Biggest Challenges that SMEs have in order to implement a digital transformation strategy 1

Title Page

Title: Biggest Challenges that SMEs have in order to implement a digital

transformation strategy

Type: Research Essay

Course Name: Current Issues in Engineering Management

Course of Study: Master’s in Engineering Management

Date: 16th November 2022

Author’s Name: Taj Ashraf

Matriculation Number: 92125722

Tutor’s Name: Prof. Dr. Dorian Mora

 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 2

Abstract: In Today’s age digitalization has become the need of all Sectors. SMEs are trying hard
to implement it as soon as possible however, the challenges for SME’s are more compared to
Large Enterprises or MNC’s. SMEs are resource constraint, they do not have adequate technical
expertise, technological advancement, human resources which are the crucial component when
implementing the strategies for digital transformation. Industry 4.0 replacing the industry 3.0 at fact
pace. In which new technologies like: Additive Manufacturing, 3D Printing, Big Data, Internet of
Things, Smart Factory, Cyber Physical System and Cyber Physical Production System gaining
popularity exponentially. All these systems are new to SMEs, and they lack in making strategy,
recognizing the potential of digitalization. Moreover, lack of digital skills and monetary and
personnel recourses.

1. Introduction
As we all are aware that in today’s age every Industry/Company is implementing digitalization in its
operation partially of fully. After the Covid-19 pandemic, this digital transformation has gain so
much popularity. Even the companies were trying to implement digital transformation much before
the Covid-19 arose, However the Covid-19 pandemic boosted the process. According to Srinivas
Reddy and Werner Reinartz.

Digital transformation is taking place all around us and there is hardly a single aspect of life
that has not been affected. In a traditional sense, digital transformation refers to the use of
computer and internet technology for a more efficient and effective economic value creation
process. In a broader sense, it refers to the changes that new technology has on the whole;
on how we operate, interact, and configure, and how wealth is created within this system. It
has become clear by now that the digital transformation has an obvious, lasting, and even
revolutionary impact, not only on the economic systems and commercial players, but
increasingly on the lives of individuals and on society at large:(REDDY & REINARTZ, 2017,
p. 11)

Here we will discuss about what is the biggest challenges that SMEs have in order to implement a
digital transformation strategy. As we know that there are various types of enterprises exists in the
world. SMEs are known as small and medium enterprises whereas the other one is large
enterprises. There are myriad of differences between these two, however our main concern here is
only SMEs. According to Ovidiu Nicolescu the following picture shows the main features of the
SMEs
 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 3

Figure General features of the SMEs organization system

Source: Adapted from (Nicolescu, 2009, p. 407)

According to Dibar Ulas,

Digital transformation is a functional use of web in design, manufacturing, marketing,

selling, promotion and is data-oriented management model. Therefore, capabilities of firms
are increased, and their processes are improved. Digital technologies are developments
regarding smartphones, cloud computing, big data, artificial intelligence, robotics systems,
internet of things, 3D printing, virtualization, cyber security, sensor technologies, advanced
robotics systems, automation and etc. which all is intensely used in many fields of
economic and social life.(Ulas, 2019, p. 662)

Before we go in the detail, we should have the basic knowledge of what we are implementing now
a days in the industry. As we are aware that we already entered in fourth industrial revolution. So,
the fourth Industrial revolution is nothing but the digitalization of the industry. So here we will see
the challenges which SMEs face in implementing the digital transformation strategies. Some of the
tools which is used for digital transformation is : Internet of things, Cloud Computing, Big Data,
Cyber Physical System , Cyber Physical Production System, Industrial IOT (Gamache et al., 2020,
p. 3). Now a days Internet of things is one of the most popular technologies. The term first coined
by the Kevin Ashton in 1999. This we will discuss in detail. Cloud Computing is a technique of data
processing there are various type of data processing technique such as edge computing, fog
 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 4

computing and the former mentioned. In IOT application the sensor generates a huge amount of
data so any data which comes in huge quantity and grows exponentially known as Big Data. Big
data is the major economic assets of the future. Mastering the potential of big data technologies
and understanding their potential to transform industries will elevate the competitiveness of
European companies and result in economic growth and job creations. (Cavanillas et al., 2016, p.
10). Big Data is a vital part of digitization of industries. CPS and CPPS is the part of Industry 4.0
which is the acronym of Cyber Physical System and Cyber Physical Production System
respectively. When we use Internet of things in Industry it is generally called Industrial IOT or
abbreviated as IIOT.

