What is holding back digital adoption among Europe’s SMEs, despite the EU’s ambitious digital targets?
Derk Bleeker: Let’s be clear: there is no lack of ambition from Europe’s SMEs when it comes to digitalisation - 85% say digital technology is crucial to their growth1, highlighting its role as a driver of competitiveness. The challenge is not mindset, it’s operating conditions. Cash-flow pressure and regulatory complexity continue to slow adoption, meaning digitalisation is seen as compliance rather than growth.
Cash flow is the most immediate constraint. One in five EU SMEs struggles with liquidity, and those under pressure invest significantly less in technology2. When businesses focus on getting paid and day-to-day survival, long-term digital investment becomes harder. Yet digitalisation is key to unlocking competitiveness and cash flow. So we need digital and economic policy to lift SME’s out of this catch-22 situation - otherwise digital adoption will remain uneven, despite strong demand.
Andrea Wechsler: The main obstacle is not a lack of ambition among Europe’s SMEs, but the framework in which they operate. Around 73% have reached at least a basic level of digital intensity, yet scaling beyond that remains difficult. The cumulative burden and complexity of EU digital regulation - GDPR, the AI Act, cybersecurity and sector rules - create legal uncertainty and high compliance costs, which weigh disproportionately on small firms. Many hesitate to experiment with AI or advanced data use because the regulatory risk appears too high.
At the same time, skills shortages persist, but they are not inevitable. Europe has underinvested in digital education, STEM skills and entrepreneurial culture for years. Digital competence must start in schools and vocational training. Moreover, political debates have often emphasized the risks of new technologies rather than their opportunities. If policy signals caution without confidence, businesses respond with hesitation. To unlock adoption, Europe needs regulatory simplification, faster guidance and a pro-innovation mindset.
We must now move from experimentation to trusted, everyday AI, built on digital infrastructure that turns administrative data into a strategic productivity asset - Derk Bleeker
How can the digitalisation of everyday operations improve efficiency and help the Single Market work better for businesses?
DB: Digitalisation delivers the greatest value in everyday processes such as invoicing, payments and reporting - where SMEs friction is highest. E-invoicing is a clear example. When implemented well, it goes beyond digitalising paper: structured e-invoicing can save SMEs up to €13,500 per year in manual administration, while widespread adoption could boost EU labour productivity by up to 2.6% per year and reduce late payments by 20%3.
Benefits increase when e-invoicing is combined with AI and trusted digital identity. AI can use structured data to automate checks and reduce administrative costs, while linking invoices to verified business identity - including through the European Business Wallet. It strengthens trust and reduces fraud. This requires interoperable systems across Member States. The proposed 28th regime offers an opportunity to support cross-border expansion through a voluntary, harmonised, digital-by-default framework.
AW: Digitalisation is not a buzzword; it’s basic business infrastructure. When SMEs digitise invoicing, procurement, inventory, payroll, customs documentation, and customer service, they reduce error rates and transaction costs - and they can sell cross-border more easily because processes become repeatable, auditable and increase productivity. That is how the Single Market becomes “real” for smaller firms, not just for multinationals.
This is also where Enrico Letta’s argument resonates: completing the Single Market now requires a “5th freedom”- free movement of knowledge, innovation and capabilities - so firms can scale ideas, talent and data-driven services across Europe faster. Speed matters: if we want productivity, we need fewer internal barriers and quicker implementation fixes when rules create unintended friction.
EU policymakers and tech providers must move beyond incremental fixes. We need a fundamental simplification of Europe’s digital rulebook - MEP Andrea Wechsler
How can AI help SMEs use their data to make smarter, more efficient business decisions?
DB: Whether in dealing with customers, handling finances or paying their people, “almost right” is just not good enough for SMEs. AI adoption depends on trust, and trust depends on accurate, structured, real-time data. Today, too much SME data remains locked in PDFs and spreadsheets, which limits the practical value of AI. E-invoicing is a proven gateway to accelerating digital adoption: 9 out of 10 SMEs that adopt e-invoicing go on to adopt other digital solutions such as AI and cloud technologies4.
Embedded into familiar tools, AI can forecast cash flow, flag anomalies and fraud risks, and automate routine admin and compliance tasks, freeing up time for higher-value work. We must now move from experimentation to trusted, everyday AI, built on digital infrastructure that turns administrative data into a strategic productivity asset.
AW: Applied AI can turn “data exhaust” into decisions: cashflow forecasting, demand planning, predictive maintenance, fraud detection, dynamic pricing, and faster customer support. The productivity evidence is increasingly concrete: field evidence in customer service shows material productivity gains when workers use generative AI assistance, with especially strong improvements for less experienced staff.
Experimental evidence also finds faster task completion and improved output quality in knowledge-work style tasks. But AI value depends on adoption conditions: access to secure cloud/compute, interoperable data, and legal clarity. If compliance uncertainty is high, SMEs will stay at “pilot” stage.
How can EU policymakers and tech providers work together to help SMEs move from basic adoption to innovation-led growth?
DB: EU policymakers and tech providers must work together to build a data-driven Single Market, not just mandate tools. Digitalisation should be seen by policymakers and SMEs alike as a way to simplify trade, reporting, and payments, not add compliance burdens.
For policymakers, that means following through on the Single Market Strategy’s digital-by-default approach prioritising interoperability and proportionality for SMEs. The upcoming reforms to e-invoicing in public procurement will be an important lever.
Tech providers must translate standards into interoperable solutions embedded in SME workflows. They play a critical role in bringing the ecosystem together. Accountants and bookkeepers, for example, are essential partners in the digital transition, supporting SME adoption of digital tools and strategic use of data. With the right digital foundations, SMEs won’t just keep up - they’ll lead Europe’s next wave of growth.
AW: EU policymakers and tech providers must move beyond incremental fixes. We need a fundamental simplification of Europe’s digital rulebook. Today, horizontal and sectoral requirements overlap, diverge and fragment across Member States. For SMEs, this means legal uncertainty and disproportionate compliance costs. Where rules are duplicative or excessively complex, we must have the courage to streamline - and, where necessary, deregulate.
Innovation cannot thrive in a maze of overlapping obligations. Second, we must shift from a narrow “sandbox” mindset to a default setting in which digital solutions are welcome and usable across all sectors. Digitalisation should be the norm, not the exception requiring special permission. That requires interoperable standards, fast guidance, and practical compliance tools developed jointly with industry.
And we should be clear-eyed. A line I hear from Chinese counterparts is: “You have the AI Act; we have the AI.” Europe must prove this is a false choice: we can protect citizens and win on applied AI - by making compliance workable, accelerating the Single Market’s 5th freedom, and focusing relentlessly on productivity.
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