JOURNAL OF ENGINEERING MANAGEMENT AND COMPETITIVENESS (JEMC)

VOL. 7, NO. 2, 2017, 126-136

THE CHALLENGE OF GOING DIGITAL

UDC: 004:339.137.2
Original Scientific Paper
Marijana VIDAS-BUBANJA1, Iva BUBANJA2
1
Belgrade Business School, 11000 Belgrade, Kraljice Marije 73, Republic of Serbia
E-mail: [email protected]
2
Belgrade Business School, 11000 Belgrade, Kraljice Marije 73, Republic of Serbia

Paper received: 01.11.2017.; Paper accepted: 26.11.2017.

Modern business environment changes under the influence of the second wave of disruptive digital
technologies such as mobile applications, social networks, cloud computing, big data analytics and
Internet of things. The specificity of these digital innovations defined as The Fourth industrial
revolution is that they bring about changes in the complete industry sectors becoming in this way a
key condition for further competitive business operations in the global market. This paper analyses
the contribution of new digital technologies to economic growth of national economies and higher
productivity and competitiveness of companies. In order to maintain competitiveness level, modern
enterprises have to start the process of digital transformation that requires new organization
models, redesigned business processes and new ways of communication with partners and
customers. According to some authors this is the biggest transformation in business the world has
seen in over a century. The untapped potential here really is enormous and it represents big
challenge for all industries and national economies. EU experiences in the development of digital
entrepreneurship are analyzed, as well as challenges of digital change in domestic companies.

Keywords: Information-communication technology, Growth, Productivity, Innovation, Competitiveness.

INTRODUCTION DIGITAL COMPANY

The fourth industrial revolution driven by the Digital companies are characterized by a high
uptake of advanced digital technologies, innovative intensity of utilization of novel digital technologies
business models and processes influences the way to improve business operations, invent new
industries and enterprises of all sizes reinvent their business models, sharpen business intelligence,
businesses, offering new value propositions, smart and engage with customers and stakeholders.
products and smart services, and reaching out to These technologies hold potential for the creation
new clients. These technologies and new disruptive of new business value to companies, thanks to
business models are evolving rapidly and re- market opportunities, higher revenue streams,
defining the rules of the global economy, creating “faster time to market”, enhanced service
new markets and unprecedented business provision, increased productivity and
opportunities, (European Commission, 2017). The competitiveness (European Commission, 2015).
key challenge for Serbia is to ensure that This is the reason why digital companies are
traditional industry and services companies can recognized by policymakers as central to
fully capture the opportunity and value of economies through their contribution to wealth
digitalization. Serbian businesses are lagging creation, income generation, output and
behind in the uptake of advanced digital employment.
technologies, with companies slow to adopt new
digital technologies. This is a challenge for Digital companies are applying technology in order
business and necessitates action at local and to enable new types of products and processes
national level. rather than simply enhancing existing processes
and modes of interaction. Because of this, digital

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 M. Vidas-Bubanja
The challenge of going digital
I. Bubanja

