots but also beyond. What type of services are usually required or relevant the most for the companies that pursue Hubs’ support?
Gabor Vicze, Innomine: In terms of the service portfolio, I think there is a very important point that SMEs are a very heterogeneous group. Both in terms of digital maturity and in terms of industry, they do have very different needs. I believe that is very important to make sure that we as Digital Innovation Hubs are able to talk to them and offer SMEs the things that they need.
It is very important to focus on the business needs of the SMEs. We could see that many entities are trying to replicate solutions and services, but they are used for big corporations or the enterprise segment. Usually, these don’t really work because SMEs want to have quick and impactful solutions that they can use.
In the case of Matro, which is already a relatively advanced company and quite big in terms of size among the SME groups, we could already see some types of planning, but even in their case they were at the beginning looking for a very tangible result and how they will have an impact of their investment. They are still a relatively big company, but they do not want to risk with their investments. Therefore, it was very important for them to make an investment which pays off within one year.
Barbora Kudzmanaitė, PPMI: Great! Irina, do you have anything to add?
Irina Toma, FIT EDIH: I would say that when we did the survey for the assessment of what kind of services companies in the construction sector needed, a lot of them were interested in financing opportunities because they were afraid that everything sounded very nice, but they wouldn't be able to finance these investments otherwise. Many of them said they would like to think about potential services or redesign of the business model, taking into account these new technologies they are acquiring.
But when we started working with UNITH2B, we also realised the services need to be adapted to the level of digitalisation of the company.
The approach with which you collaborate with an SME that is just starting out, that does not have a digital transformation roadmap is very different from collaboration with one which is already relatively mature or advanced and just needs fine-tuning, tailoring or much more punctual expert knowledge.
I would encourage other Digital Innovation Hubs to consider clustering companies based on the needs that they have at different stages of their digitalisation and digital transformation journey.
Barbora Kudzmanaitė, PPMI: Absolutely. And Anca, from your perspective, since UNITH2B is a relatively digitally mature company, what type of services were the most valuable for you during the pilot from the Hub and from the BIMTech association?
Anca Sandu, UNITH2B: For us, a very important step was the assessment. We entered a project without having any clear expectations and without knowing what we would want to obtain. We had many ideas, but we did not know what was realistic to obtain. And before building trust, we did not know what the Hub and the program can offer us in the period of time associated with the project.
And what I found a very positive aspect was the openness they had towards assessing our company, tailoring our KPIs and finding a plan that we thought would work – one that had KPIs and targets for this particular period of the project. But we were also trying to identify things that we could approach and optimise in the long term.
That part of assessing digital maturity and our digitalisation or optimisation needs was very important. Another thing that was very important for us is the presence of specialists and know-how of similar companies and an overview of our design sector of the construction industry. We know we make a constant effort, and we know digitalisation is important. But where exactly we are compared to the rest of the market is always a question, because there is no assessment for that. So that was also a plus for us.
Barbora Kudzmanaitė, PPMI: Thank you!
Tailoring Hub’s services to companies’ needs
Barbora Kudzmanaitė, PPMI: I will ask maybe perhaps a slightly more challenging question, as both of you suggested, that the Hubs need to adapt based on the company’s digital maturity levels. Yet at the same time, I'm curious how feasible is this flexibility to really tailor the approach to each company. What successful strategies have your Hubs been harnessing or trying out to actually provide services that match different companies’ needs? Irina, let’s start with you.
Irina Toma, FIT EDIH: We've thought a lot about this, and I don't think I have definite answers. But maybe just to speak from our experience, we always thought that we could try to work through a clustering method, to work with groups and bring companies together based on different common elements in order to be able to work with them in a more efficient manner.
The experience we've had with needs assessment through this SIR project has shown that this implies quite some energy from the Hub and the expertі. The companies are indeed heterogeneous, and they don't often have exactly the same needs. Maybe they have similar maturity levels, or you could make a general orientation based on their different levels. But when it comes to the exact problem in their company, they each have a very different business model. The solution that they each need requires a bit of tailoring. And we're exploring different ways to be able to approach this.
