Digital Transformation Must be Embraced by All

Analysis

The need for it has long been there. Organizations such as the American Chamber of Commerce in Hungary went so far as to make it one of the four key strategic areas it focused on in its 2017-2020 Policy Agenda publication, its “roadmap for [...] advocacy activities.” 

The “it” in question is the digital transformation of the Hungarian economy. Over the years we have written countless articles on the subject, looking at progress and problems, at government programs, at education and workforce needs. That it is a trend is obvious; that it is also a necessity seems to have gone unnoticed by some, not least Hungary’s SMEs.  

Our special report in this issue looks at the telecoms sector. From the conversations we have been having with various market players, it is clear that to the small number of good things to come out of the coronavirus pandemic (less air pollution, more caring communities, the rediscovery of morning birdsong) can be added the acceleration of the digital transformation.  

In one sense this is obvious. When the schools closed and the country started to a work from home from mid-March, three things were required: individual laptops or desktops; greater national band width to support all those extra computers going online; and added security (just think of all those home office work stations outside the company firewall).  

In living through this mass experiment we learned a number of things. Some people adapt better to remote working than others; video conference calls might be a good (and certainly a cost effective) alternative to long-haul business travel, but creative solutions tend to be better where social interaction allows in-person brain storming. Perhaps most importantly, bosses learned they can trust the vast majority of their staff to work from home, and we all learned first-hand some of the benefits of digitization.  

Taken at face value, this is to be welcomed indeed. One of the particular problems Hungary has faced is a reluctance to digitize among SMEs, who perhaps saw it as just another cost to be borne. But even larger Hungarian companies weren’t always moving with lightning speed to adapt themselves. Gerald Grace, the CEO of Invitech ICT Services, who we interview in this issue, says larger companies now get the need. They have learned the lessons of lockdown, and in many cases were already coming under pressure from competitors in export markets who were further advanced in their digitalization journey. He also makes the point that many of these larger companies are relatively well capitalized, and thus able to invest in digital transformation.  

But while that is good news, careful attention also needs to be paid here, or there is a real danger the digital divide between Hungarian SMEs and multinational companies will only widen. Regardless of the industry, MNCs rely on SMEs. If suppliers in Hungary are not able to meet the digitalized needs of the bigger players, the country’s competitivity is damaged and those multinationals will find somewhere else to set up business.  

It isn’t quite true to say it doesn’t matter how quickly large Hungarian corporates transform their businesses, but it is fair to say that how far behind the SME cohort is might be very important indeed. To be fair, the government seems to be aware of this, but it needs to be, and must do all it can to help further accelerate the process and close the digital gap.

Robin Marshall

Editor-in-chief

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