Digital transformation of Turkish SMEs: research

Turkey’s leading university conducted a survey on the digital transformation of Turkish SMEs

The Bogazici University Industry 4.0 platform conducted a survey about digital transformation of the Turkish SMEs, called Tool for Digital Transformation Evaluation of the Turkish SMEs or D3A. The research focused on the digital transformation of 100 Turkish SMEs from Istanbul. The reasons in choosing the SMEs are   that they constitute 99 % of manufacturing companies in Turkey; and they have limited resources, according to Prof. Dr. Lale Akarun, The Head of Platform for Boğaziçi University Industry 4.0. “…We envision digital transformation to be a completely different thing: It is more about the transformation of workers than the elimination of them: It is enabling workers to become more digital, collecting data and analyzing it for increasing efficiency,” said Akarun. Here is what Akarun told me about the research.

What is the background of the research? Why did you decide to run such a survey?

The Bogazici University Industry 4.0 platform is an industry-academia platform with over 300 members. We established the platform in 2017 and chose Industry 4.0, or Digital Transformation (DT) as the focus area because there was a lot of interest on the industry side. However, our interests extend beyond digital transformation, to producing the enabling technologies for digital transformation.

We held a number of meetings, with agendas centered on requests from the industry side. We found out that the industry members are eager for Digital Transformation, but have little idea where to start. One of the big problems is that the technology providers, with international expertise on Digital transformation, are beyond the reach of budgets of most companies.  A second problem is that people fear transformations and need a trusted partner to guide them.  We felt that our platform was very well suited to build trust and open the way for local DT providers and decided to start by digital transformation maturity assessment.

When we decided on this course of action, we applied for a grant and we got funded by İSTKA, the İstanbul Development Agency. We proposed to assess 100 companies in the manufacturing sector on the SME scale, for two reasons: They constitute 99 % of manufacturing companies in Turkey; and they have limited resources; so they should utilize those resources only after a very careful analysis.

Our project team consists of Professors Ümit Bilge and Necati Aras from Industrial Engineering Dept, myself, Prof. Tuna Tuğcu and Assist Prof. F. Başak Aydemir from Computer Engineering Dept, and Prof. Aslı Sencer from Management Information Sciences department. We had two project coordinators, Sertaç Yerlikaya and Cemre Selcen, both  Industrial Engineers with 30 years of experience. Last but not least, our project team contains Sedanur Yıldız a graduate student in MIS, who is conducting her thesis work on this area. As academicians, we first surveyed assessment methods in the literature; and wrote a paper and book chapter. We then formulated a unique assessment approach and analysis method and filed a patent. We cannot call our assessment method a classical survey, because it is conducted face to face; with open ended questions.

What were your main criteria to see the digital transformation of the Turkish SMEs? -For the survey questions I noticed you have 65 questions. Did you use the same questions for all of 100 SMEs? Did you customize the questions for each SME?

We grouped our questions into five main categories: Organization, Customer, Product Development, Supply Chain Management, and Production. We designed 10-18 questions for each category; comprising a total of 65 questions. The answers to the questions are open-ended: Each question investigates how data is used for each task of the category. We question whether data is collected; whether it is shared through a system; how it is kept and updated; whether analyses can be performed on it; whether these are automatic and predictive. Since each question is for a specific task; the answers for each are suited to that category and technologies developed for carrying out that task. The experts conducting the interview can classify the answers and rate the answer on a scale of 0-4. Our aim was generating a maturity map rather than a company-specific road map. Therefore, we had a common set of questions.

I know you conducted the survey with 100 SMEs from Istanbul. Do you think this universe is satisfactory to reach proper results?

There are about 370,000 companies in the SME scale in the manufacturing sector. A sample of 100 companies is far from representative but at this stage it is not our main focus to represent the manufacturing sector SMEs in Turkey. Rather we aimed to design a maturity index for Turkish SMEs and develop DT roadmaps for SMEs at different maturity levels. That’s why we chose a focus area, Dudullu Organized Industrial Park, which is one of the most established Industrial parks in Turkey. By choosing this as our focus area, we were expecting to include some of the most developed SMEs. However, we also chose companies from the small industry parks in the zone; so we were able to include companies from a range of maturity levels. Therefore, we think that our sample represents Dudullu Organized Industrial Zone well. 

The study said Turkish SMEs have a digital transformation awareness but don’t have a strategy. How can the SMEs build transformation strategies?

In the last five years, there have been a lot of activities to raise awareness. Therefore, everybody has heard about Industry 4.0; knows that digital transformation is inevitable. However, there is no agreement on what it encompasses. In the limited context, it is perceived as factory floor automation. Sometimes the term “dark factory” is used since a factory all run by robots does not need light. This aspect worries workers as well as policy makers. We envision digital transformation to be a completely different thing: It is more about the transformation of workers than the elimination of them: It is enabling workers to become more digital, collecting data and analyzing it for increasing efficiency. The more knowledge you have, the more you understand that DT is not about buying equipment. You cannot transform a company without involving all the workers. Since our survey questions all the functions, different tasks about data usage; I think it automatically raises awareness in the people we interview. One output of our assessment is grouping companies into three clusters, as beginners, medium level and advanced. We give recommendations based on the group for each of these groups. This is designed to give them ideas as to how to start.

What are the major results of the research? As you compare the Turkish SMEs with the European ones, what are the similarities and differences in terms of digital transformation?

The objective of our research is not comparing Turkish SMEs with European ones. Our aim was to design a maturity index suited to Turkish SMEs and design proper strategies for DT. We have been able to do that: In each category we have studied, we have grouped the companies into three clusters, as beginners, medium level and advanced, and given recommendations specific to each cluster.

I know you applied for a patent for your research method. What are your future plans after receiving the patent?

Yes, we have applied for the patent.  Once granted, we will license the patent. We want to continue assessments with more companies. This will enable us to analyze subgroups in our set. We may revisit the same companies after a certain time; and see how much they have advanced. We also plan to automate our assessment method step by step, in order to scale it to more companies.

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