Empowering Europe to Compete – How to Make SMEs Fit for the Digital Age?

On Tuesday, December 17, SME Connect organized a working breakfast titled „Empowering Europe to Compete – How to Make SMEs Fit for the Digital Age?” at the European Parliamentary Association in Strasbourg. The event was hosted by MARION WALSMANN MEP and Co-chair of the EPP SME Circle, Vice-Chair of the JURI Committee, Member of the IMCO Committee.

The panel featured distinguished experts including GREGOR SCHMALZRIED, Journalist and Consultant specializing in Generative AI Strategy; ANDREAS PLOTZITZKA, One-Person Company Owner of the Media Production & Marketing Agency Salienz; MICHAEL MAUS, Founder of Evolution24; MARGARETE RUDZKI, Head of Unit Digital Economy & Society at the German Confederation of Crafts and Small Businesses (ZDH), and BETSY ANNEN, Global Head of Ads Ecosystems & Safety, Government Affairs and Public Policy at Google. The event was moderated by HORST HEITZ, Chair of the Steering Committee of SME Connect.

In her introduction speech, MARION WALSMANN MEP highlighted the critical role of Europe’s 23 million SMEs in driving jobs and innovation. She addressed the significant challenges SMEs face, including financial constraints, limited digital expertise, and administrative burdens, which risk Europe falling behind competitors in the digital economy. Ms. Walsmann emphasized the EU’s efforts to tackle these issues through initiatives like Digital Europe and the expansion of Digital Innovation Hubs, which support SMEs in adopting technologies like AI and cloud solutions. She called for reducing bureaucracy, enhancing digital education, and creating financial incentives, stressing the urgency of coordinated action at EU and member state levels to bolster SME competitiveness.

GREGOR SCHMALZRIED explored the current and potential impact of generative AI on workflows and SMEs. He introduced generative AI, such as ChatGPT, which are particularly relevant for SMEs. He highlighted the rapid adoption of AI, with tools like ChatGPT being used by 92% of Gen Z knowledge workers weekly. Gregor acknowledged AI’s limitations, such as a lack of understanding of truth and its tendency to generate plausible but incorrect information. However, he emphasized its utility in tasks like text summarization, creating code, and enhancing productivity, estimating that AI could reduce SME workflows by at least 25%. He concluded by stressing the need to identify which tasks are best suited for AI and which require human expertise, envisioning a future where AI handles repetitive tasks, freeing humans for more nuanced and creative roles. The speech underscored AI’s transformative potential for SMEs, balanced by its current limitations and the need for responsible application.

MICHAEL MAUS emphasized the transformative potential of AI, describing it as more than a trend but a tool that could reshape the future. He introduced practical applications of AI, such as “Buki” a system generating high-quality, search engine-optimized content with unique character in under a minute. This tool can produce up to 192 articles annually, attracting nearly 30,000 targeted readers. Additionally, he highlighted tools like AI-powered newsletters and intelligent assistants, which can quadruple employee productivity. Michael underscored the need for courage and a positive mindset to embrace AI’s opportunities. He demonstrated how AI reduces costs, scales operations, and enhances creativity, presenting it as vital for future business growth. He called for action to leverage AI’s potential now, ensuring businesses stay ahead of the curve. His speech advocated for viewing AI as a transformative force for productivity, innovation, and long-term success.

ANDREAS PLOTZITZKA highlighted the transformative impact of AI-powered targeted advertising for SMEs. He shared examples of how businesses, including a freelance musician and a high-end restaurant, used AI tools to optimize their marketing efforts and achieve significant results. The musician expanded his YouTube following from 400 to 14,000 subscribers in two months with a modest €1,000 investment, while the restaurant reduced its marketing budget by half using AI-driven audience targeting. Andreas emphasized the cost-effectiveness of AI in tailoring advertisements to specific audiences, enabling SMEs to compete effectively with limited resources. He acknowledged potential concerns about data privacy and surveillance, particularly among younger generations, and called for policymakers and platforms like Google to address these issues. While challenges remain, he stressed that targeted advertising offers a significant opportunity for SMEs to grow, innovate, and compete in the digital economy.

BETSY ANNEN emphasized the importance of digital advertising for SMEs to thrive in the digital age, particularly through personalized ads. Using a relatable example of a consumer searching for locally crafted gloves, she illustrated how SMEs can leverage digital tools to connect with targeted customers effectively. Betsy stressed that personalized ads ensure SMEs only pay for highly valuable traffic—interested consumers who are more likely to convert into buyers. She highlighted the complexity of modern consumer journeys, with an average of six steps before purchasing a product, underscoring the necessity of digital tools to navigate this landscape. SMEs, often constrained by limited resources, require efficient marketing strategies to maximize returns, with platforms like Google delivering an average of €8 in profit for every €1 spent on ads. Betsy expressed concerns about new regulations potentially restricting personalized ads, noting that digital advertising is already heavily regulated under frameworks like the DSA and DMA. She urged policymakers to focus on enforcing existing regulations and simplifying processes rather than imposing additional burdens, to protect SMEs’ ability to grow and compete effectively in the digital marketplace.

MARGARETE RUDZKI highlighted the unique challenges and opportunities facing small and micro businesses in Europe, particularly in the context of digitalization. Representing millions of craft and small enterprises, she emphasized the disparity between traditional and technology-driven SMEs, noting that digital transformation has become a necessity due to skilled labor shortages and time constraints. Margarete shared examples of innovative AI use in unexpected sectors, such as bakeries using sensors and data to optimize production and reduce waste, and roofers employing AI to predict roof maintenance needs. Despite these successes, she pointed out that only 4% of small companies currently use AI, reflecting a broader need for awareness and support. She called for targeted policies, including simplified funding programs and expanded awareness initiatives, to help SMEs recognize the value of data beyond GDPR compliance. While praising initiatives like Digital Innovation Hubs, she criticized the complexity of programs like Digital Europe, advocating for smaller, more accessible funding schemes tailored to SMEs’ needs. Margarete also stressed the importance of implementing existing legislation, such as the Data Act and AI Act, to reduce legal uncertainties for businesses. She urged policymakers to prioritize smaller companies in funding and regulatory frameworks, ensuring digital innovation benefits the majority of European SMEs.