Beyond COVID-19: advancing digital business transformation in the Eastern partner countries

A new OECD report published by the EU4Business From Policies to Action Project highlights the challenges and priorities for advancing the digital business transformation in the Eastern partner countries.

The report – ‘Beyond COVID-19: Advancing Digital Business Transformation in the Eastern Partner Countries’ – examines four main areas, looking at the challenges, the current state of play, and the way forward:

• Understanding the digital transformation in Eastern partner countries
• Framework conditions for the digital economy
• Skills for the digital economy
• Supporting the digital transformation of SMEs

Connectivity

In terms of framework conditions, ensuring internet connectivity is one of the first steps towards a successful digital transformation. However, broadband uptake varies considerably among EaP countries, remains below OECD levels, and shows disparities between urban and rural areas and between SMEs and large firms. EaP countries should accelerate the deployment of high-speed broadband at affordable prices and bridge connectivity gaps by boosting competition and private investment. 

eCommerce

Similarly, the growth of e-commerce in EaP countries has been fast, but remains at an early stage of development. There are important gaps in the legislative framework exist, and integration with wider European e-commerce markets is limited. Moreover, the current legislative frameworks for e-signature are not aligned with international standards. To maximise the growth potential offered by e-commerce, policy makers in the EaP could strengthen regulatory frameworks governing consumer protection and digital security, and align e-signature and trust services standards, as well as legislation on digital security and data protection, with EU standards and frameworks. 

Digital skills

The promotion of digital skills has a pivotal role in the digital transformation. However, SMEs struggle to understand the potential of digital tools, and face difficulties in attracting skilled employees. In general, ICT skills in EaP countries are well below those of OECD countries, and school curricula are generally not flexible enough to accommodate rapidly evolving technologies. EaP governments should consider measures to equip SME managers and employees with the necessary skills to embrace the digital transformation. These include raising awareness of the different types of trainings available and relying on local ecosystems and communities to access relevant skills and promote best practices. 

Digital strategy

National digital strategies appear to be the most suitable instruments to create sound digitalisation policies, and they are becoming increasingly common in EaP countries, although they rarely include specific actions to promote SME digitalisation. However, initiatives to support the digital transformation of SMEs may also be introduced outside the scope of all-encompassing strategic documents. 

Recommendations

To inspire policy makers’ reform efforts, the report presents a “blueprint” of policy measures to be considered by enterprise support agencies to support the digital transformation of SMEs in the EaP countries: 

• An implementing agency – e.g. the national enterprise/SME support agency – with a strong mandate in the policy framework for digitalisation should act as a “digital one-stop-shop” for businesses wishing to advance their digital transformation. 
• Policy makers should develop and provide sector-specific digital plans listing recommendations for suitable digital solutions, fundamental business capabilities needed, and available digital training. 
• SMEs should be able to undergo a digital self-assessment via a self-diagnostic tool. 
• To facilitate SMEs in understanding and achieving their digital capacity building needs, EaP countries can build a reliable network of certified consultants and advisers, as well as ensure tailored training opportunities are available. 
• Policy makers should provide financial support for digitalisation through a palette of instruments such as grants, vouchers, loans, and indirect financial incentives. 
• Finally, policy makers should nurture and co-ordinate the ecosystem for digital transformation, comprising all agents and stakeholders supporting SME development (e.g. incubators, high-tech parks, digital innovation hubs, universities) to maximise the impact of the existing structures. 

Read the full report