With this coming May earmarked for the long-anticipated launch of the European Commission’s overarching Digital Single Market strategy, now is a good moment to consider why it’s vital to get the digital single market right and what’s at stake if we don’t.
It’s been suggested that, with the right support, the digital sector could grow seven times faster than overall EU GDP in years to come. Achieving a fully-functioning digital single market could translate into an additional 340 billion euro in economic growth. The incentives for this new Commission to embrace digital technologies are clear.
But before Europe can reap the benefits of digitization, we need to overcome a number of remaining obstacles.
Europe was once a technological pioneer, but since the 1990s it has fallen behind other regions of the world when it comes to ICT-driven productivity. The adoption of cloud computing has been particularly slow. This is a worrying trend, given that recent studies have shown how digital solutions such as enterprise cloud have the potential to greatly increase productivity, and ultimately drive massive economic growth and job creation.
To drive European competiveness and growth, traditional industries must also join the digital journey. The value of digitization for all sectors has already been proven: in Germany, for instance, the INDUSTRIE 4.0 policy initiative has focused on embedding digital technologies at the heart of manufacturing engineering, using the Internet-of-Things (IoT) and Machine-to-Machine communication (M2M). And this week’s CeBIT conference in Hannover saw a clear focus on the potential of digitization to drive a new industrial revolution in Germany.
We need to replicate, and build upon, such initiatives at a European level.
Last month’s publication of a new Digital Economy and Society Index by the European Commission showed just how arbitrary digital opportunities can be. From one country to the next, the development and uptake of solutions such as high-speed broadband, cloud computing, e-commerce or e-government varies significantly.
The EU needs to ensure that the right frameworks and economic incentives are in place to support digitization across all industries. Numerous studies, including a recent Microsoft-commissioned report, show that promoting the development of digital services and applications is likely to drive demand for broadband across the EU, which in turn supports the development of and investment in better infrastructure. This means that we need a coherent approach to foster cloud adoption, infrastructure and the digitization of industries.
Focusing on infrastructure availability is often the solution of choice in countries just beginning their ICT development. But this is a short-term approach. Sustained digital progress must be driven by increasing the uptake of digital services, which is the option favored by more digitally-mature countries. Given the varying levels of success this has had across Europe, it would be helpful to start benchmarking EU countries according to their uptake of solutions such as cloud computing across different sectors, in order to fully understand what obstacles remain.
One such barrier is the outdated approach to structural funding for IT procurement and related purchases. Whereas such expenses were once considered as one-off, capital expenditures and benefited from EU structural funds assistance, recent technological advances mean that on-demand services such cloud computing are now considered as ongoing operating expenses. However, this renders them ineligible for structural funding. Such a discrepancy reduces the incentives for some companies to embrace new solutions and presents a major stumbling block to Europe’s digital transformation.
To ensure all users can benefit from access to competitive, high-quality services, we also need to overcome national borders on key telecommunication issues such as network authorization and the accessibility of spectrum frequencies. Through a balanced, pan-European approach to legislation, we must develop a healthier, more competitive telecoms market encompassing multiple players. The global competitiveness of the European digital economy however will be measured by the success of other industries.
Finally, in legislating for the digital era, it’s important that we don’t inadvertently create additional regulatory restrictions. This is of vital importance when we consider that most rules governing the digital arena are limited by national borders but the digital services Europe relies upon are global in nature.
The new European Commission has shown a deep and determined commitment to completing a digital single market which will benefit all Europeans. Success demands a considered, ambitious and bold approach from all the EU institutions, encompassing all the ingredients for driving digitally-based growth. Only then will Europe truly reap the benefits of technology for all.