The path to digital transformation

7th of February 2023
The path to digital transformation

Europe is quickening its step in a bid to catch up in the global race towards a digital future. Hartley Milner reports on the swathe of actions that could see the region take the lead in the transition while boosting trade opportunities at home and across international markets.

The Path to the Digital Decade is a programme of ambitious targets and support initiatives devised by the European Union to make sure every member state is ready for the “challenges of an evolving and inter-connected world” by 2030.

How the EU aims to get there is set out as a ‘digital compass’, each of its four points indicating a core strategy – promotion of digital skills, rollout of secure and sustainable digital infrastructures, the digital transformation of businesses and digitalisation of the public sector. The Union pledges to work towards these objectives without compromise on “transparency, security or fundamental digital rights and principles”.

Additionally, each country will have to come up with a strategic roadmap of its own, showing how it will go about achieving the transition, including measures backed up by regulation and investment.

“The Digital Decade is about making digital technology work for people and businesses,” said Margrethe Vestager, European Commission executive vice-president for a Europe fit for the digital age. “It is about enabling everyone to have the skills to participate in the digital society. To be empowered. It is about empowering businesses. It is about the infrastructure that keeps us connected. It is about bringing government services closer to citizens. Europe’s digital transformation will give opportunities to everyone.”

So what’s in it for businesses? “Immeasurable new opportunities to prosper,” according to the Commission. Manufacturers will have access to high quality industrial data, enabling them to optimise production, become more competitive and save money. Changes to how business is done online will set out clear rules for access to the single market and “strengthen the responsibility” of online platforms.

New competition rules are planned to ensure fairness for digital enterprises, big and small, as well as traditional industries. Investing in people and infrastructure will tackle the digital skills gap constraining business growth and provide funding for advanced connectivity and secure European data clouds.

SMEs are seen as pivotal to the success of the Digital Decade project, not only because they comprise the bulk of companies but because they are a critical source of innovation. “A truly functioning single market should create favourable conditions for digital take-up, disruptive innovation, rapid-growth and scale-up,” the Commission says. To these ends, it has pledged to strengthen innovative and fast-growing start-ups and SMEs, set up specialised digital innovation hubs promoting the uptake of artificial intelligence (AI) and improve access to finance.

Ability to adopt new tech

But the digital transformation of businesses will depend on their ability to adopt new technologies rapidly and across the board, including in the industrial and service sectors that are currently lagging behind. The Commission says the switch to new technologies will enable more efficient use of resources, boost productivity and reduce vulnerability to supply shocks.

By 2030, the Commission expects to see:
• 75 per cent of European enterprises using cloud computing services, big data and AI compared to 26, 14 and 25 per cent for each of these technologies at present
• More than 90 per cent of SMEs to have achieved at least a basic level of ‘digital intensity’ against 60 per cent now
• The number of European unicorns – start-up companies valued at more than $1bn – doubled from 112 to 224
• Adults with basic digital skills up from 56 per cent to 80 per cent
• 20 million information and communications technology (ICT) specialists in employment compared to 8.46 million now
• Gigabit network coverage up from 59 per cent to 100 per cent
• 5G coverage up from 14 per cent to 100 per cent
• EU production of semiconductors, including processors, up from 10 per cent to 20 per cent of world production in value.

There are 10,000 edge nodes in the EU (computers that act as an end-user portal for communication in cluster computing to provide better, secure and more sustainable data processing). By 2025, the Commission says the bloc’s first computer with quantum acceleration will be “paving the way to providing cutting-edge quantum capabilities”.

Quantum capabilities

All EU citizens and businesses will have online access to key public services in areas relating to careers, studying, family life, day-to-day business operations and moving home, as well as digital access to health records. Plus it is expected that 80 per cent of citizens will be using a digital ID.

Also in the pipeline is a programme of multi-country projects, large-scale initiatives to deliver the digital transformation of Europe and its industrial recovery. The projects will pool EU, national and private resources to bring about change in critical areas that no member state could achieve
on its own. These include common data infrastructure and services, blockchain (transactions made in
bitcoin and other cryptocurrencies), low-power processors, pan-European deployment of 5G corridors and high-performance computing.

Commissioner for the internal market Thierry Breton said: “Unlocking the potentials of the digital transformation, specifically by setting up and implementing multi-country projects, will pave the way for a competitive and sovereign Europe. We have to swiftly embark on the Path to the Digital Decade to make sure Europe is ready for the challenges in an evolving and inter-connected world.”

Other support will promote the rollout of digital information hubs, high-tech partnerships to promote digital skills, quantum infrastructure and a network of cybersecurity centres powered by AI to predict, detect and respond to cyber attacks at national and EU level. A new agency, the European Digital Infrastructure Consortium, will assist with the implementation of these multi-
country projects and make it easier for countries to take part when they invest in digital infrastructures.

For the first time, a common set of rules on “intermediaries’ obligations and accountability” across the single market will open up new opportunities to provide digital services across borders, while ensuring a high level of protection for all users. A new digital services act will clamp down on illegal content and protect users’ fundamental rights online, including the freedom of speech. It will also create a stronger public oversight of online platforms, in particular those that reach more than 10 per cent of the EU’s population.

Europe’s digital switchover needs to go hand-in-hand with its green transition, as “neither can succeed without the other”, the Commission says. “However, we need to ensure that digital?technologies?do not consume more energy than they save,” it stresses. “At present, digital technologies account for between 8-10 per cent of our energy consumption and 2-4 per cent of our greenhouse gas?emissions – small percentages but big numbers.”

The Commission reckons switching from 4G to 5G networks alone could reduce energy consumption by up to 90 per cent and says it will update existing laws and introduce new measures to ensure the move to digital has only positive impacts across all areas.

Global partnerships vital

But Europe is not proposing to pursue its goals in isolation. Global partnerships are seen as crucial in terms of regulatory co-operation, skills development, investment and research. The digital economy will be shaped through initiatives that bring together the EU, its member states, private companies, like-minded countries and international financial institutions. One route to improving connectivity with EU partners could be through a digital connectivity fund.

Building blocks

The Path to the Digital Decade will have a €7.6bn budget managed by the Digital Europe Programme along with funding from other EU programmes, including the Horizon Europe fund for research and innovation, the Connecting Europe Facility for digital infrastructure and the Recovery and Resilience Facility. Progress along the path will be measured with key performance indicators (KPIs) and evaluated in an annual report presented to the European Parliament and Council.

The Digital Decade transition programme has the agreement of the European Parliament and Council and was due to receive formal approval by the two co-legislators by the end of the year.

Britain, meanwhile, is strides ahead of its former EU partners in the race to a digital future, according to the UK government. In the preamble to its digital policy paper Chris Philp, minister for tech and the digital economy, says: “The UK starts with many advantages. Critical building blocks of the digital economy, from superfast internet access across the UK to cyber security capabilities, are already in place or being built. UK universities lead the world in fundamental and applied science. We saw more private capital flow into UK tech last year than any other European country, £27.4bn – around double the level of second-placed Germany and more than triple the level of France in third place.”

To further enhance its place in a digital world, the government has set an agenda for the UK to be a “recognised science and tech superpower” at the forefront of global regulation on technology, cyber, digital and data. It also has ambitions to set the pace in AI, one of seven technologies included in its innovation strategy, along with semiconductor development and advanced telecom systems.


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