Digital transformation of micro and small companies still incipient in Brazil

According to a new study, companies in the segment are in the initial stages of digitalization but are increasingly open to innovative approaches.

According to new research, Brazilian micro and small businesses are mostly in the initial stages of digital transformation, but these companies are increasingly open to technology innovation.

Using a 4-level scale, where 1 is an organization that operates in an analog manner, 2 is considered "emergent" in terms of adoption, 3 is at an intermediate level of digitalization, and 4 is a digital leader, the Digitalization Map of Brazilian Micro, and Small Enterprises survey was carried out by the Brazilian Agency for Industrial Development (ABDI) and the Getúlio Vargas Foundation (FGV) with 2,572 companies nationwide.

According to the research, 66% of companies in the segment are in the initial two stages of digital maturity, while 30% are in the intermediate stage (level 3), and only 3% can be considered digital leaders.

Moreover, the degree of implementation of 25 good practices in the digital space and the use of enabling technologies was measured as part of the study. According to the research, the average digital maturity of Brazilian micro and small companies is 40.77 points, on a scale ranging from 0 to 100 points, where 0 is a company that is not digital at all, with 100 being fully digital.

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The survey also found that broadband access is a reality for 68.7% of companies. However, only 27.5% of the organizations surveyed have a website with interactive features, while 25.4% use cloud computing services, and just 19% collect or store data from their customers.

Distance learning as a means to boost the workforce skills was a method employed by only 17.7% of the organizations surveyed, while cybersecurity tools were in place in only 21.4% of the firms surveyed. A separate study carried out by Marsh on behalf of Microsoft has found that 84% of the companies in Brazil have failed to boost investment in cybersecurity in the last few months despite an increase in incidents as a result of the Covid-19 pandemic.

In relation to innovating fast and collaboratively, 43.7% of the companies polled in the ABDI/FGV study claimed to be open to opinions and suggestions for the development of products or services, but only 11.6% engaged with other companies and their customers in such processes.

When it comes to the reasons why micro and small companies in Brazil struggle with digital transformation, almost 40% of respondents stated the main difficulty for digital transformation is the lack of financial resources to invest. The lack of strategy and knowledge on how to digitalize their company was cited by 25% of entrepreneurs as the main hurdle in the process. On the other hand, 68% of those surveyed said they are open to participating in some kind of digital maturity acceleration program.

Beyond the challenges found in the report, the findings point to the opportunities when it comes to the adoption of digital approaches in micro and small organizations in Brazil, since they account for more than half of Brazil's job vacancies, according to the president at ABDI, Igor Calvet.

"It is essential that companies adapt and make the most of the benefits of these technologies, which help to improve their operations, create new business models and generate more revenue", the executive noted.