2. Detailed Analysis of SMEs.

Now we will discuss in detail regarding the challenges that SMEs have in order to implement a
digital transformation. There are Various challenges in the implementation of digital transformation
strategies for both MNEs/ Large enterprises and SMEs, however in comparison with MNEs/ Large
enterprises, SMEs has much more challenges. One of the reasons for this is the organizational
structure of SMEs. SMEs are the small and medium enterprises means the human recourses are
less in comparison with large enterprises.

2.1 Lack of Recourses: The Biggest challenge for SMEs is that most of the SMEs are resource
constraint. They don’t have proper recourses to take big decision such as implementing Cyber
physical system, cyber physical production system, Internet of thing, Big data, Cloud Computing,
IIOT and Industry 4.0 which are the part of digital transformation and we will discuss some this in
later stage with respect to its implementation in SMEs.

2.1.1 Lack of Human Recourses: Human are the most important physical thing in this universe.
Because every technology is invented by human being so human plays a central role in the world.
moreover, for any new changes or transformation in technology requires human effort. In SMEs
the quantity of people in organization is less it can be as low as 10 people. This is one of the
biggest challenges for SMEs.

2.1.2 Lack of Money: Almost majority of SMEs have financial issues. This is because of many
reasons. Investor doesn’t trust the SMEs the way they trust large enterprises. People prefer to
invest in big company because the chances of loss in large enterprises are less in compared to
SMEs. Lack of money creates so many issues such as material shortage, staff salary, production
suffers, maintenance not resolved. The digital transformation required high amount of money for
majority of companies especially production/ manufacturing type.

2.1.3 Lack of Technological Advancement: When we see our surrounding, we found that the SMEs
do not use the latest tools for production/ manufacturing. This is especially true for the developing
nation/ emerging economy such as India. There are various reasons for it one of them is the owner
 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 5

unwillingness to spent money of new advancement. I worked in India around the year 2012 to
2015 and noticed that SMEs were moving towards Industrial Automation which is Industry 3.0 and
this trend is still going on. So, Industry 4.0 is still infancy for many SMEs.

2.2 Leadership Issues: Majority of people want to work in MNCs or big corporates. Even MNCs
spend a huge amount of money in searching talented leaders or employees. So searching a
talented leader for SMEs becomes a huge task and sometime they did not get the great leader
with courage and great leadership skills. Eventually incompetent leaders or managers deal with
employees and as a result the performance of company suffers. Most leaders in SMEs couldn’t
take transformation decision because of high risk associated with it. Many times the authority of
taking these decisions only with company owner and he follows the authoritarian style of
leadership with calculated risk. Owners do not give enough authority to their managers even.

2.3 Lack of technical expertise: In most of SMEs the employees work with less people,
organization is not vastly structured as in MNCs. Employees are less capable with new technology.
E.g., I work in the company where we work on SAP, so for any Material Purchase Request,
Purchase Order, Goods Receipt, Payment Certificate, Goods Allocation, Project Assignment,
Salary Allocation, Material Storage etc. all works are only through SAP. In small company people
works for the same services or product but do not use SAP. So, they have less technical expertise
as per the industry standard set by the Big Corporate.

2.4 Budget Constraint: Most SMEs do not spend on Research and Development and if do, it is in
very limited amount. They mostly focus on profit with calculated risk only. Their budget is designed
in such a way that production/ manufacturing should not be affected. They focus on preventive
maintenance of existing machinery or technology rather than implementing new technology
because new technology has higher risk also when implementing for the first time. This is because
of other lack of recourses. If any company has ample number of recourses, new technology
implementation can boost their business exponentially, unfortunately that is not the case with
SMEs.

