Covid-19 pandemic accelerates the digitalization journey of SMEs

Supported by İstanbul Development Agency (İSTKA) and carried out by Bosphorus University with the partnership of İstanbul Dudullu Organized Industrial Zone (İDOSB) and the İstanbul Chamber of Industry (İSO); Digital Transformation Assessment Tool in Turkey (D3A) 2019-2020 Final Report was announced.

Creating road maps specific to each of the 100 companies participating in the research, D3A is a long term project that reveals the level of preparation for digital transformation of SMEs in our country and determines the steps to accelerate this transformation. In the first phase of the project covering the years 2019-2020, the digital transformation of 100 industrial organizations that are members of İDOSB and İSO was evaluated.

“After the Covid-19, new roles are waiting for Turkey in the global value chain.”

Speaking at the online meeting held to announce the project final report, Deputy Minister of Industry and Technology Mehmet Fatih Kacır said that: “Covid-19 showed how important digital transformation and self-efficacy are. After Covid-19, especially SMEs in Turkey expects new roles in the global value chain. Therefore, it is necessary to proceed in no time with the right steps in digital transformation by fulfilling the self-efficacy requirements. For this purpose, our preparations for the digital transformation support program continue. Incentive system will be integrated with appropriate assessment tools for digital transformation of Turkey. We aim it to be composed of not a single assessment tool but complementary tools highlighting differences, including the assessment of other parties representing Turkey’s competitiveness in detail.

For this purpose, we want to use the Digital Transformation Assessment Tool developed by Bosphorus University to evaluate the digital transformation of SMEs, sectoral and structural differences. We also examined samples in the world, we believe we will proceed more quickly in Turkey’s digital transformation journey with the products and tools to be developed with local and original sources tools and I would like to thank Bosphorus University professors and contributing companies.”

“We applied for a patent for this indexing method”

Bosphorus University Rector Prof. Dr. Mehmed Özkan stated that: “With the indexing method developed in this study, we applied for a patent and a digital transformation assessment tool suitable for implementation was developed at SME scale. We wish D3A tool to be a useful tool for the digital transformation of SMEs in Turkey.”

“It is not enough to determine the current situation of SMEs; road maps should be presented as well.”

Bosphorus University Digital Transformation and Industry 4.0 Platform President Prof. Dr. Lale Akarun shared the following information about the index in her speech which announced the results of the project 2019-2020:

“Digital transformation is the key to providing high value added services and products as well as ensuring international competitiveness by increasing efficiency in the industry. The World Economic Forum predicts that the value that digital transformation will create in social and economic terms will be 100 trillion USD in the 10-year period. In our country, with the full application of industry 4.0 technologies, it is calculated that there will be an increase of 3% annually in industrial production and 1% in GDP. However, this transformation is a challenging process for SMEs, which make up 99% of the enterprises in the production sector. Therefore, special evaluation tools are needed for the digital transformation of SMEs. In order for these tools to be effective, it is not enough to determine the current situation of the SMEs. Road maps need to be presented clearly. We have developed D3A with this perspective to serve three main purposes: To determine the need for transformation, to monitor whether the need is met and to measure the benefit of transformation.”

Mentioning the effects of Covid-19 pandemic on digitalization, Prof.  Dr. Lale Akarun said that:

“In the future, 2020 will be remembered as a year in which digital transformation gained momentum. Digital technologies have been around for a long time, but in order to enter our lives, human behavior had to change. The pandemic had an accelerating effect here. When it comes to health threats in our daily lives, we have seen how we quickly adopt e-commerce, internet journalism and distance education. Along with this, great changes are going to be experienced in the production sector. In this pandemic, contacting with sick people is a big risk. Robot use is expected to increase in high-risk jobs. Sterilization robots, patient care robots will become widespread. Demand for unmanned cash registers will increase in the markets; technologies that reduce contact will emerge in the logistics industry. Economic difficulties in the past always brought growth afterwards. This time growth is expected to be invested in new digital technologies. We saw that our industry quickly adapted to the situation in the Covid-19 pandemic. For example, textile manufacturers started sewing surgical masks. Supporting this adaptability with innovations like virus-proof technological fabrics, self-cleaning materials and automation in quality control can make the gain permanent. In general, this process is the best investment for SMEs to monitor how the world will transform in the long term, by preparing for transformation and focusing on education.”

Digital transformation report card of SMEs

D3A, developed for SMEs, includes evaluations under 5 titles: organizational structure, customer management, product development, supply chain management and production management. A total of 65 questions were asked to 100 SMEs participating in the research and each criterion was evaluated on a scale of 0-4.

The companies were grouped into three clusters under each title as beginning, intermediate and advanced. The most remarkable differences of the companies in different clusters were discovered and recommendations were made for them to advance to an upper level. Each company participating in the study was given these recommendations with a chart showing their location according to the general average and road maps were created.

The digital transformation level of SMEs was evaluated in 5 different categories on a scale of 0-4. Although the average scores were low, it was noteworthy that there were companies that performed well above the average. It was observed that the rate of companies at advanced level is quite high especially in production management. As a result of the research, recommendations for companies were developed based on good examples.

Recommendations for SMEs

• In order to reach the advanced level in the organizational structure, digitalization should be put as a strategic target and the target spread should be shared with all relevant units. Strengthening the IT infrastructure is also important in this process.
• Customer and market data should be analyzed and used in algorithms to play an effective role in sales forecast, pricing and other operational and tactical decisions in customer management. Sharing sales data online with relevant units of the business is also an important key to reaching the advanced level.
• It is important to carry out R&D / P&D in product development, conduct project research with external academic partners and carry out projects with external support.
• Production planning for advanced level in supply chain management should be integrated with supply and shipment planning. Optimization should be used in lot sizes or capacity planning. Data should also be used for production and capacity planning.
• In the digitalization of product management, it is important to monitor material movements, machine stops and employees at the production site. It is necessary to collect the data, analyze the production control system data, manage production orders and the order of the works at the workstations accordingly.