KEY ISSUES FOR DIGITAL TRANSFORMATION IN THE G20

These adoption gaps between large firms and SMEs appear to persist over time. Both small and large firms
have increasingly adopted ERP software: On average, 78% of large firms used ERPs in 2015 compared with 64%
in 2010, and 33% of small firms used ERPs in 2015 compared to only 16% in 2010. However, even though ERPs
have diffused to more small and large firms, the disparity across firm sizes in 2015 remains at similar levels to
2010. On average, large firms remain around 50% more likely to have adopted ERPs than small firms in 2015, a
similar adoption gap as in 2010.
The available data also point to systematic differences in the adoption of other complex digital technologies
across firms; 10 small and young plants (one to ten years old) are, for example, less likely to use data
management software than older and larger establishments (see Figure 43). Although there is considerable
cross-country variation, a common finding is that plants that are both younger and smaller are less likely to use
data management software than those that are larger and older. On average, 67% of larger-older plants use
data management technology, whereas only 41% of smaller-younger plants do so. Similarly, on average 41% of
establishments that are larger-older use innovation software as opposed to roughly 11% for small-young
plants.
% Large and old plants Small and young plants
100
80
60
40
20
0
Notes: Size classes are defined based on plant employment as: small (from 1 to 100 persons employed) and large (250 and above). Age
classes as defined based on plant age as: young (1-10 years) and old (25+ years). Small and young plants comprise a large proportion of
new plants of multi-plant firms.
Source: Authors’ calculations based on data from CiTDB.
In contrast to the “traditional” investment in emerging ICTs, recent years have witnessed a growing trend
towards buying ICTs as a service (Marcolin, Le Mouel and Squicciarini, forthcoming). This externalisation of the
costs of ICT investment by purchasing services that are functionally equivalent to ICT investment may help
SMEs to overcome the barriers discussed above. Indeed, one reason why firms are beginning to move away
from making investments in ICTs is that it enables firms to escape the often high, upfront sunk costs of these
investments. Another reason – important for large as well as smaller firms – is that the fast advances in ICTs
result in a continual churning of technology use; buying ICT services allows companies, and SMEs in particular,
to switch more rapidly from one technology to another as they are not locked in by the large investment of
specific ICTs which may become rapidly obsolete because of the arrival of newer – and better – technologies.