Europe on a digital transformation journey

Big data, cloud services and the Internet of Things (IoT) are central to the EU’s competitiveness. This is one of the central messages of the Digital Single Market Strategy. Knocking down market barriers that prevent the uptake of IoT is therefore a key goal in order to realize the full potential of the data economy and to fuel a new cycle of technological innovation and stimulate broader economic growth across Europe.

The potential benefits from both a wider internal market for digital goods and services and the digital transformation of businesses are widely recognized. In a European Commission report published last year, IDC quantifies the expected annual growth rates of the market for inter-connected things in Europe as over 20% between 2013 and 2020. Revenues from hardware, software and services are expected to exceed €1.1 trillion in 2020 across the EU, up from €307 billion in 2013. The report pinpoints the inability of enterprises, in particular SMEs, to drive large scale adoption as the biggest hurdle for tapping into this powerful driver of business innovation and growth.

But today’s businesses aren’t designed for a hyper-connected world. The very enterprises who are expected to drive Europe’s digital transformation are still missing the mark when it comes to truly reshaping their business to the new reality. According to a new study by Forrester Research, commissioned by Microsoft, 94% of companies have some sort of digital strategy in place but many of these are a bolt-on to legacy systems and processes. Moreover, businesses are facing a skills-gap in such critical areas as security, app development and data analytics/machine learning which is preventing them from fully executing their transformation strategies. A further minefield facing European businesses is how to maintain customer trust by ensuring that their data is secure, private and compliant with regulation whilst maximizing data insights within the existing legal frameworks.

“The cloud is not a threat to data, but a way of doing things more efficiently in all segments of life.”Robert Madelin

What we can learn from the Forrester study is that digitizing Europe’s enterprise and industrial base needs to go beyond add-on digital tactics. This applies to technology as much as business processes and defining the right policy frameworks is key. On many levels, becoming a digital business is not a destination, it is a journey.

While technology enables us to analyze data in real-time, providing actionable insights for improving business operations and customer engagements, more fundamental changes are needed. Various aspects including skills, business processes, organizational structures, culture and policies across a fragmented European market should also be considered.

Speaking at Convergence EMEA 2015, Microsoft’s business conference for Europe, the Middle East and Africa, held in Barcelona this week, the European Commission Senior Adviser for Innovation, Robert Madelin, highlighted how the EU sees the future of IoT: “Europe sees a digital future changing everything, for everybody. European innovators want to be creating the next generation of technology, not just using it.”

Creating the necessary framework for every company to become a data company is certainly necessary if we are serious about helping European businesses succeed in their own journeys towards becoming digital businesses.


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