Part of the solution could be working together more with technology providers and seeing if they can further take on technology audits. For example, when things get very technical with a particular industry. Another approach that I've seen other Hubs take is to provide free services through the Digital Innovation Hubs and then provide more in-depth services as a paid service of the Hub. We have not implemented this yet. But depending on the developments that we see in implementation, we could consider this in the future so that we can actually provide the proper support needed for a true digital transformation.
Barbora Kudzmanaitė, PPMI: Gabor, anything to add?
Gabor Vicze, Innomine: In our case, international knowledge transfer was a very important factor in building the service portfolio. And this project is one of the examples. But even in the past, we have participated in some European Commission and other projects, where we as a Digital Innovation Hub could promote cascade funding. With that, we could help some local SMEs to get aware of digitalisation and then for some selected companies to go through the whole digitalisation quest or at least a few projects.
And I think that this is very important because one of the most demanded services, when we start talking about digitalisation, is access to funding. And why is this? Not because the companies don’t have the money. The very important factor is to reduce risks connected to digitalisation. When we talk about smaller companies, they have less capability to go into risk. If a huge corporation is running 50 innovation projects and 40 out of them fail, that can still make enough results for them to operate successfully. But if we talk about a smaller company which can run only 1 project, then failure is not really an option because it will mean then a major issue for the company. And in our case, that's the best option. If we can also offer some EU funding, some small amount – and this doesn't have to be huge funds – it is already a key enabler for small businesses to start digitalisation. And for us, it is an opportunity to build the services and then use our champions in the ecosystem.
Barbora Kudzmanaitė, PPMI: We actually have a comment on this in the chat. It is both a question and a bit of an idea. With regard to the services provided by the Hubs, the service options listed are from the (E)DIHs in isolation. But the comment is suggesting that there is a potential for an initiative for (E)DIHs to work jointly and collaborate, perhaps building some connections when it comes to companies’ maturities. It seems that it's possible to somewhat segment the type of services companies need based on their levels of maturity and then collaborate across Hubs to create some methodology, exchange ideas and practices. And I would just open the floor to you to reflect on and react to this.
Gabor Vicze, Innomine: Well, I am very happy to share. In our case, we are part of EDIH on artificial intelligence. And honestly, I cannot really see that EDIHs are working in isolation because, at least in our case, we do have a very intense network and cooperation with all the EDIS and DIHs in Hungary.
Last week, there was a joint press event for example. And also internationally, we do have a very good and very operational cooperation with plenty of other (European) Digital Innovation Hubs from multiple countries.
And these international knowledge transfers and networking are key for our operation and for us to learn and access the necessary knowledge.
Irina Toma, FIT EDIH: We have also drawn quite a bit of inspiration from the digitalisation and construction Digital Innovation Hub and a platform constructed around this sector with research and resources for digitalisation in the construction sector. There is a lot of knowledge in the network and it's important to tap into it and to mature these connections that have been established.
Barbora Kudzmanaitė, PPMI: Great. Thank you so much for sharing and thank you for the comments in the chat.
Ensuring digitalisation sustainability
Barbora Kudzmanaitė, PPMI: I will move on to another topic. We touched upon in the collaborative session the importance of successfully managing the digital intervention and making sure that the digital intervention is sustainable. Maybe I would turn to Anca to ask you about how you ensure or approach the sustainability of digital interventions from the long-term perspective? In my understanding, the pilot is actually a piece of a bigger puzzle for UNITH2B when it comes to digitalising.
Anca Sandu, UNITH2B: Yes, I don't know how things are in other domains but I’ve seen some projects of digitalisation that have a start and a finish. They had a great impact on us. Our company started to partially digitalise because the design sector in the construction industry has been for a long time under digitalisation. This trend of embracing BIM technology, for instance, is something that we have been working on and implementing for almost ten years since everything started to clarify it. Sustainability is something that's somehow natural. You have to be sustainable in your efforts to digitalise.
What is also important is to generate the value of change for the entire company. This is easier done from a management point of view. Management needs to understand that progress and continuous know-how infusion and change management should be the core pillars in the evolution of the company. That is how you generate sustainability by continuously approaching some new possibilities, documenting and implementing. Of course, there is time and effort to be continuously put into this part of the business’s existence. But, from my point of view, only in this way you can ensure that you keep up with this moment of extremely rapid change when everything evolves.
