New data analytics from the International Centre for Industrial Transformation (INCIT) highlights an urgent challenge facing small and medium enterprises (SMEs) worldwide. These key contributors to the global economy are falling dangerously behind in their digital transformation journeys—at a time when new tax tariffs are tightening the pressure on productivity and competitiveness.
A Concerning Digital Deficit
INCIT’s analysis reveals that the global average Smart Industry Readiness Index (SIRI) score for SMEs currently ranges between 0 and 2 on a scale of 0 to 5. This reflects low levels of digital maturity across essential areas such as operations, technology adoption, and organisational structure.
This gap in digital capabilities translates directly into lower productivity and reduced efficiency—two critical disadvantages in today’s fast-evolving industrial landscape. While larger enterprises continue to reap the benefits of automation, data integration, and digital agility, many SMEs remain reliant on manual processes and outdated systems.
New Tax Tariffs Add to the Strain
The timing of this digital lag is especially concerning. Recent tax reforms and tariffs—introduced in several regions to promote localisation and drive productivity—are likely to hit SMEs hardest. Without the productivity gains enabled by digital tools, these businesses may find themselves bearing the brunt of increased input costs, disrupted supply chains, and diminished competitiveness.
Digital Transformation: A Business Imperative
For SMEs, digital transformation is no longer optional. It is a vital strategy for survival and growth in an increasingly demanding economic environment. Embracing technologies such as cloud computing, data analytics, and connected systems can dramatically improve output, efficiency, and resilience.
Five Steps to a More Resilient SME Future:
- Assess and Understand
The first step is understanding current digital maturity. Tools like INCIT’s Smart Industry Readiness Index (SIRI) assessment provide a comprehensive benchmark and highlight areas for improvement. - Invest Strategically
SMEs should make targeted investments in digital technologies aligned with business needs—from simple workflow tools to advanced automation platforms. - Empower the Workforce
A digitally enabled workforce is essential. Upskilling and continuous training help employees adapt and thrive with new technologies. - Collaborate for Impact
Strategic partnerships—with technology providers, industry associations, or larger enterprises—can offer access to critical resources and insights that accelerate transformation. - Prioritise Agility
Digital tools enable flexibility and adaptability, allowing SMEs to respond rapidly to economic shifts and tariff-related challenges.
A Clear and Urgent Choice
The message from the data is unmistakable: SMEs stand at a crossroads. Continuing without digital transformation risks not only stagnation but also amplified exposure to external pressures such as new tariffs. By prioritising digitalisation now, SMEs can strengthen their foundations, boost their competitiveness, and build a more secure, future-ready business model.
