Digital transformation and e-business in Serbian enterprises
My company VEZA d.o.o. Business Knowledge, in cooperation with Poslovni Softver company implemented a project to support the development of private sector in Serbia “Private Sector Development” PSD. We researched and analyzed the preparedness of Serbian enterprises for digital transformation and digital business. This project was implemented by the Development Agency of Serbia RAS in cooperation with the USAID United States Agency for International Development.
During the research, the following questions were asked:
How much are you using business software solutions and digital business models?
What is the level of preparedness at your company for digital transformation?
What are the problems when using digital technologies and what are your needs?
What needs to be done to speed up digital transformation so you can have visible benefits?
The survey was conducted in the period February-March 2018. The research involved 27 companies.
Research analyses of the state of digital transformation
These are some of the research results:
A survey on the use of computers in Serbian companies shows that 100% of companies use a computer, regardless of the size, activity or location of the company. However, the percentage of employees who use the computer every day is significantly lower compared to the EU countries.
The percentage of IT resource allocation for Serbian companies (on average 0.5% of revenue) is several times lower than the EU average (4.0%).
It is encouraging to note that 100% of surveyed firms have a good connection with the Internet. It is mainly about broadband internet access. Most of the companies use cable networks (63%), followed by ADSL internet access (40.7%).
All surveyed companies reported individual IT budgets of less than € 5,000 per year, so that the combined (joint) budget of all companies is only about € 50,000 per year. On the other hand, the estimated business revenues of the surveyed companies amount to about EUR 20 million, so IT budget share in total company revenues is, on average, less than 0.25%.
Only two companies out of 27 respondents said they had their own server, which indicates low LAN network coverage and poor connectivity of their computers.
The analysis shows that only 4 companies (14.8%) electronically sell to other companies, 4 companies receive orders through a website or mobile application (14.8%), while only 2 companies or 7, 4% have Business 2 Business web portal.
What is the conclusion of this research and analysis?
The good news is that the digital transformation of companies in the south of Serbia has already begun. Of course, even without this research, we know that they have just begun their journey to reach the level of digitization in advanced Western countries. There is a huge space for the improvement and full implementation of digital technologies and business models. Recently, global digital disruption and increased competition has forced Serbian companies of all sizes, especially SME-s, to start working on improving their competitiveness, most often by digitally transforming their businesses.
In response to this urgent need of Serbian SME-s, the Chamber of Commerce and Industry of Serbia PKS established the Digital Transformation Center CDT in cooperation with the Chamber of Commerce of Austria WKO, and their Center for Digital Transformation. The main goal of CDT is to provide direct consulting support to companies (mostly SMEs) in Serbia, and help them to digitally transform their business. In June 2018, digital transformation training courses and certifications were organized for a group of 22 consultants, and in September, Austrian colleagues awarded certificates to Serbian digital consultants.
What are the challenges of digital transformation in Serbia?
At our most recent CDT digital transformation project in December 2018, while working with four Serbian SME-s, I have discovered that their biggest challenge is to change their perception that digital transformation is only the use and application of software. Unfortunately, when buying a business software package, most Serbian companies treat the procurement and implementation like they are purchasing “toilet paper”. For them, it is only important that the software is purchased, installed on computers, or on the local networks, and then it is forgotten. They do not see that installing software is just the first step and its application and use the next more important step. I witnessed that in some companies the use of the Google Calendar had a much greater impact on improving organisation and efficiency than the implementation of some very expensive and sophisticated software solutions.
The conclusion is that most Serbian companies that have already implemented some of the very best software solutions do not use them well. Their employees do not want to use them, or those who want to use them do not use them properly. Unfortunately, they do not realize that the installation and implementation of software solution does not automatically implies its successful exploitation. As we know in practice, the application issue is never a question that can be answered with YES or NO. It is always a certain % of performance (which is usually in a range of 30% to 70%). Also, to create a masterpiece you do need good tools (software), but much more than that you need a master craftsman (motivated employees). The most difficult task of a digital transformation consultant is not to determine which software is needed and how to install it, but how to get it accepted and used by all employees.
How much are companies in Serbia prepared for digitization?
The main problem is that their current business models and business processes are not optimized for the use of sophisticated software solutions, and very often they do not have the effect of improvement for which they are applied. They need to understand that digital transformation is not an application, but a change (transformation), and we know very well how “easy” is to make any changes in Serbia.
Nowadays this is often called “lipstick on a pig” phenomenon. Many companies in Serbia believe they are successfully implementing digital transformation, but in reality they are not prepared for it and they are using it as a makeup, just to hide their weaknesses. This is also the problem of the best and most advanced companies in the world, and Bill Gates himself said about it:
(1) Automation applied to an efficient operation will magnify the efficiency.
(2) Automation applied to an inefficient operation will magnify the inefficiency.
First, optimize your business models and business processes, and then install and use software solutions. The best software in the World will not help you if your business models are not effective and if your business processes are not efficient, or if your employees do not: “Do the right things at the right time, in the right place and in the right way”.
“Given a bad start, trouble will increase at an exponential rate” – Parouzzi’s principle
Miodrag Kostić, CMC, CDC
Owner and director of BusinessKnowledge.biz