strategy of a company depends on the use of digital integrated digital transformation strategy.
assets in new ways. Digital transformation cannot (European Commission, 2017)
be separated from technology, but it also requires a
culture that encourages the enterprise to change in According to McKinsey Global Institute new
real time with a business landscape, which changes digital technologies should be observed both in
constantly. This is not easy, and often involves a terms of potential economic impact and capacity to
good deal of catching up to digital leaders. disrupt, because these effects go hand-in-hand and
(Kerschberg, 2017) because both are of critical importance to leaders
(Manyika et al., 2013). As the early 20th-century
NEW WAVE OF DIGITAL TECHNOLOGIES economist Joseph Schumpeter (Schumpeter, 1950)
observed, the most significant advances in
According to European Digital Transformation economies are often accompanied by a process of
Scoreboard (EDTS) 2017 there are seven important “creative destruction”, which shifts profit pools,
digital technologies for doing successful business rearranges industry structures, and replaces
today and they are: mobile services, social media incumbent businesses. This process is often driven
and cloud technologies, Internet of things, cyber by technological innovation in the hands of
security solutions, robotic and automated entrepreneurs. For this reasons following
machinery, big data and data analytics (Figure 1). characteristics of new digital technologies are
These specific technologies were chosen because positioned high on the importance level list
they represent the current most prominent new (Manyika et al., 2013):
digital technologies, enabling the rapid  The technology is rapidly advancing or
transformation of industries and the way experiencing breakthroughs. Disruptive
businesses operate in the digital paradigm. technologies typically demonstrate a rapid rate
(European Commission, 2017) of change in capabilities in terms of
price/performance relative to substitutes and
alternative approaches, or they experience
breakthroughs that drive accelerated rates of
change or discontinuous capability
improvements.
 The potential scope of impact is broad. To be
economically disruptive, a technology must
have broad reach – touching companies and
industries and affecting (or giving rise to) a
wide range of machines, products, or services.
The mobile Internet, for example, could affect
how five billion people go about their lives,
giving them tools to become potential
innovators or entrepreneurs – making the
mobile Internet one of our most impactful
technologies. And the Internet of Things
Figure 1: Seven important digital technologies technology could connect and embed
Source: EC, 2017, p. 9 intelligence in billions of objects and devices all
around the world, affecting the health, safety,
The adoption of at least two of the seven key and productivity of billions of people.
digital technologies (Table 1) requires particular  Significant economic value could be affected.
skill sets and the existence of a specific digital An economically disruptive technology must
transformation strategy to reap their full benefits. have the potential to create massive economic
Large firms are more likely than SMEs to have impact. The value at stake must be large in
employees with these required skills, which terms of profit pools that might be disrupted,
explain the higher rate of large firms adopting key additions to GDP that might result, and capital
technologies. In addition, SMEs often lack investments that might be rendered obsolete.
awareness of the positive outcomes for their Advanced robotics, for example, has the
businesses that could arise from setting up an potential to affect $6.3 trillion in labour costs
globally. Cloud technology has the potential to

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improve productivity across $3 trillion in global billions of consumers and millions of

enterprise IT spending, as well as enabling the businesses alike.
creation of new online products and services for

Table 1: The second wave of digital technologies

Mobility and mobile apps: Technologies that enable voice and data connections between people, and increasingly
between objects, while on the move. Businesses are adopting mobile services with the purpose of enhancing
competitiveness, engaging with customers, and enhancing services. In the digital economy, services can be provided
and improved through the proper use of mobile services technologies which help reach a customer base and can
deliver enhanced services. Furthermore, businesses adopting this technology also declare the improvement of
marketing and advertising strategies and the analysis of information on products, services and employees as
additional main purposes for adopting this technology. Monitoring the use of mobile services is a prime indicator of
how digital technologies influence the way in which businesses work.
Social media: Enterprise social media describes companies’ use of social media tools for business purpose. These
tools may include social networks (e.g. Facebook, LinkedIn, etc.), micro blogging (e.g. Twitter), blogs, internal
wikis and/or other enterprise collaborative software. Social media has a wide-ranging impact on digital
entrepreneurs, such as providing a better insight into customer behavior and improved office productivity with
internal networks. Recent trends include social media going company-wide beyond marketing and community and
allowing for real-time communication and information sharing.
Cloud: Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of
configurable computing resources (e.g. networks, servers, storage, software, applications and services) that can be
rapidly provisioned and released with minimal management effort or service provider interaction. Important
business data forms and other documents can now be accessed from virtually anywhere. Cloud computing is making
it easier to do business, creating a more dynamic entrepreneurial culture.
Big data analytics: It refers to the process of collecting, organizing and analyzing large sets of data (“big data”)
from a variety of different sources to discover and derive value from patterns and other useful information.
Companies are beginning to utilize big data and data analytics to gain business insights. As analytical technologies
mature, they will leverage what computers do best, while freeing decision-makers from complex data analysis to
deliver “intelligence in the moment”. This “information advantage” will speed the transition from data to insight and
drive better business decisions and actions, thus generating superior business results.
The Internet of Things (IoT): IoT describes the network of physical objects that feature an IP address for Internet
connectivity, and the communication that occurs between these objects and other Internet-enabled devices and
systems. From monitoring the flow of products through a factory to measuring the moisture in a field of crops to
tracking the flow of water through utility pipes, the Internet of Things allows businesses and public-sector
organizations to manage assets, optimize performance, and create new business models.
Cyber security solutions: Cyber security has never been more essential, as companies have more digital assets than
ever before and these assets are worth more than they used to. The increasingly used hybrid cloud architecture
requires a more sophisticated approach to cyber security. The pervasive use of mobile devices by employees means
that corporate IT now has to manage the security of many more devices.
Robotic and automated machinery: Robotics can disrupt business models and shift the labour/capital mix while
managing societal expectations. End-user industries are rapidly adopting robots for industrial purposes to improve
the quality of products and reduce manufacturing costs.
Source: European Commission, 2015, p. 19 and European Commission, 2017, p. 7

