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Message not received: Overcoming the barriers to digitalization

The current digital malaise, as a result of economic turmoil, is influencing investments in digitalization among firms.

An office block in London. Image © Tim Sandle
An office block in London. Image © Tim Sandle

Business advice firm IONOS has been exploring the opportunities and threats in terms of the digital transformation of small and medium sized business units. In particular, the analysts have been keen to understand the barriers for digitalization.

A related concern is with why the U.S. has been a decline in the digital transformation imperative in contrast with the continued push towards digitalization seen in most other developed nations.

For the survey, over 4,000 businesses were polled: 1,000; UK 1,004; Germany 1,005; Spain 1,004; and France 801 respondents.

An explanation for the sharp decline of company-specific websites and email addresses among U.S. firms connects with the current economic uncertainty and lack of skills to implement digitalization initiatives.

Here, U.S. firms note that costs (60 percent), lack of time (56 percent), lack of know-how (52 percent) and inflation (50 percent) are major barriers to digitalization. Lack of interest in digitalization doubled among U.S. small to medium sized companies from 25 percent in 2022 to 51 percent in 2023.

With economic uncertainty, the current digital malaise is influencing investments in digitalization among firms. It stands that thirty percent report they postponed digitalization expenses that are not absolutely necessary. This is in response to the current economic situation, energy crisis and geopolitical threats.

Furthermore, twenty-four percent of U.S. firms, the largest value in the survey, plan to invest less heavily in digitalization due to the current economic situation.

Another important section of the survey focuses on overall business risk. The deepest concerns regarding business risk among U.S. companies include a declining economy and threat of a recession (46 percent) and a shortage of skilled workers (44 percent).

Mistakes are also contributory, whether this be a straightforward lack of planning to more unpredictable changes within the give market. Many common business risks include IT security and cybercrime. Yet such mistakes (the potential for causing them) appears to be less of a concern among U.S. firms compared with their European counterparts.

Sixty-seven percent of businesses report they are well-positioned regarding IT security and cybercrime, while no more than half of the European respondents feel well equipped in those areas. In France, the number drops to 33 percent.

The most common protective measures that U.S. companies take is to implement include regular password updates and high password security (noted by 36 percent) and choosing cloud and hosting solution providers experienced in cybersecurity and maintaining critical infrastructure (33 percent).

Hence, while less ‘pro-digital transformation’ than many European firms, U.S. firms are placing greater emphasis upon cybersecurity.

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Written By

Dr. Tim Sandle is Digital Journal's Editor-at-Large for science news. Tim specializes in science, technology, environmental, business, and health journalism. He is additionally a practising microbiologist; and an author. He is also interested in history, politics and current affairs.

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