2.5 Fear of Changing: The one of the main reasons for not adopting digital transformation is the
management/employees afraid of change. They do not prefer radical changes because we know
that in SMEs the numbers of employees and recourses are less. The organizational chart is so
small that every employee has access with their owner or Managing Director. If MD wants a radical
change in the system, he needs employees who knows that new technology in that case he may
end up changing all his employees with new one. Because of lack of money, he cannot afford to
train all the employees, and firing most of them will lead company reputation down. So, this fear is
more than enough to stick to the previous technology and not implementing the digitalization
strategy.
 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 6

3. Implementation of Industry 4.0

The Fourth Industrial revolution which is currently taking place, set a number of challenges for the
companies. (Horváth & Szabó, 2019, p. 119). We all know that now we are in the age of fourth
industrial revolution, before this we had three industrial revolution takes place. The first industrial
revolution came when we started the production of clothes with machine. In the second industrial
revolution the assembly line and division of labor is created, and quality control is introduced in the
manufacturing/production system. The third industrial revolution introduces the automation in the
production which revolutionized the whole industry and still is in use. In the work is done
automatically without human intervention with the help of PLC, HMI and SCADA. These are still
famous in the industry and specially in the developing world. PLC is an industrial computer which
is programmed to perform the operation. It is the acronym of Programmable logic controller as its
name suggest it control the manufacturing operation. Whereas SCADA is the acronym of
supervisory control and data acquisition. It is a software which is used to monitor the plant or
operations in real time. HMI is the acronym of human machine interface, and it is the combination
of software and hardware which is used in low scale work. For Controlling a big plant DCS is used
which is known as distributed control system. Now from the production medicine in pharmaceutical
industries to the production of Pepsi in food and beverages industry everywhere PLC and SCADA
are used. These terms are commonly integrable now a days with industrial automation. Means
now Industrial Automation is used in many industries such as

Power Plant: In the generation and distribution of electricity

Pharmaceutical Industry: In the production of Medicine and Vaccine

Food and Beverages: In the production of soft drinks and other packed food

Water Treatment Plant: In the process of water purification and supply

Oil and Gas Industry: In the extraction and purification and distribution of oil and gas

Manufacturing Industry: In the manufacturing of electronics and electrical equipment & appliances
and manufacturing of cars and other heavy and sophisticated transportation means.

So, we can see, almost every industry is using industrial automation some of it I did not mention
here even. Big MNCs are producing with the help of industrial automation from decades ago, such
as car manufacturer Mercedes, BMW, Ford and Toyota etc.

Now Companies are moving towards Industry 4.0 which is also known as digitalization of industry
and many other synonyms such as 3D printing, Cyber physical system, Cyber Physical Production
System. The industry 4.0 is the integration of electro-mechanical equipment to the internet.
Moreover, Industry 4.0 is some time referred to as Industrial Internet of things. So, some company
already moved in industry 4.0 and majority of them are trying to get into as soon as possible and
 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 7

this trend is continuously increasing. Imran et el. (2018) describe the five Industry 4.0 factor which
is big data, smart factory, cyber physical system (CPS), Internet of things (IOT) and
Interoperability. They propose the mechanism of Industry 4.0 and the performance of the
production and service industries and showed how these five factors of Industry 4.0 increases the
performance.(Imran et al., 2018, pp. 1–3)

Figure: Influence of Industry 4.0 factors on production, services, and company performance.
Source: (Imran et al., 2018, p. 3)

3.1 Additive manufacturing: Additive manufacturing is the new technology used by company for
manufacturing. Previously companies used only subtractive manufacturing technique for the
manufacturing of product. Additive manufacturing is commonly known as 3-D Printing in which we
can manufacture the product directly through the 3D printer with the help of CAD and CAM
software. Generally designed is built by CAD software in computer and then it is transferred in
Computer aided manufacturing software which is used in 3D printer. Thus, the 3D printer makes
the physical product without human intervention. This 3D printing/ Additive manufacturing
technology is a part of industry 4.0. Now Majority of companies use 3D printing for manufacturing
of part along with the traditional subtracting technology to enhance the production. Now Prototype
development which is an integral part of product development is done with the help of 3 D printing
 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 8

and known as Rapid Prototyping. Moreover, Rapid Tooling and Rapid Manufacturing is so popular,
these days. Both metal and Plastic part can be made through 3D printing however producing metal
product/part requires more sophisticated workplace, qualified worker and higher cost. With regards
to SMEs implementation of Additive manufacturing technology, they need qualified and trained
staff and worker who can work on this new technology in addition with the increase cost of
purchasing and maintaining the 3 D printer. Startup SMEs has a great chance to directly go with
this technology because it decreases the production cost so drastically. This is the main reason
that all companies trying to implement 3D printing in their production partially or fully.

