Digital transformation - what does that actually mean?
Before I highlight some funding opportunities here, allow me to take stock of digital change. At the beginning there is the question: Who can attach the first mention of the term “digital transformation” to the lapel?
That is probably in the dark of contemporary history. Nowadays this word creation is on everyone's lips, especially in those of management consultants. In short, it is about the profound changes that have been triggered by the development of digital technologies. We are in the middle of the economic hurricane that economists succinctly describe as Industry 4.0.
Corona crisis as a catalyst for digital development
A catalyst for this development started quite harmlessly on a fish market in Wuhan. A few weeks later the blinds were pulled down worldwide. People stayed at home, schools were closed, and the consumption of the latest news about the virus took on proportions that, at least in eastern Germany, were reminiscent of the turning point.
What previously seemed impossible has become a reality: nationwide home office, homeschooling in the children's room, business meetings took place in slippers in front of the home PC, shops remained closed. After this lock down, life returned to normal within a limited framework. And the company was amazed to see:
- Comprehensive home office can work and the employees actually work (contrary to the expectations of many decision-makers)
- There is a lot of catching up to do in homeschooling. Some teachers lack the understanding of this form of teaching, in some cases far too many tasks are required, and teaching via video conferencing hardly takes place at all
- And the business meetings? For many work situations, the short meeting via zoom or similar conference solutions is a practicable and above all economically and ecologically sensible solution.
- The impact of the crisis on regional retailers has been dramatic. More and more everyday purchases are now being processed online.
- These profound changes require a rethink in your own business model and a technical upgrade.
De Minimis Regulation - what does it mean for public funding?
In the funding programs, reference is often made to the de minimis regulation. Those in the know will nod their heads in understanding, but for most of them this term is not transparent. Hence a brief explanation of this foreign word.
De minimis means translated from Latin "things of little importance". This means: Company can be funded up to a certain amount without an examination by the European Commission for distortion of competition. A German company can therefore receive funding of up to 200.000 euros from the state without a separate check for interventions in the market. This maximum amount is granted within a maximum of three tax years. If funding programs are now applied for, entrepreneurs have to declare that this limit of 200.000 euros has not been reached within the last three years.
Overview of digital funding programs
But what exactly are the funding programs and how do they differ? A few years ago, a funding program called “Go digital” came out on the subject.
Another comprehensive funding measure is in the starting blocks, the name of which differs only marginally from the first-mentioned funding: "Digital Now". We would like to present these measures to you here and are therefore now diving into the German funding jungle.
The addressees for these subsidies are companies with fewer than 100 employees and less than 20 million euros in sales or total assets. The companies must be based in Germany and come from the commercial sector.
Craft businesses with technological potential are also eligible. In the case of partner companies or affiliated companies, the criteria for within this association must not be exceeded.
What is promoted?
Only authorized consulting companies are allowed to provide advice. The corresponding companies are listed on the website of the Federal Ministry of Economics. There are three eligible modules:
- IT security: This includes, for example, minimizing risks from cybercrime and optimizing corporate IT security management systems
- Digital market development: For example developing an online marketing strategy or setting up a professional Internet presence
- Digitized business processes: Your goal is the introduction of e-business solutions for entire or partial processes
A daily consultant rate of up to 1.100 euros (excluding sales tax) is funded. The funding rate is 50 percent. The consulting company receives an invoice for the own contribution and the payment of the entire sales tax for the consulting service.
How is funding supported?
A main module with at least 51 percent of the requested funding volume must be selected: Since this funding program attaches great importance to IT security, at least two consultation days are to be allowed for (regardless of the choice of module and preference). In the main module, up to 20 consultant days are eligible, in one or both subsidiary modules up to 10 consultant days
The funding application is submitted by the consulting company and the consulting service and implementation only begin after receiving the funding notification. A maximum duration of 6 months is prescribed for the project.
This program can be applied for from 07 September 2020 and - in contrast to the “Go digital” program - members of the liberal professions (e.g. doctors, tax consultants, architects) and other self-employed entrepreneurs can also benefit from this support. The promoted company size was also expanded to a maximum of 499 employees.
What is promoted?
It should be noted that only investments in innovative hardware and software that create future added value are funded. Investments in standard software and hardware are not funded. The program consists of two funding modules:
- Module 1: Investing in digital technologies
- Module 2: Qualification measures for employees.
A "digitization plan" is required for the application. This must make the following key statements:
- Description of the entire project
- Type and number of digitization measures
- Presentation of the current situation in the company
- Representation of the target state after implementation
- Investment plan
Another smart thing is that the programs “Go digital” and “digital now” can be combined. In the first step, the planning of the investment is promoted and in the second step the investment based on it.
How is funding supported?
Here, too, it is a condition that implementation must not begin before the funding has been approved and that a listed consulting company is a project partner. A big improvement compared to the “Go digital” program is the duration of the project: the project can be carried out over twelve months (instead of six months).
The maximum funding amount is 50.000 euros, the minimum funding amount for investments is 17.000 euros and for qualification measures 3.000 euros. Due to the broad company size, the maximum grant is graded according to the size of the company:
- 50 percent for companies with up to 50 employees
- 45 percent for companies with up to 250 employees
- 40 percent for companies with up to 4499 employees
Attention: For funding applications submitted after June 30.06.2021th, 40, the funding rates are reduced to 35/30/5 percent. If investments are made in IT security, the funding rate increases by 10 percent. If the company is located in a structurally weak region, there is an additional XNUMX percent subsidy as a bonus.
Special feature of the value chain / network
If the interested entrepreneur takes a closer look at the funding, he will inevitably stumble across the above terms. These associations enjoy a special status. Companies in a value chain are companies that work together from the supply of raw materials to the end product.
A value-added network is characterized by the fact that the companies make independent contributions to an end product (e.g. suppliers in automobile production). And what is that good for? If you are in a chain or network as a company, the funding amount increases to a maximum of 100.000 euros.
Increase in the funding rate
The funding rate will also be increased by 5 percent. Small disadvantage here. Each company in this chain / network must submit an independent application with a digitization plan. The application with increased quotas is only considered complete when all companies involved have successfully submitted their applications. A collective application is not possible.
By the way, your own contribution can be financed across other programs. For example, kfw offers various low-interest loans that promote the expansion of digital infrastructure and growth in the company.
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