Good practice:

Complex SME development path for the uptake of Industry 4.0 solutions

Industry 4.0 is not only about robots, sensors, clouds and databases. As long as public assistance focuses on non-targeted open calls that support purchases of I4.0 equipment, policy makers will probably not see durable results and real developments among SMEs. Moreover, a single point of interaction - i. e. being awarded with some non-refundable grant to implement an Industry 4.0 technology modernization project – seems to bring suboptimal results both to policy makers and SMEs.
In our understanding Industry 4.0 is primarily about offering a tool to raise competitiveness of SMEs thanks to advances in technology. But it needs much more than modern equipment including business modelling, training and skill development of employees. To this and an approach that provides a tailored path to SMEs works well. Such an approach is offered by the Ministry of Finance and implementing bodies to SMEs. The path starts with awareness raising, then defining possible clients that receive a diagnosis and a customised itinerary on how digital transformation would serve them best and last grant-type assistance is offered for digital transformation.
The approach is coordinated by the Ministry of Finance, in agreement with the Ministry of Innovation and Technology as concerned policy maker. IFKA Nonprofit Ltd (a state-owned agency) and ICT-H (the No. 1. business association of the digital economy in Hungary) act as implementing bodies of the practice. Main target group is manufacturing SMEs.

The central point of the practice is a complex project offering awareness raising, diagnosis and development path. The project size is ~EUR 17 million even though the project includes other activities not part of this practice. Grants are offered in separate calls to SMEs.

Since the launch of the practice roughly 150 SMEs have been using the complex assistance. The approach itself is used in other segments of SME development in Hungary, e. g. in the case of the so-called gazelles, the high-growth companies.

The practice is more expensive to implement and benefits fewer SMEs than “conventional” approaches. On the other hand, unit costs of implementation for standard calls is lower but the result is less certain. It’s a challenge to find the right intervention mode when assessing this trade off.

The practice offers a different approach to standard SME calls that typically focus on a single issue and provide a one-time public support action. In such a “conventional” approach, a broad target group is typically set for SME calls without a deep understanding of SMEs needs and the same process is repeated with other calls and topics without tracking or monitoring individual development paths of SMEs.
This practice changes the above attitude by replacing the one-time public support action with a longitudinal mentoring of participating SMEs. Through targeted awareness raising a pre-selection of the target group takes place. From selected and interested SMEs, each SME receives a precise diagnosis and a customised development path. The SME is followed and supported through the development path and the improvement of the SME’s performance can be monitored and evaluated by public authorities.