Our digital SMEs are not start-ups!

7 months after its launch, FrenchTech is a real success story. My ex-start-up digital soul is rejoicing. This adventure reminds me of my life in the late 90s, before the dot-com bubble burst. Vitality, incredible ambition, an abundance of ideas, a community of entrepreneurs and investors… in short, a wildly positive energy. 15 years on, we can only congratulate ourselves on this government-sponsored movement. It’s about time!

France realizes that digital is a crucial issue for our old Europe, and the fertile humus for all our industries. As you’ve no doubt noticed, the word “digital” gained its letters of nobility in the latest ministerial reshuffle: we now have a Ministry of the Economy, Productive Redress and the Digital Economy!

Combined with new energies, digital technology is at the heart of the Third Industrial Revolution described by Jeremy Rifkin. This industry needs to be supported in its investments and innovations, but not only … It is essential to support its development by focusing on its fabric of SMEs, which need to be densified, transformed into ETIs and taken to the international stage.

It’s true that the government has recognized the importance of SMEs to the French economy. The growth of SMEs is a vector of performance, transformation and innovation for the economy, and a strong potential for job creation. Existing initiatives are to be welcomed and supported: The work of the national public procurement mediation service, the Pacte PME platform, the programs proposed by competitiveness clusters…

But beware: a digital SME is not a start-up, and a digital SME with differentiated offerings is not necessarily innovative.

Our SMEs suffer from three main ills: market access, relations with major principals and financing their working capital. In this respect, the data from our survey (SME/ETI Barometer – September 2013) are unequivocal: 96% of SMEs/ETIs find access to large companies difficult. The same survey showed a deterioration in relations between SMEs and large companies, mainly for the following reasons

• Restrictive purchasing policies of major accounts (87%)
• Strict size requirements for SMEs (65%)
• Unable to find a contact (38%)

Major customers too often perceive SMEs as the ideal partner for innovation and prototyping. SMEs are not perceived as potentially sustainable over time for major projects, and would represent a risk. When it comes to the industrialization phase, major customers don’t have the SME reflex. This phenomenon is greatly accelerated by policies of cost rationalization and supplier consolidation at purchasing level, which leave no room for SMEs and thus deprive them of vital market access. In response to these practices, it should first be remembered that prototyping requires a high level of investment on the part of the SME, and yields little revenue.

Secondly, most of our SMEs are companies that, over the years, have developed the know-how to manage medium-sized industrial projects. Their many references bear witness to this.

Finally, beyond innovation, agility, proximity and expertise – intrinsic qualities of our SMEs – are real assets for our major companies. I would even go so far as to say that they are essential ingredients in their digital transformation.

Our digital SMEs should no longer be equated with “start-ups” or confined to “innovative purchasing”. Major clients need to reform their purchasing procedures to integrate these new entrants. As you can see, this is not just a question of responding to the demands of Corporate Social Responsibility (CSR), but a market challenge for our public and private companies.