3.2 Internet of things: Commonly known as IOT, is the new technology in which we connect the
equipment with each other with the help of internet. Internet of things is one of the main elements
of Industry 4.0. Since the end of the 20th century, it has been possible to observe the progressive
digitalization of everything in our surrounding, as well as the rapid development of the Internet.
(Ingaldi & Ulewicz, 2020, p. 2). Even connecting machine with each other is not new technology it
has been with us from long that is known as M2M, however this is done without internet means it is
not the IP based. The novelty with Internet of things is we connect the machine with the help of
internet. The internet of things combines devices such as sensor and actuators and connectivity to
the cloud and allows them to leverage artificial intelligence, machine learning, and big data
analytics. (Fu et al., 2020, p. 1). As we are aware that IOT is growing at very fast speed. The
Government, Organization, Companies implementing these because it makes human life easy.
Such as Driver less car, smart cities, automatic parking system and many more. IOT has myriad of
benefits, however it has some challenges which is even more crucial with respect to SMEs.

3.2.1 Challenges of Internet of things: There are two main problem which is privacy and security
issue. The first challenge is to deal with privacy issue in that we must deal with various challenges
such as profiling & tracking, localization & tracking. Moreover we need to take care of security, the
data should be transmitted in a secured manner(Hameed et al., 2019, p. 2). These challenges are
so crucial for companies and MNCs spend so much money to provide better security and privacy
and due to lack of resources SMEs are unable to provide appropriate solution for it at times.

3.3 Big Data: The term Big Data is used to report large amount of data which can be structured,
semi-structured or unstructured type, and has a potential to be mined for information (Ulas, 2019,
p. 665).

3.3.1 Barrier for SMEs to approach the potential for big Data: The Following Table1 shows extant
research findings on barriers of SMEs to approach the potential of Big Data within the concept of
Industry 4.0 (Müller, 2019, pp. 4–5)

Table: Extant literature on barriers for SMEs to approach the potentials of Big Data
Barrier Description Exemplary
References
 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 9

Feared transparency to
customers and competitors
Data Security
SMEs fear that they might have high efforts (Horváth and Szabó,
for establishing data transparency in the first 2019; Moeuf et al.,
place. Then, they fear that their customers 2019; Müller, Buliga
might get insights that they can use in price and Voigt, 2018)
negotiations or to replace them. Further,
SMEs fear that trade secrets might be passed
on to competitors.
SMEs fear that adequate data security cannot (Birkel et al., 2019;
be afforded by SMEs, lacking data and Moeuf et al., 2019)
information to third parties

High investment costs and
unclear economic benefit
No clear strategy and priority
Limited resources of SMEs must be scattered (Birkel et al., 2019;
across several potential Industry 4.0 projects, Kiel et al., 2017;
but economic return is unclear and might only Moeuf et al., 2019)
be achieved in the long term.
The often owner-driven strategy of many (Birkel et al., 2019;
SMEs has several advantages, but if the Horváth and Szabó,
owner does not recognize the benefits of 2019)
Industry 4.0, implementation is slowed down.

Lacking skill and knowhow in
Big Data and required
technologies
Internal resistance and
innovation culture
Too little data generation
within the SME
SMEs do not have the required skills and (Mittal et al., 2018;
cannot afford the required specialists. Moeuf et al., 2019)
Fear of job losses and company culture that (Müller and Voigt,
builds on flexible “all-rounders” rather than 2018)
specialists.
The internal processes are not sufficient to (Müller, Buliga and
generate Big Data within a SME. Voigt, 2018)

Data quality, storage, and Data generation is not sufficient for the (Birkel et al., 2019
availability generation of Big Data in SMEs.

