The new report published by reichelt elektronik looks at the current state of digitalisation and asks about the status quo in European countries.
The majority of European industrial companies are already benefiting greatly from digitalisation projects. But a closer look shows: The conditions are often not as favourable as the companies themselves would like to believe. Are European companies overestimating digitalisation in their own country? An independent survey of 1.250 European industrial companies in the Netherlands, Germany, Italy and France commissioned by reichelt elektronik precisely raises this question.
Connectivity: it’s complicated
The basis for any digitalisation project is a fast, high-performance internet connection. 80 percent of respondents express satisfaction with the speed and stability of their connection. At the same time, however, almost a half (48%) believe that in their company, less capacity is available than the infrastructure should actually allow. Even more worrying: 41 percent of those surveyed complain of internet disruptions at least once a week. With this in mind, it seems almost contradictory that people’s satisfaction with their connectivity is that high.
Digitalisation: Which country is overestimating itself?
How Europeans generally assess the status of digitalisation in their countries is likewise full of contradictions. The EU-wide digitalisation index DESI (Digital Economy and Society Index) shows that Germany (13th) and France (12th) perform rather mediocre in comparison with other EU countries, while Italy ranks on place 18 well below the average. None of these countries achieve a position in the top third in this ranking.
When asked where German companies thought Germany would rank, most respondents said between 4th and 7th place – significantly better than is the case. In both France and Italy, most manufacturers surveyed put their own country between 5th and 8th rank, also overestimating their own rank. Countries like Germany and Italy also ranked themselves better than Netherlands, France, Spain or Austria – all countries that placed ahead of them.
In the Netherlands it’s quite the opposite: The country performs very well compared to other EU countries with rank 3, well above the European average, trailing only Finland and Denmark. When asked which countries would score best, the Netherlands, Germany and Denmark were mentioned most often. But still many surveyed Dutch put the Netherlands well below their actual rank between the 7th or 8th place.
Generally, all countries indicated that Germany would score best in EU digitalisation index. Followed by Denmark and the Netherlands. This shows that our own perception as well as the perception of our neighbouring countries regarding the state of digitalisation can be misleading.
What are the implications of these disparities for formulating policies and strategic plans aimed at fostering digital transformation throughout Europe?
This is going well: efficiency and workflows
In general, the European industry rates its success in digitalisation positively and see great opportunities in it. 87% of those surveyed draw a positive conclusion from their companies’ digitalisation initiatives to date. Companies most appreciate the opportunity to work faster and more efficiently. Digitalisation accelerates processes and workflows (52%), saves costs through more efficient tools (49%) and increases productivity (44%). Digitalisation helps 37 percent of the companies surveyed to develop new products or solutions. Enterprises benefit from tools that facilitate collaboration via cloud-based documents and administrative tasks. In each case, 77 per cent find these useful.
The majority of companies (79%) measure the success of digital measures using precise metrics such as time-to-market, error reduction, material savings and profit increase. However, only a third (35%) set specific target values to be achieved before the start of a new project.
The European industry also has a clear idea of the opportunities it wants to exploit in the future through digitalisation. When asked which projects the companies would like to implement if they were ideally positioned for digitalisation, most responded with automation of administrative activities (39%), followed by predictive maintenance and intelligent machine monitoring (37%) and AI projects (36%). Interestingly, Germany chose AI projects first (44%), Italy deemed predictive maintenance and intelligent machine monitoring (42%) as most important, while Netherlands (46%) and France (40%) prioritise the automation of administrative activities.
What challenges need to be tackled?
According to half of those surveyed, the most important success factors for digitalisation projects are a strategic approach that integrates digital processes seamlessly into the company’s workflow (48%) and the appropriate specialists (45%). The shortage of skilled labour in particular is a problem for many companies. They further consider training of the workforce (29%) and more digital education in schools (27%) as the most promising approaches to solving this problem. A further 25 percent also cite the need to disincentivise skilled workers from moving abroad by increasing net wages or lowering the tax burden for top earners.
There is also another challenge: bureaucracy. There is a widespread consensus across EU politics and business that the administration in all European countries has some catching up to do when it comes to digitalisation.
Companies would be willing to handle administrative processes digitally. Half of industrial companies (51%) already take advantage of the opportunity to complete administrative tasks online, such as filling out online forms. Beyond this, however, digital services for companies are not yet sufficiently developed. Only a third (33%) agree that public authorities offer them effective digital solutions for completing administrative tasks. The result for accessibility and information procurement also leaves a lot to be desired: only about a quarter (29%) can easily reach public officials and administrations via online channels, while 67 percent of companies do not find that information about administrative processes is accessible or easy to locate online.
Conclusion
Looking at digitalisation in the European industry, the picture is multifaceted and complex. On the one hand, companies are achieving good results and take a very positive view of their own progress. On the other hand, undeniable problems are becoming apparent time and again, whether in terms of technical infrastructure such as network technology or structural problems such as the shortage of skilled labour.
“We are in the middle of a major transformation phase,” comments Thomas Kruse, Product Manager at reichelt elektronik. “Confronted with these challenges, the European industry is making the most of conditions that may not always be ideal. Nevertheless, we must not be complacent about the successes we have already achieved. If Europe does not want to be left behind digitally as an industrial location, everyone must pull together – politicians and companies alike.”
About the survey
The survey was conducted by the independent institute OnePoll among 1.250 participants from Netherlands, Germany, Italy and France. The survey period was March 2024 and the respondents were tech decision-makers from the manufacturing industry, including the aerospace / aviation, automotive, computer hardware, electronics, engineering, manufacturing, textiles, transportation / distribution, utilities (electricity, gas, water) sectors.
Images: reichelt elektronik, Adobe Stock