 Economic impact is potentially disruptive. that correspond to more “basic technologies” (i.e.
Technologies that matter have the potential to broadband access and greater bandwidth, IT
dramatically change the status quo. They can infrastructure, digital tools for accounting, CRM
transform how people live and work, create new applications, etc.). These technologies can also be
opportunities or shift surplus for businesses, referred to as technologies from the “first digital
and drive growth or change comparative wave”. Implementation process of novel digital
advantage for nations. technologies (the second digital wave) is more
challenging, resulting in the gap between those
There are two waves of company digitalization. companies under the first digitalization wave and
The first wave is based on early digital innovation much lower percent of those under the second
technologies and the second wave on the new digitalization wave. (European Commission, 2017)
digital technologies started after 2010 (Figure 2).
According to European experiences, companies
find easier to implement mainstream technologies

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According to survey results performed under the the assumption that in the current digital paradigm,
EDTS 2017 the top two technologies adopted by businesses do prioritize rapidly deployable and
European companies are mobile services and social scalable technologies as the first step to ensure
media (31% of the business population declaring their digital transformation. Once a critical mass of
positive outcomes), followed by cloud technology products, services and customers is reached,
and robotic and automated machinery (29 and attention will have to turn to analysis and
27%). This observation confirms previous analyses protection of large volumes of data. (European
reflecting the importance given by businesses to Commission, 2017)
social media and mobile technologies, and stresses

Figure 2: Waves of digitalization

Source: European Commission, 2017, p. 10

GOING DIGITAL customers and suppliers. Companies that are

leaders in digitalization make more extensive
To perform the process of going digital for a use of digital payments, digital marketing, and
company means much more than just buying the design-led product development. They are more
latest IT system. Companies do need assets like likely to use software to manage their back-
computers, servers, networks, and software, but office operations and customer relationships.
those purchases are just the start. Digital leaders They take advantage of e-commerce platforms –
stand out from their competitors in two ways: how and may even operate their own. Their
they put digital to work, especially in engaging underlying business processes make use of
with clients and suppliers, and how intensively social technologies to interact with customers
their employees use digital tools in every aspect of and partners. This digital usage supports related
their daily activities. In order to fully understand innovations that are likely to have profound
the process of going digital, managers of implications on business models and economics
companies should be aware of three broad across the value chain of companies in the
categories, (Gandhi et al., 2016): coming years.
1. First, digital assets. To benchmark them, 3. Third, digitally empowered workforce. It
companies measure how much they invest in means the degree to which companies put
hardware, software, data, and IT services: What digital tools in the hands of their employees to
is also relevant is the extent to which companies ramp up productivity. The introduction of
are digitizing their physical assets — that is, various digital labour metrics is not simple and
whether they have smart buildings, connected it encompasses for example the share of tasks
vehicle fleets, and big data or IoT systems that involving digital tools and the number of new
get maximum performance out of equipment, digital occupations in the company. Technology
systems, and supply chains; still hasn’t penetrated much of the everyday
2. Second, digital usage. It measures the extent to work performed by many world workers, which
which companies engage digitally with means that most businesses are missing