We are dependent on software and a lot of external factors and external companies that evolve at the same time and that embrace digitalisation in any type and form. And we have to keep flexible because that is the only way.
To summarise, for sustainability, you have to:
- be flexible;
- have an approach to change management;
- be less sensitive to losses in productivity and other losses that we find along the way and during the learning curve.
You don’t just go up all the time. It's effort and it's dynamic. There is not a single answer to this question, it is quite a complex question.
Barbora Kudzmanaitė, PPMI: Absolutely, and probably a half an hour panel discussion is not enough to untangle it.
How the company size and management style affect digitalisation processes
Barbora Kudzmanaitė, PPMI: I would like to actually turn also to the Hubs here. Looking at the type of support Hubs can provide to help companies manage digital interventions. And we also have a question in the chat linked to this and on how the type of support changes depending on the size of the company.
So, we heard during the previous presentation that because of the fire, the company could transform how it approached digitalisation, switching from an incremental approach to a whole-of-organisation approach. And the Hub there played a central role. In other companies, it might be more driven by the management that has a clear vision of the direction it wants to go.
So, what has been the Hub's experience? How can a company’s size and maturity affect what type of support the Hub can give it to help it digitalise? Do you pull it by the shoestring? Or does the company drive the initiative forward?
Irina Toma, FIT EDIH: Firstly, I wanted to comment on the question you had a bit earlier. I think once you start with a company and you've already worked on one digitalisation project or pilot, if the relationship was beneficial, you tend to continue with it. Sustainability also comes from this trust-building and seeing added value. And also, I liked Gabor’s remark about cascade funding and the continuous funding opportunities that arise. We've had companies that continued for years and that have matured. And you continue to offer different services depending on their level and how they've evolved. New opportunities arise all the time.
And with regards to the question on the size of the company, I find that smaller SMEs are sometimes more agile and can change more quickly. It is maybe a more difficult process for larger companies to try to get all their departments on board. And there's a lot more diversity there. At the same time, smaller companies might have less capacity for the productivity decreases that you see when you go on a new learning process. I think it depends on the company context and the industry, the age of the employees.
I was reflecting on the fact that some newer companies may sometimes find it easier to hire new staff that already has part of the digital skills that they want to see. Other older companies might sometimes have more difficulty in getting their employees on board. So, I think it's more on a case-by-case basis.
Barbora Kudzmanaitė, PPMI: Thank you. Gabor, would you like anything to add?
Gabor Vicze, Innomine: I think that the challenges are very different, depending on the industry and the size of the company. And I have seen now one question in the chat about how to implement AI or AI-related solutions in the small business segment. And I think that among SMEs there are two key segments. One is IT companies that develop solutions, and the others are going through digitalisation quests using solutions developed by others. And we are working with both ecosystems and both types of companies, but most of our services and efforts are rather going towards industries to be digitalised. What we aim to achieve is not necessarily to further develop cutting-edge AI solutions, but to start using them. And I think that's an important point.
From our perspective, based on the company size and the industry, the personal factor is very important. Even in a case where a CEO is a relatively young person, using iPhone and digital stuff on a daily basis, the first moment when they really bought our idea of factory digitalisation was when they first saw the factory data on a screen. Then they realised that they will be able to monitor what was going on at the factory and randomly check the manufacturing line, immediately see the output and then make whatever changes are needed. These are really the tangible results which are key and which might be different company by company. It is very personal and very dependent on the CEO, top management or owners.
Barbora Kudzmanaitė, PPMI: Thank you so much. There are a lot of things we can say about digitalisation and working together between companies and Hubs. What I'm taking away from today are the three C’s of trust-building: confidence, consistency and communication. And of course, showing the benefit of digitalisation, collaborating among companies and DIHs and working together to achieve progress.
Thank you so much to the panellists and thank you to everyone in the chat who was asking questions.
This workshop is followed by a Digitalisation Toolbox, that summarises key steps and processes of industrial SME digitalisation. Keep an eye on the study page for further updates and past publications.
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