How Spanish SMEs Are Advancing in Digital Transformation

For several years now, digital transformation has become indispensable in any economy. This process, driven by rapid technological development, is key for the Spanish business fabric and, in particular, for its pymes, which represent around 99% of the country’s companies, according to the INE. In this context, in 2022 — during the onset of the post-pandemic recovery — the Kit Digital program began. Managed by Red.es and with the collaboration of the Spanish Chamber of Commerce, it is the government-backed digitization program funded by the European NextGenerationEU funds.

After more than three years of deployment with the objective of generating direct subsidies to strengthen and digitalize small and medium-sized enterprises, Kit Digital enters its final phase. The total economic package of subsidies for SMEs and self-employed over these three years exceeds 3.4 billion euros, which makes it the largest digitization program in Spain to date. To manage this large-scale deployment and facilitate implementation, the role of the digitalization agent has been developed: companies or self-employed individuals in the tech sector who, through the program, collaborate with the SMEs applying for these subsidies. This scheme, which combines funding and technical support, has allowed reaching more than 870,000 SMEs and self-employed. The impact surpasses the initial target of 676,000 subsidies agreed with the European Commission and translates into one in five Spanish SMEs having participated in the program.

“In the case of SMEs and self-employed, more than 65% say their sales have increased and 40% report having expanded their workforce after implementing the program’s solutions”

According to the available data, both the digitalization agents and the beneficiary companies report growth. For SMEs and self-employed, more than 65% say their sales increased and 40% indicate having expanded their workforce after implementing the program’s solutions. For the digitalization agents, the sales volume grew, on average, by more than 1,200,000 euros. Among the tools and services most requested are the following:

As reflected by the data, out of a total of seventeen solution categories, the creation of websites and the management of processes have been two of the most demanded. One beneficiary of the latter category was José Luis Fernández, CEO of evenTwo Mobile Apps. According to him to Agenda Pública, Kit Digital has given him the opportunity to develop a program for his sixteen-employee company that, without these subsidies, would have been harder to onboard. This CRM software —which allows, among other things, to track customers— has meant an improvement in the company’s internal processes and, although “it was already quite digitalized,” the current program has represented a leap in its activity.

Sustaining economic growth through digitalization

Another way to gauge the program’s impact is by the type of businesses applying for the subsidies. As Fernández notes, “digitalization, more than important, is essential,” and therefore this dimension applies to any type of company.

In the following chart there is an aggregation of the main Economic activities of the SMEs and self-employed that have received this aid. Red.es indicates that they have managed to “reach all sectors”.

Beyond transportation and communications companies, the data highlight the restaurant and hospitality sector (17.77%) and the construction sector (21.06%). These sectors, which a priori had lower digitization, have also managed to develop new websites or have received support in managing their social networks.

On the other hand, for companies like evenTwo Mobile Apps, which also offers its services outside of Spain, Fernández underscores that this type of aid strengthens their ability to compete in other markets. “Having this kind of programs helps us”, he adds regarding competition with other international companies.

“According to the balance sheet presented by Red.es, the Kit Digital subsidies have reached around 92% of Spanish municipalities and more than 90% of rural municipalities”

Additionally, the available data allow verifying the program’s territorial penetration level. According to the balance presented by Red.es, the Kit Digital subsidies have reached around 92% of Spanish municipalities and more than 90% of rural municipalities (6,018 in total). In these settings, where nearly a sixth of beneficiaries reside and almost 17% of the agreements are signed, the program has become “a lever to reduce the territorial digital divide”, as the report states.

Alongside the territorial challenge, the gender issue stood out. According to the INE, women face more difficulties than men when starting a business: only 36.8% of self-employed people in Spain are women. Despite the risk of underrepresenting them, 37.9% of the total self-employed beneficiaries are women, a proportion slightly higher than their share in the overall self-employed. The data point to a partial correction of the gap, although it remains an area where action is needed.

Focus on reducing bureaucracy: “zero papers” policy

When tackling the implementation of high-budget public policies, the way subsidies are processed is almost as relevant as the amount. In this case, Kit Digital has embraced a “zero papers” philosophy: eliminating paper processing and minimizing the electronic documentation that applicants must present. The program automatically verifies the requirements by cross-referencing data with other administrations and records, with the idea of saving time and reducing the bureaucratic burden.

According to the report, this automated architecture has reduced the average verification time per file to about three minutes and cut processing times by around 90%, relying on 39 robots that have performed more than twenty-four million automatic checks. The management of these robots has allowed 45% of applications to be automatically approved. In addition, the zero-paper policy has avoided handling more than fourteen million documents just in the concession phase, in an approach that also takes into account pollution and emissions reductions. 

“The zero-paper policy has avoided handling more than fourteen million documents just in the concession phase”

As stated during the balance of this program by the Minister for Digital Transformation and Public Function, Óscar López, “Kit Digital is growing up and has already evolved toward a new generation of programs that are underway”. Thus, digitization will continue to be promoted through new public policies. Among them, the minister highlighted Kit Consulting —a program focused on advisory services for SMEs—, or RedIA and RedIA Health, which are policies focused on artificial intelligence for businesses and the healthcare sector

The evolution and growth of AI and related technologies presents a scenario in which more and more companies will need to adapt. In that context, maintaining sustained effort in this field seems prudent. Leveraging the mechanisms that have allowed Kit Digital to advance —such as automation or the reduction of administrative burdens—and reviewing those aspects that require adjustments will be decisive for the design of new programs. That learning will also influence the ability of SMEs to improve their competitiveness and productivity in the coming years.