No access to the overall data
generation in the supply
chain and to product data in
usage
Processes with little or no
digitization
SMEs can hardly benefit from product data in (Müller, 2019a;
usage, since they often act as suppliers with Müller, Buliga and
no direct contact to the end customer. Voigt, 2018)
SMEs tend to have semi-automated (Müller, Buliga and
processes that are hard and costly to digitize. Voigt, 2018)

Unstandardized data and Low standardization of data generation and (Mittal et al., 2019;
interfaces interfaces in SMEs, which does not bring Müller, Buliga and
benefits for them. Voigt, 2018)

Table: Extant literature on barriers for SMEs to approach the potentials of Big Data, Source:
(Müller, 2019, pp. 4–5)

The Table showed here enlighten the major challenges of SMEs in implementation of Big Data
within the concept of Industry 4.0

3.4 Cyber Physical System/ Cyber Physical Production System : As the name Suggest when CPS
is the integration of physical system to the cyber system means computer or internet. (Monostori,
 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 10

2014, p. 1). When we integrate the production system which is physical in nature to internet is
known as Cyber physical production system or CPPS. CPPS is a vital part of Industry 4.0.
According to the Federal Ministry of Education and Research Germany:

Industry is on the threshold of the fourth revolution. Driven by the Internet, the real and
virtual worlds are growing closer and closer together to form the Internet of Things.
Industrial Production of the feature will be characterized by the strong individualization of
products under the conditions of highly flexible (large series) production, the extensive
integration of customers and business partners in business and value-added processes,
and the linking of production and high-quality services leading to so-called hybrid products.
(N.N, 2013 as cited in Monostori, 2014, p. 9).

As we know that Cyber Physical Production System has its own feature in which we collaborate
the internet to production system and reduce the human intervention. It has three level first is
primary level, second is secondary level and third is tertiary level. This platform/approach is fully
different than the previous industrial revolution which was industry 3.0 and commonly known as
Industrial Automation. The major hurdle in implementing the CPS is that we already had a complex
system of automation, and we use PLC (Programmable Logic Controller) to control the operation.
There are different brands of PLC available Such as Siemens, Allen Bradley or Mitsubishi. There
could be all three brands of PLC installed in a Plant. The communication between these different
brands of PLC could not be done because of their heterogeneous nature. There is a difference in
programming language of these different brand PLCs, their Communication Ports are different,
their communication software is different. So, if a production Unit has different brand of PLCs, we
need to change the PLC to single brand before the implementation of CPPS in the plant. As we
know that in CPPS all the sensors, actuator, PLCs are connected to Internet, and this is only
possible if all devices installed in the Plant communicate each other’s. The Data transfer/storage is
also a challenge task because the sensors generate huge amount of data and for CPS these data
should be processed without delay. Cloud Computing and Fog/edge computing is used for
processing of these big data. So, these are the major challenges arise in implementing the CPPS.

Martin Prause states about the industry 4.0 in the following way,

Industry 4.0 facilitates the balancing act of internal and external complexity by shifting
traditional production systems from a structured centralized control to decentralized control.
It is a specific deployment of an advanced manufacturing strategy. The core principles of
Industry 4.0 are modularization, self-regulation, and digital integration across business
functions and within and beyond the organizational boundaries. Industry 4.0 induces
product innovation based on the usage of intelligent sensor and actor systems to facilitate
context-sensitive production processes and ICT based process innovation to integrate
production processes across the value chain, value network, and product lifecycle.(Prause,
2019, p. 1)
 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 11