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opportunities for greater efficiency and better democracy" will be enabled resulting in changed
customer experience. Many still need to break distribution of power between multinationals and
out of their old habit of housing “digital talent” SMEs or much focused market players. This type
in a separate department. Companies of approach could lead to "mobile manufacturing
increasingly need each employee to bring units": small and autonomous manufacturing cells
greater digital skills to bear on every activity. that could be shipped in some countries to locally
That’s the only way to unleash innovation and develop production for the local market without
capture efficiencies at an institutional level. In building a full plant. Such a change in business
some cases, new hires may be necessary, but processes could modify the approach of industrial
investing in ongoing employee capability foreign direct investment with regards to emerging
building and cultural change could pay real markets and localization needs. (Blanchet et al.,
dividends. 2014)

WHAT IS CHANGED IN DIGITALIZATION 3. Business model. Digitalization is based on the

PROCESS fragmentation of the value chain. Business models
of complex and intertwined manufacturing
By going digital companies will be able to face all network change the roles of designers, physical
the challenges of global digital business product suppliers and the interfaces with the
environment and new requirements connected with customer. As business leaders rethink and
the necessary change of their products, business restructure their value chains new challenges in
processes, business models, required skills and regard to cost and profit ownership arise, and small
knowledge, (Blanchet et al., 2014). Through the companies enter the market owing to lower
digitalization process companies combine barriers to entry. New business models could also
innovative operational model with cheaper more be created if the "long tail" philosophy that was
customized product, faster service and improved brought up by the Internet can be extrapolated to
customer experiences. The main benefit of the Internet of things, (Blanchet et al., 2014).
digitalistaion process for companies is higher
interactivity with customers and rising capability 4. The competition. In the new digital business
of meeting all customer`s expectations, what is environment of converging frontiers traditional
definitely going to be the critical element of industry boundaries are becoming blurred, as are
competitiveness in the future period. In this respect the boundaries between industrial and non-
main characteristics of product, business processes, industrial applications. Under this competition
business model, competition, skills and rules the focus will be on industrial working
globalization under the digitalization process will methods, including the reproducibility not only of
be analised. identical products but also of services. Services can
be mass-produced too. High-quality digital
1. Product. Digitalization brings more freedom (outsourced) services and a fail-safe,
and flexibility into the production process. As a comprehensive digital infrastructure are becoming
result, product is personalized, locally produced the fundamental prerequisites for successful
through mass customization. In digital companies digitalization process. (Vidas-Bubanja & Bubanja,
it will become possible to create personalized 2017)
products tailored to segment-by-one customer
needs at relatively low marginal cost. (Vidas- New competition environment is characterized by
Bubanja & Bubanja, 2017). even closer cooperation between IT/telecommu-
nications firms and traditional manufacturing
2. Business processes. Companies support companies. In fact, IT firms are becoming the new
network manufacturing concept and cluster industry leaders. The most recent examples:
dynamics in the digitally connected world. Facebook is acquiring a stake in the drones
Businesses will operate in dispersed digital business and Internet giant Google is entering the
locations in accordance with available skills raising biotech sector and researching new methods of
the complexity of production and supply networks combating age-related diseases. Today, physical
significantly. Owing to the blurring frontiers machine and tooling suppliers harvest the biggest
between the information and physical worlds entry margins with their industry clients. But in a cyber-
barriers for smaller or more specialized companies physical system world, these suppliers will lose
will lower. The phenomenon called "industrial importance. Instead, suppliers of sensors, IT and

