In 2025, the digital economy is moving at full speed—but many SMEs risk being left behind. Digital transformation is now critical to competitiveness, yet the costs, skills shortages, and cybersecurity risks are leaving smaller firms exposed.
Statista reports that 22% of SMEs lack confidence in their cybersecurity, while the CBI warns of a widening “digital divide” between large corporates investing heavily in tech and smaller firms struggling to afford even basic upgrades.
“Digital adoption is no longer optional, but the upfront costs and skills gap are prohibitive for many SMEs,” said Rain Newton-Smith, CBI Chief Executive.
For instance, one Yorkshire retailer looking to deploy AI-driven customer service software faced upfront costs of more than £10,000—a prohibitive investment for a business with tight margins.
The government’s Help to Grow: Digital scheme, intended to subsidise adoption, has seen limited uptake. A 2025 Department for Business and Trade report found that only 15% of eligible SMEs have enrolled, with many citing complex criteria and poor awareness.
Cybersecurity threats are rising alongside digitalisation. Industry data shows a 30% increase in cyber-attacks targeting e-commerce SMEs, with a Manchester online boutique losing £5,000 to a data breach, along with customer trust.
The IoD has urged the government to back SMEs with more accessible training and practical cyber-support. Newton-Smith warned: “Without digital capabilities, SMEs risk being left behind.”
The challenge is two-fold: SMEs must not only adopt digital tools but also ensure their teams are equipped to use them effectively. Those who can bridge this divide will unlock efficiency gains, new markets, and better customer relationships. Those who cannot risk stagnation in an increasingly digital-first economy.