4. Discussion:
As we have mentioned above the various challenges of SMEs and the Industry4.0 in which we
mentioned the various type of digital technology and their implementation problems. We all know
that today’s is the age of digitalization. Everyone is trying to digitalize their businesses because of
the digitalization trends. They know that if they did not change according to the trend, their
business could be in loss and eventually obsolete. We have the seen such a case with big MNCs
which were so popular before, as we all know that Nokia was the leading seller of Mobile phone in
the world before. They unable to change their strategy of product development according to the
market trend, when everybody brand was moving with the Keyless smartphones and android and
IOS system. Now the market leader leaders changed in mobile phone categories and Nokia has
gone from top to bottom. There are so many examples like this in every industry. Whoever unable
to transform according to the changes would faces consequences. So this is the reason that SMEs
want to implement digitalization as soon and as much as possible, even if they are resource
constraint. A. Azevedo & A. Almeida stated “Small and medium-sized enterprises (SMEs) in
Europe risk their competitiveness if they fail to embrace digitalization” (Azevedo & Almeida, 2021,
p. 1). Somer (2015) cited from Statistisches Bundesamt, 2014b the following figure.
Approximately 99 percent of all German enterprises are SMEs employing 60 percent of all
employees in Germany. These SMEs and their employees generate 34 percent of the total
turnover of all German enterprises.
Approximately 1 percent of all German enterprises are large enterprises employing 40
percent of the German employees. These enterprises and their employees generate 66
percent of the total turnover of all German enterprises. (Statistisches Bundesamt, 2014b as
cited in Sommer, 2015, p. 1514)
So, with this figure we can assume the importance of SMEs in the German economies and
according to the latest GDP (nominal) figure by world bank, Germany is the fourth largest economy
in the world after USA, China and Japan. A survey conducted by Maria Hulla et al. (2021)
regarding the major challenges faced in implementing the digital transformation by SMEs. The
result is summarized in the table. (Hulla et al., 2021, p. 890)
Table: Challenges of SMEs regarding digitalization and digital transformation
Challenge Explanation
Lack of strategy / There is mostly neither a digitalization strategy in the enterprise nor
roadmap a roadmap regarding the implementation of digital technologies.
Recognizing the potential of The benefits of digitalization in the company and the digitalization
digitalization potentials such as higher productivity in the value chain cannot be
recognized.
Lack of digital skills and Management and employees often lack in skills and competencies
competencies regarding digitalization. Moreover, there seldom is a digitalization
expert, digitalization team or a digitalization department.
 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 12

Monetary and personnel SMEs often work on the limit regarding monetary, time and
resources personnel possibilities and there are rarely resources left for the
implementation of digitalization.
Knowledge reading state- Interview respondents reported that they often do not know what
of-the-art in digital there is available on the market and what is state of the art in their
technologies industry.
Mindset of employees The mindset and acceptance of employees towards implementation
and usage of digital technologies.
Table: Challenges of SMEs regarding digitalization and digital transformation

Source: (Adapted from Hulla et al., 2021, p. 890)

Conclusion:

The Primary objective of this research was to find out the biggest challenges that SMEs have in
order to implement a digital transformation. Because of it in this research essay we have quoted
the challenges that is somewhat related to SMEs, all other aspect like benefits, ease of
implementation of digitalization is not mentioned here. There are various research papers and
thesis written on the SMEs organizational structure. The Organizational structure of SMEs are
different than the large companies and their leaders have less recourses. Such as lack of human
resources, money, technical skills and many more. The worker in SME’s has very little exposure to
the new technologies like Industry 4.0, Big Data, 3D Printing, Internet of Things, Cyber Physical
Production System etc. The SMEs play an important role in world economy, even SMEs are aware
that they must implement the digitalization in order to survive in the market. However, Majority of
SMEs are implementing Industrial Automation which is Industry 3.0 in the emerging economies of
Asia and Africa. So, for those who already hadn’t use industrial automation before will face more
problem due to the lack of technical skills of their staff on the other hand they have the advantage
that they don’t have to dump the expensive Industrial Automation Machine which are some how
incompatible in many cases. We know that different brand of PLC has different programming
technique and communication between two brand of PLC is problematic in large scale with data
transfer.
 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 13

References

Azevedo, A., & Almeida, A. H. (2021). Grasp the Challenge of Digital Transition in SMEs—A Training Course

Geared towards Decision-Makers. Education Sciences, 11(4), Article 4.

https://doi.org/10.3390/educsci11040151

Cavanillas, J. M., Curry, E., & Wahlster, W. (Eds.). (2016). New Horizons for a Data-Driven Economy. Springer

