More Than Money: The Real Drivers of Digital Transformation in Bulgarian SMEs

True digital transformation goes beyond simply investing in technology

Digitalization is no longer a concept of the future. It is the present reality in which businesses operate, compete, and create value. For micro, small, and medium-sized enterprises (SMEs), embracing digital transformation is not a luxury - it is essential for staying competitive, adapting to change, and ensuring long-term viability. In this fast-paced technological environment, support for SMEs must be not only timely but strategically designed and grounded in their real-world needs.

With this in mind, the Bulgarian Small and Medium Enterprise Promotion Agency (BSMEPA) joined the Digitrans initiative - an international pilot project launched by the World Bank and implemented across Bulgaria, Poland, and Slovakia. The project's aim was to determine what types of support are most effective in accelerating the digital transformation of SMEs. The insights gained offer important guidance for future policymaking in this field.

In its initial phase, the Digitrans project tested five different models of digitalization support across 25 small and medium-sized enterprises. These companies were divided into five groups, each receiving a specific combination of diagnostics, training, and consulting. The purpose was to evaluate which formats delivered the most practical and effective results. This experimentation enabled the refinement of the pilot model, ensuring that it was better adapted to business needs - more flexible, more targeted, and more actionable.

Building on the outcomes of this early phase, the project moved into a broader second phase, involving more than 600 SMEs across the three countries. This expanded version introduced a comprehensive program with three integrated components: diagnostics tailored to assess digital readiness, change management training, and individualized technology consulting. These were combined with financial incentives to evaluate how different types of support influence outcomes. The approach was deliberately structured for scalability, with simplified procedures and content matched to the companies’ digital maturity.

Participants were grouped into three categories. The first received only a €2,000 grant. The second group received both the financial support and full technical assistance, including diagnostics, training, and a digital roadmap tailored to their needs. The third group served as a control, receiving no intervention. This setup allowed researchers to measure the actual impact of the different support mechanisms through follow-up surveys.

The results were clear: the companies that received the full support package outperformed the rest. Their use of digital tools increased by a factor of 2.5, and they were twice as likely to implement organizational and decision-making changes. Adoption of systems like CRM and ERP was significantly higher and more effective among these firms. Interestingly, the combined support model proved especially beneficial for micro enterprises, companies led by women, and those with lower initial digital capabilities.

Another key insight emerged: companies receiving only financial support tended to limit their spending to the amount of the subsidy. In contrast, those that received technical assistance often committed additional funds, suggesting a stronger internal drive to transform. A curious pattern also appeared among company leaders - those who overestimated their own digital skills tended to show more substantial improvements. While this may point to the risks of overconfidence, the technical support helped mitigate potential pitfalls and turn ambition into concrete results.

What Digitrans ultimately revealed is that money alone doesn’t drive transformation. Many SMEs acquire software tools but lack the skills or readiness to integrate them into their daily workflows. Simply purchasing technology is not equivalent to digitalization. True transformation begins when companies develop the capacity to align these tools with their operational goals and use them effectively. That capacity - often hidden or underdeveloped - is the essential ingredient that determines whether technology becomes a cost or a source of value.

The diagnostic assessments and expert consultations provided in the project turned out to be instrumental. Many SMEs don’t know where to begin, lack internal know-how, or struggle to choose the right tools. The project made clear that providing knowledge and hands-on guidance is what turns isolated investments into long-term digital growth.

Digitrans was more than just a project - it was a practical testbed that blended funding, know-how, and experience. Its overarching message is unambiguous: technology alone won’t change a business. Real digital transformation demands leadership, strategy, and people who are prepared to act. It doesn't start with buying tools. It starts with a clear vision of what kind of company you want to build. Because digitalization, in the end, is not the goal - it is the path to building smarter, more adaptable, and more competitive enterprises.

This analysis was prepared by Boyko Takov, Executive Director of the Bulgarian Small and Medium Enterprise Promotion Agency, for Dir.bg.