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software might take their place in Industry 4.0, journey to adopt and deploy digital technologies
while machine and tooling companies shift down and business models to improve performance
to tier 2. (Blanchet et al., 2014) quantifiably. Many companies will benefit
enormously from digitization. Others will not.
5. Skills. The digital business concept need both The real question then is which organizations will
enhanced social and technical skills that will succeed? (Wade & Tarling, 2016)
enable design thinking instead of production
thinking. The dominant technologies of digital To win in the process of digital transformation
world will be IT, electronics and robotics. But it companies must be dynamic enough to
will also embrace other knowledge areas such as understand and respond to the risks disruptors
biotech and nanotech. Corporate cultures with pose. As margins from core models decline, the
continuous training and development in the percentage of revenue from new businesses needs
workplace and lifelong learning are becoming a to increase. This puts pressure on companies to
core competency. A lot of collaborative and cross- improve the ‘hit rate’ of marketable innovation
cultural competencies will be required to be able to and the good answer to this challenge is
work in network environments sustainably. The development of ‘digital business agility.’
technical competency profile will be Companies that possess digital business agility
interdisciplinary rather than specialized. Analytics respond quickly and effectively to emerging
specialists, engineers and programmers will have threats to their business, and seize new market
to be able to think across business models, opportunities before their rivals even notice them,
production processes, machine technology and (Marković, 2016).
data-related procedures. Education and training is
becoming an integral part of every job. The According to some authors (Wade & Tarling,
following axioms in the field of human resources 2016) digital business agility has three main
management in the 21st century are considered, pillars: hyperawareness, informed decision-
(Lekić et al., 2014): continuing education is making, and fast execution. These pillars are not
essential and mandatory for employees and technologies, but rather technology-enabled
employers; information technology affects all jobs capabilities.
- no one is safe, nor can its impact be ignored; 1) Hyperawareness is a company’s ability to
change is normative; work is highly interdependent detect and monitor changes in its business
in terms of business, in terms of communication environment. By ‘business environment’, we
and transport in different areas of activity; there is mean both the internal and external factors that
no standard way on the career ladder and progress. impact the company’s opportunities and risks.
Hyperaware companies are less likely to be
6. Globalization. Organizations will be set up in a taken by surprise and are hard to disrupt
much more decentralized and flexible way. because they can sense their vulnerabilities and
Because of this in the new industrial revolution the adjust models and processes accordingly. For
organization of the future will concentrate on example, hyperaware companies understand
selected hotspots, rather than a comprehensive when their customers are dissatisfied and why.
global presence. There will be open production Likewise, when a company is hyperaware of
sites ("makerspaces") and clusters. Firms will not its competitive landscape, it understands the
necessarily have to sustain huge production sites to strength and weaknesses of traditional rivals,
operate cost-efficiently. Sometimes it will be and the potential impact of new lines of
cheaper to transfer data and produce locally on a business or acquisitions. They also anticipate
small scale. (Blanchet et al., 2014) which non-traditional competitors could
threaten their market position, and the models
AGILITY AS A RESPONS TO they could use to disrupt, (Wade & Tarling,
DIGITALIZATION CHALLENGE 2016).
2) Informed decision-making is a company’s
Digital disruption is an issue for firms in all ability to make the best decision possible in a
sectors and industries. To counter these given situation. To do this, data collected as
potentially existential threats companies need to part of company hyperawareness processes
change, but not just change, they need to must be analyzed, scaled, packaged, and
transform. Digital business transformation is a distributed throughout the organization. To
excel in informed decision-making, companies

