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  • Writer's pictureValeria Coppola

Digitalization in Italian SMEs: a statistical survey of the economic sectors

Digitization is the process of transforming images, documents, and sounds into a digital format, which is a binary code that can be stored or edited with a computer or transmitted remotely more efficiently.

Digital transformation spans multiple business areas and uses tools such as Cloud Computing, CRM and Artificial Intelligence.

Digitization is affecting companies globally.

In Italy, as well as in the rest of the world, the COVID-19 pandemic has led to increasing development of technological innovation processes.

To study the measure of a country's state of digital transformation, is used the level of digitization within SMEs.

The acronym SME stands for small and medium-sized enterprises, a category with fewer than 250 employees whose annual turnover does not exceed fifty million euros or whose annual balance sheet total does not exceed forty-three million euros.

To measure and monitor the levels and possible progress of digitization of the economy and society, the European Commission in 2014 formed an index, the so-called DESI which is an acronym for the Digital Economy and Society Index.

The DESI represents the synthesis of several indicators collected in four dimensions: human capital, connectivity, integration of digital technology and digital public services.

The level of digitization of Italian SMEs, as measured by DESI, is below the European average, in terms of online sales, use of software, CRM, cloud computing, artificial intelligence systems, integration of digital technologies and specific digital skills of employees within companies.

The DESI 2022 report shows an improvement in the Italian situation: Italy reaches the number eighteen position among the twenty-seven EU Member States with a score of 49.3, three points below the European average.

The graph shows that although the health crisis of the last two years has positively affected technological progress, the Italian economy is unable to keep up with the progress affecting European economies.

Regarding the level of digital intensity of Italian SMEs, the data obtained from DESI show an increase in the last decade, particularly because of the pandemic but not in all areas of digitization.

The variables chosen for the statistical survey are analyzed to demonstrate their influence on the basic level of digitization in Italian SMEs. The variables are:

- Enterprises that have a basic level of digitization - DIGIT21

- Enterprises purchasing cloud computing services - CLOUDC21

- CRM software applications - CRM21

- Data analysis through machine learning (Machine Learning) - MACHINE21

- Workflow analysis or decision support (Robotic Software Automation) - ROB21

- Enterprises using at least one intelligent device - DISP21

Hierarchical cluster analysis is carried out by Euclidean distance and Ward's method.

The hierarchical analysis shows how economic activities can be divided into two groups. In fact, the dendrogram shows the net division of economic sectors.

The graph below highlights more the distinction in clusters, divided by color and shape, based on digital intensity according to the above variables.

It is shown that the clustering is quite sharp, good clustering is observed between the variables DIGIT21 and ROB21; in contrast, clustering is poor between CRM21 and DISP21.

Relevant data emerge in the survey tackled to confirm the theses advocated.

It outlines how the digitization process in Italian SMEs is growing rapidly.

It is apparent that the use of Cloud Computing and CRM services is a focal point in business growth and must be something that companies must invest in to be able to achieve increased profit margins.

Increased use of Machine Learning implies a higher level of digitization within the enterprise.

The study shows that digital transformation is increasing on average but with differences among Italian economic sectors.

Data published on Istat's website regarding ICT use in Italian SMEs show that the companies that invest the most resources in digital are those operating in the telecommunications sector. This is followed by companies in the research and development sector and the IT sector.

It is critically important to make investments in the digital sphere and to close the gap between sectors of the Italian economy that are struggling to keep up with those in Europe.

The digital transition in Italy is steadily increasing, and investment in digital tools can be particularly significant in the development of digitization and digital intensity.

It is, therefore, important for Italian small and medium-sized enterprises to embrace digital transformation so that they can grow and develop their potential on par with European SMEs.


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