How Digitalization Boosts a Company’s Productivity

In a fast-paced world, companies that do not quickly adapt risk falling behind. But what does digitalization mean for a business, and how can it transform the way you work?

In 2021, the European Commission published a report tracking the progress of member states in the digital sector through the Digital Economy and Society Index (DESI). Among the 27 countries, Romania ranked 27th. One of the factors considered in determining the digital evolution of states was the integration of digital technology in business activities. Only 33% of Romanian SMEs had at least a basic level of digital integration, while the European average reached 60%.

At the same time, in 2022, Ciel Romania launched a study showing that 25% of Romanian entrepreneurs considered digitalization to be the key to business success. Interestingly, 33% of them — the same percentage as small and medium-sized businesses with minimal digitalization — said that the primary advantage of running a business in Romania is affordable digitalization. Moreover, more than half of the entrepreneurs saw digitalization as a necessity from the very start of their business.

These two reports reveal a gap between how business owners perceive the importance of digitalization and its actual implementation. As with other challenges, it’s often easier said than done. In this article, we will outline the main arguments for why digitalization is worth the effort, focusing on its key benefits, especially in boosting productivity within a company.

According to a study published by the European Central Bank in 2024, which analyzed multiple reports on the effects of digitalization, a 1% increase in digital technologies leads to a 0.01% growth in multifactor productivity within a maximum of five years. Similarly, a 1% increase in investment in digital technologies is associated with a 0.02% acceleration in the growth of multifactor productivity in businesses.

At first glance, these figures may seem small, but when viewed in context, their impact is actually quite significant. Digital transformation within a company greatly increases the overall percentage of digitalization. Furthermore, digitalization is an ongoing process that leads to constant improvements in productivity. Ultimately, the way employees use new technologies can result in even greater productivity gains.

In addition to this study, many others demonstrate a direct link between digitalization and productivity. But what are the concrete causes of this correlation? In other words, what are the general benefits of digitalization that also lead to increased company productivity?

1. Cost Reduction: How much time do your teams spend on repetitive tasks that could be automated? The immediate and major benefit of digitalization is optimizing and reducing the costs of allocated resources. Businesses can use their resources more efficiently, and automation eliminates the repetition and duplication of daily tasks. Additionally, the constant monitoring of processes significantly reduces the likelihood of errors.
2. Streamlining Processes: Every entrepreneur strives to find innovative ways to improve their business efficiency. Streamlining processes through digital transformation can be the answer to this goal. For example, in supply chain management, it allows real-time inventory tracking, automating replenishment processes, and ensuring deliveries without the need for human involvement.
3. Improving Data Collection and Analysis: Digitalization simplifies the collection, organization, and interpretation of data, which are essential for planning business directions. Decisions based on these insights become predictive rather than reactive. Without this data, companies risk missing major opportunities by having a limited understanding of the market, customer interest in a product or service, or the level of employee motivation.
4. Increasing Transparency: Transparency in business processes is crucial for long-term success. Digital monitoring enhances the ability to identify errors and opportunities in a timely manner. Additionally, it indirectly affects customer relationships, increasing their trust and collaboration.
5. Ensuring Continuity: Another major benefit of digitalization is ensuring that every activity follows a consistent flow, leading to predictable and reliable outcomes. For example, digitizing and automating customer communication ensures that quality support is provided to every client, regardless of the situation.

These are just a few of the benefits of digitalizing your company. The impact can vary depending on several factors, such as the types of technologies implemented, adoption mechanisms, and the continuity of investment in these technologies. However, the effect of digitalization remains constant: increased productivity. Contact us to learn how you can achieve this goal and discover the actions that can drive your company’s growth.