Digital transformation in SMEs: Why relationships matter as much as technology

Kars-Unluoglu, Selen; Kevill, Alex; Estrada-Robles, Mariana

Abstract

Digital transformation is increasingly recognised as the basis for driving business productivity, innovation, and growth. In the UK, small and medium-sized enterprises (SMEs)—the backbone of the economy—often face significant challenges in adopting digital technologies compared to larger firms. Despite the availability of various policy initiatives and funding schemes, many SMEs still struggle to effectively integrate digital capabilities into their operations, leaving untapped potential for enhancing competitiveness.
This report provides an overview of the UK’s digital transformation landscape, focusing on SMEs and their critical role in sustaining economic growth. We provide insights from SME practitioners, highlighting that digital transformation is not solely a technical challenge but also a deeply relational one. Our findings reveal that SMEs achieving the most success in digital transformation are those where practitioners actively engage colleagues, build organisational support, and align their digital skills with broader business goals.
Key barriers to digital transformation include resistance to change, unclear strategic direction, and insufficient leadership support. These issues often arise from limited stakeholder understanding, weak organisational buy-in, and the absence of a clear digital strategy. Conversely, the report identifies enablers that drive success: strong internal networks, opportunities for practitioners to showcase their digital skills, and a culture that encourages innovation and collaboration.
To support SMEs in overcoming these challenges, we introduce the ADAPT Model, a practical framework tailored for practitioners embarking on digital transformation. The model comprises five interrelated dimensions:
•Agency: Empowering individuals to act as digital champions
•Destination: Establishing a clear vision and goals for transformation
•Association: Building strong relational networks within the organisation
•Progress: Ensuring measurable steps and continuous improvement
•Tapestry: Integrating new technologies into the organisational fabric
The policy recommendations set out in this report aim to address the unique challenges faced by SMEs, enabling them to harness the full potential of digital technologies and remain competitive in today’s changing world.

• Report Type: Research Report
• Publication Date: Oct 7, 2024
• Deposit Date: Jan 6, 2025
• Publicly Available Date: Jan 7, 2025
• Public URL: https://uwe-repository.worktribe.com/output/13592868