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must develop mature data analytics capabilities performance of the digital economy across the EU.
that augment human judgement (Marković, (European Commission, 2015)
2016). However, many companies fail despite
having the information they need to make the Based on the broad definition of digital
right moves. Often, this is because entrepreneurship as an activity of putting digital
assumptions held by top management were not technologies at the heart of business and
tested or questioned. Decisions based purely harnessing their power to generate value and
upon “gut feeling” or past experience have growth, innovate and create jobs, Digital
little chance of success. Instead, companies Entrepreneurship Scoreboard follows two
must make decisions based on insights gleaned dimensions. The first dimension represents the
from data analysis, and ensure that experts framework conditions for digital entrepreneurship.
from within and outside of the organization They capture the environmental factors which
have access to these insights. Diversity of favour digital entrepreneurship and cover 5
perspective is a major contributor to informed components: Digital knowledge base and ICT
decision-making but is only one element of a market, Digital business environment, Taxation &
larger imperative of corporate inclusion, , financial environment, Digital skills and e-
(Wade & Tarling, 2016). leadership and Entrepreneurial mindset. The output
3) Fast execution is a company’s ability to carry dimension aims at measuring the Digital
out its plans quickly and effectively. Entrepreneurship in itself, i.e. the achievements in
Unfortunately, it is a rare capability, especially terms of: digital transformation of businesses, the
in large companies where execution is slowed share of turnover deriving from e-commerce in the
by organizational complexity, cultural inertia, EU28, and the business dynamic in the ICT
turf wars and a reluctance to invest in sectors, looking at the birth rate of new ICT start-
resources needed to get the job done. ups, their capacity of growing and creating new
jobs. (European Commission, 2015)
DIGITAL TRANSFORMATION OF
EUROPEAN INDUSTRY According to Digital Entrepreneurship Scoreboard
2015 there is a scattered picture across the EU
The European Commission recognizes the key role concerning the creation of favorable conditions for
that digital technologies can play in improving the digital entrepreneurship. Countries that perform
business landscape in Europe and has taken action better in terms of enabling factors (UK, France and
to support digital transformation, placing this issue Germany) are also the ones adopting faster novel
at the core of many key policy initiatives. One of technologies and outperform the countries with
these initiatives is the Europe 2020 strategy for weaker enabling environments (Spain and Italy),
growth and jobs with its flagships: a) The Digital (European Commission, 2015). On the company
Agenda for Europe, 2) the Single Market Act, 3) level there is the group of companies (rather small
Industrial policy for globalization era, 4) the percentage around 2) which fully leverage digital.
Entrepreneurship 2020 Action Plan. Also, the They are typically large firms operating in the
European Fund for Strategic Investments is sector of finance. On the other hand, are still a
designed to fill the investment gap created by the large number of firms (around 40%) that do not
economic and financial crisis and to mobilize over use any technology associated with digital
€315 bill to support industrial investments around entrepreneurship (social, mobile, cloud, and big
digital modernization (European Commission, data). These firms are typically SMEs operating in
2016). sectors such as mining, construction,
manufacturing, transport and storage and utilities.
The Commission initiated the creation of Digital It is estimated that European SMEs – across
Entrepreneurship Scoreboard in order to measure different sectors – grow two to three times faster
national progress in the digital transformation of when they embrace digital technologies and, more
European industry throughout the 28 EU Member generally, it is recognized that the digital economy
States. The Digital Entrepreneurship Scoreboard will bring new opportunities for growth and jobs.
provides a comparative assessment of the enabling (European Commission, 2015)
factors which in the EU 28 Member States create a
fertile ground for digital entrepreneurs to thrive In 2017 Commission published The Digital
and operate successfully, the degree of Transformation Scoreboard (DTS) 2017 in order to
digitalization of European businesses and the present further findings about the performance of

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the 28 EU Member States in the digital marketplace. However, only a few European
transformation of their industries and enterprises. companies are taking advantage of these
There are high disparities between EU Member opportunities. The adoption rate of new digital
States as regards digital transformation technologies is slow. Only 44% of DTS survey
performance. Sweden is leading the way in terms respondents have adopted at least two of the seven
of digital technology integration and at the bottom digital technologies investigated by the survey.
of the scale are Bulgaria, Greece, Hungary, and Mobile services, cloud technology and social
Latvia. (European Commission, 2017) media are the most widely used digital
technologies with 25%, 23% and 23% (Figure 3)
According to the DTS 2017 survey three out of of survey respondents having integrated these
four European companies regard digital technologies respectively. (European Commission,
technologies as an opportunity to innovate, grow 2017)
and thrive to remain competitive in the global

Figure 3: The level of technology adoption in European companies

Source: European Commission, 2017, p. 11

European companies favour “mainstream Member States are called to take action, across all
technologies” from the “first digital wave” over areas of policy (from investments to support
new digital technologies. Lack of skills and costly knowledge creation, to measures to strengthen
processes are preventing simultaneous investments skills, access to finance, the entrepreneurship
in at least two of the seven key digital mindset), in order to progress in the creation of
technologies. Large firms are more likely than favorable environments in which digital
SMEs to perform digital transformation and to reap entrepreneurs can start and thrive, and make it
their full benefits. easier for European businesses to go digital.

