We’ve partnered with Lloyds Bank on its UK Business Digital Index (BDI) for the last three years. It’s a fascinating project, tracking the digital maturity of SMEs and charities year-on-year across the country. We all know large companies are embracing digital enthusiastically. But what about SMEs? After all, smaller businesses play a vital role in driving entrepreneurship and grass-roots growth. Their development of—and investment in—digital skills is hugely significant.

With this year’s BDI recently released, this blog provides a snapshot of some of the more interesting findings. So have we become a digital nation through and through, from grass-roots SME to multinational giant? Not yet. But the top-level findings are certainly encouraging: small businesses and charities have made strong progress in the past year, with both groups showing an increase in overall digital maturity. In 2015, just 23 percent of SMEs were advanced digital organisations. That proportion has risen sharply to 38 percent this year.

Read the report
Read the report

Of real interest too, there’s an increasingly direct link between digitalisation and commercial success. The most digital small businesses are now twice as likely as the least digital to report an increase in turnover, while the more digital charities are almost 30 percent more likely to report an increase in funding/turnover than their less digital peers.

There are some major gaps, however. Nearly 40 percent of SMEs lack at least some of the basic digital skills (managing data, communicating, transacting, creating and problem solving). That rises to 50 percent amongst sole traders. Nationwide, there are still 1.44 million SMEs and almost 100,000 charities without basic skills in this key area. Only one in five SMEs use digital to support their overseas business. And almost half of all SMEs (and over 40 percent of charities) don’t have a website.

On the plus side, we’re seeing these organisations really getting to grips with social media. Forty-five percent of SMEs created a social media community in the past year. And more than 35 percent of small businesses and charities now believe a social media presence helps them generate higher revenues and/or increase donations. That’s up by 15 percent in 12 months. This increased reliance on social media seems to be driving a shift in advice preferences: more than half of all small businesses rely on friends, relatives and colleagues for free digital support (rather than investing their own budget in honing digital skills).

Digital maturity is on the rise across the UK. Northern Ireland’s SME’s are now the UK’s most digital-savvy, followed by Scotland, then London. Though still improving, small businesses in the West Midlands and the North East are going digital less rapidly than their peers elsewhere. Encouragingly, there’s no digital ‘glass ceiling’. Men and women are equally likely to have digital skills. The BDI reveals almost no difference between male and female decision-makers’ scores.

The BDI also highlights what’s getting in the way of broader-based digitalisation among SMEs and charities. A continuing lack of digital skills is the principal challenge for both groups. But for now, this isn’t translating into any committed push to invest in digital skills development. Two-thirds of SMEs and almost eight out of 10 charities still invest nothing in this area.

That’s a concern, especially in light of the growing cyber threat they all face. The BDI shows around 70 percent of charities and SMEs currently lack the skills they need to protect themselves online. In the next blog in this mini-series, I’ll be taking a closer look at the extent of this cyber threat, and talking about how these organisations can move to safeguard their operations.

Thanks for reading.

Learn more about the 2016 Lloyds Bank UK Business Digital Index


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