International Publishing. https://doi.org/10.1007/978-3-319-21569-3

Fu, K., Kohno, T., Lopresti, D., Mynatt, E., Nahrstedt, K., Patel, S., Richardson, D., & Zorn, B. (2020). Safety,

Security, and Privacy Threats Posed by Accelerating Trends in the Internet of Things

(arXiv:2008.00017). arXiv. https://doi.org/10.48550/arXiv.2008.00017

Gamache, S., Abdul-Nour, G., & Baril, C. (2020). Evaluation of the influence parameters of Industry 4.0 and

their impact on the Quebec manufacturing SMEs: The first findings. Cogent Engineering, 7(1),

1771818. https://doi.org/10.1080/23311916.2020.1771818

Hameed, S., Khan, F. I., & Hameed, B. (2019). Understanding Security Requirements and Challenges in

Internet of Things (IoT): A Review. Journal of Computer Networks and Communications, 2019,

e9629381. https://doi.org/10.1155/2019/9629381

Horváth, D., & Szabó, R. Zs. (2019). Driving forces and barriers of Industry 4.0: Do multinational and small

and medium-sized companies have equal opportunities? Technological Forecasting and Social

Change, 146, 119–132. https://doi.org/10.1016/j.techfore.2019.05.021

Hulla, M., Herstätter, P., Wolf, M., & Ramsauer, C. (2021). Towards digitalization in production in SMEs – A

qualitative study of challenges, competencies and requirements for trainings. Procedia CIRP, 104,

887–892. https://doi.org/10.1016/j.procir.2021.11.149

Imran, M., Hameed, W. ul, & Haque, A. ul. (2018). Influence of Industry 4.0 on the Production and Service

Sectors in Pakistan: Evidence from Textile and Logistics Industries. Social Sciences, 7(12), Article 12.

https://doi.org/10.3390/socsci7120246

Ingaldi, M., & Ulewicz, R. (2020). Problems with the Implementation of Industry 4.0 in Enterprises from the

SME Sector. Sustainability, 12(1), Article 1. https://doi.org/10.3390/su12010217

 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 14

Monostori, L. (2014). Cyber-physical Production Systems: Roots, Expectations and R&D Challenges.

Procedia CIRP, 17, 9–13. https://doi.org/10.1016/j.procir.2014.03.115

Müller, J. (2019). How SMEs can participate in the potentials of Big Data within Industry 4.0. International

Conference on Information Systems 2019 Special Interest Group on Big Data Proceedings.

https://aisel.aisnet.org/sigbd2019/1

Nicolescu, O. (2009). Main Features of SMEs Organisation System. 10(3), 9.

Prause, M. (2019). Challenges of Industry 4.0 Technology Adoption for SMEs: The Case of Japan.

Sustainability, 11(20), Article 20. https://doi.org/10.3390/su11205807

REDDY, S. K., & REINARTZ, W. (2017). Digital transformation and value creation: Sea change ahead. GfK

Marketing Intelligence Review, 9(1), 10–17. https://doi.org/10.1515/gfkmir-2017-0002

Sommer, L. (2015). Industrial revolution - industry 4.0: Are German manufacturing SMEs the first victims of

this revolution? Journal of Industrial Engineering and Management, 8(5), Article 5.

https://doi.org/10.3926/jiem.1470

Ulas, D. (2019). Digital Transformation Process and SMEs. Procedia Computer Science, 158, 662–671.

https://doi.org/10.1016/j.procs.2019.09.101
 Biggest Challenges that SMEs have in order to implement a digital transformation strategy 15

Appendix

List of Figures and Tables

Figure: General features of the SMEs organization system

Source: Nicolescu, 2009, p. 407

Figure: Influence of Industry 4.0 factors on production, services, and company

performance. Source: (Imran et al., 2018, p. 3)

Table: Extant literature on barriers for SMEs to approach the potentials of Big Data,
Source: (Müller, 2019, pp. 4–5)

Table: Challenges of SMEs regarding digitalization and digital transformation

Source: (Adapted from Hulla et al., 2021, p. 890)

Biggest Challenges that SMEs have in order to implement a digital transformation strategy 16
Biggest Challenges that SMEs have in order to implement a digital transformation strategy 17