Concerning the positive results stemming from DIGITALIZATION PROCESS IN SERBIAN

digital transformation the DTS survey indicates the ENTERPRISES
following findings, (European Commission, 2017):
 64% of survey respondents consider that Serbia is still at the very beginning of digitalization
positive outcomes were generated thanks to the process in its economy and society. Although in
integration of digital technologies, the past two decades ICT have generally improved
 54% of technology adopters have seen their their performance and growth of ICT sector has
productivity increase or significantly increase, been reasonable, Serbia still needs to reform its
 53% of technology adopters have seen their economy in the way that allows ICT to become
annual turnover increase or significantly “the great enabler” it can be (Vidas-Bubanja &
increase, Bubanja, 2016).
 Only 6% of technology adopters have seen their
operational costs decrease or significantly Indicators of ICT implementation in Serbian
decrease. business sector presented in Table 2 proof that
domestic enterprises are more or less lagging in

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their efforts and commitment to fully develop and begging to use advantages of WEB 2.0 services as
leverage ICTs to boost business transformation and 28. 6% of enterprises use some of social networks
development for reaching higher competitiveness for the purpose of their business, (Bubanja, 2015).
level. According to Serbian state statistical office Also, domestic companies are lagging in value
99.8% enterprises in Serbia had the Internet access, chain management processes as low percentage of
and 77% of enterprises used this Internet access for companies use ERP and CRM software (16.2%
the creation of web sites in 2016, (SORS, 2016). In and 14.9% respectively). Cloud services pay only
the focus of domestic companies is to provide high 9.3% of companies in 2016, (SORS, 2016).
speed connections with good bandwidth and there
were 98.6% enterprises in 2016 with broadband New development environment create challenges
Internet connection in Serbia. Owing to broadband for domestic companies to use an opportunity
connections 94.5% of enterprises were able to use offered by digital economy and to stop with the
e-government services last year, (SORS, 2016). practice of producing the same products and
services in improved ways, but by accepting new
Table 2: ICT implementation in Serbian companies business models to divert to the creation of new
and EU-28 products and services with the more added value
EU-28 SERBIA and higher quality levels. Although Serbian
Enterprises with Internet access, % companies regard digital as an opportunity,
2014 97 100 investments in digital technologies remain limited.
2015 97 99,1 Frequently, domestic companies are using digital
2016 97 99,8 technologies to enhance particular business
Enterprises with WEB sites, % functions rather than to disrupt or radically
2014 74 74 transform their businesses. Performed analysis
2015 75 75,2
indicate that Serbian companies are still in the
2016 77 80,8
“first digital wave”, that is they adopted
% of Enterprises using the Internet for
interaction with public authorities
mainstream technologies that correspond to more
2013 87 87,6 “basic technologies” (i.e. broadband access and
2014 88 92,0 greater bandwidth, IT infrastructure, digital tools
2016 89 98,6 for accounting, CRM applications, etc.). For
% Enterprises receiving orders online domestic companies the new wave of technology
(at least 1%) adoption is more challenging and they are very
2014 15 22,9 slow in their implementation. (Vidas-Bubanja,
2015 17 23,3 2015)
% Enterprises purchasing online
(at least 1%) Whereas many larger companies have started
2014 38 40,4 digitalization process in Serbia, SMEs face
2015 40 41,0 particular challenges in ‘going digital’. The digital-
% Enterprises using ERP skills gap is hampering the acceleration of digital
2014 31 16,2 adoption in Serbia, and a great number of
2015 36 - companies still do not consider reskilling strategies
% Enterprises using CRM
to be a priority. Reskilling the workforce across
2014 30 14,9
Serbia’s industrial sectors is a critical necessity and
2015 33 -
% Enterprises using cloud services
challenge. A significant percentage of the
2014 19 3,2 workforce is at risk of ‘functional obsolescence’.
2015 - 9,2 SMEs cannot afford long and costly training
2016 21 9,3 efforts. Digital reskilling for new and better jobs
Source: SORS, 2016. requires a strong sectoral focus as well as the
promotion of cross sector e-skills. A
On the other side, the realization of network comprehensive strategy is needed to provide an
transactions still is not on a high level in Serbian adequate response to the digital leap that industries
business sector. In 2016 41.0% of enterprises will experience in the next 5 to 10 years
bought products/services online, and only 23.3% of modernization. (European Commission, 2016)
enterprises received orders by Internet (Table 2). In
the same time, domestic companies are only Serbia is also lagging behind its competitors in all
types of entrepreneurial activity. The main

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 M. Vidas-Bubanja
The challenge of going digital
I. Bubanja

problem in domestic enterprises lies in inadequate For reaping the ICT growth benefits Serbia needs
use of knowledge, by domestic managers in the to secure a high-quality and affordable
first place, as well as the lack of will for constant infrastructure in all sectors, including high-speed
improvement, (Đorđević et al., 2011). Serbia needs fixed and mobile broadband. Developed
a new wave of entrepreneurs to be the key drivers infrastructure can be properly used only by
of the digital transformation of domestic industries talented and educated human capital, that is, by
and enterprises. Entrepreneurship can be an answer skilled workers and educated managers.
to tackling new business opportunities, boosting Knowledge represents soft infrastructure necessary
market-creating innovations and solving societal for the realization of digital economy and
challenges, (Vidas-Bubanja & Bubanja, 2016). information society. Rising awareness and
readiness among business and citizens in Serbia for
Lack of surveys and data presents an obstacle for new ICT reality can be a result of wide education
deeper insights towards a better understanding of policies that encompass different social categories
the challenges faced by Serbian industry and from youth, to those business active and finally to
enterprises in their transformation journey. As no all actively participating in digital economy. In this
progress can be realized if it is not measured, way new reformed education system based on ICT
Statistical Office of Republic of Serbia should and innovation is an important way for Serbia to
regularly assess and monitor the performance of prepare itself for digitally connected world.
our industries and enterprises in the digital
transformation allowing the tracking of progress on In the future, Serbia needs more intensive activities
this critically important issue. Digital technology focused on creation of proper environment for
integration index, Digital Transformation Enablers’ further development of digital economy
Index and ICT Start-up Evolution Index created by (education, innovation, organizational
EU are the samples of good practice in this respect, transformation, etc.). In this respect very importan
(European Commission, 2015; 2017). The duties have to be done by business leaders and
evidence of this kind will help decision-makers in policymakers. On the one side, business leaders
Serbia to create policies supporting Serbian should struggle to implement effective strategies to
companies in the digital transformation processes. use the digital world as a source of innovation for
In the same time, it will enable companies to their customers or users. At the same time,
understand why digital technologies are important policymakers need to understand how these new
and how they can create (or reinforce) their own technological applications work in order to better
digital strategy. grasp their social, economic and regulatory
implications to ultimately set the framework
CONCLUSION conditions that will allow Serbian companies to
take full advantage of digital opportunities. This
Digital technologies have created new markets and will enable domestic economy to work more
unprecedented business opportunities. In Serbia, efficient through ICT implementation and realize
the key challenge is to ensure that such long-term economic development and overcome
opportunities are fully captured by industry and recession and transition challenges.
service companies, leveraging digitalization to
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IZAZOVI DIGITALIZACIJE

Savremeno poslovno okruženje se menja pod uticajem drugog talasa “uznemirujućih” (disruptive)
digitalnih tehnologija kao što su mobile aplikacije, društvene mreže, oblak računarstvo, analitika
velikih podataka i Internet stvari. Specifičnost ovih digitalnih inovacija koje se definišu kao Četvrta
industrijska revolucija je u tome što one izazivaju promene u celim industrijskim sektorima
postajući na ovaj način ključni preduslov za dalje konkurentno poslovanje na globalnom nivou.
Ovaj rad analizira doprinos novih digitalnih tehnologija ekonomskom rastu nacionalnih ekonomija
i ostvarivanju viših nivoa produktivnosti i konkurentnosti preduzeća. U cilju postizanja potrebnog
nivoa konkurentnosti savremena preduzeća moraju početi sa procesom digitalne transformacije
svog poslovanja što zahteva nove organizacione modele, redizajn poslovnih procesa i nove načine
komuniciranja sa partnerskim preduzećima i potrošačima. Prema nekim autorima ovo je jedna od
najvećih transformacija poslovnog sveta u zadnjem veku. Potencijali koji mogu biti iskorišćeni u
okviru novih digitalnih inovacija su značajni i predstavljaju veliki izazov za sve industrijske grane i
nacionalne ekonomije. Analizirana su iskustva EU u razvoju digitalnog preduzetništva, kao i
izazovi digitalnih promena za domaća preduzeća.

Kjučne reči: Infromaciono-komunikacione tehnologije, Rast, Produktivnost, Inovacije, Konkurentnost.

136 JEMC, VOL. 7, NO. 2, 2017, 126-136