Facing the data economy:June 2017 - DigitalEurope€¦ · Big Data is considered the new asset class – the oil of the digital era. However, while oil is the world’s most traded

June 2017Facing the data economy:

Last call for Europe!

June 2017

Foreword

Economically, Europe is still a giant with a rich and diverse industrybase, a long tradition in science and technology, a good track recordwhen it comes to Innovation, and an important marketplace -perfect conditions to leverage the advantages of digitization.

However, the reality is also that Europe urgently needs to seize agreater proportion of the opportunities presented by the digitaltransformation the world is undergoing, in order to remaincompetitive on a global level. While the sheer scale of the changemeans that no one can be certain of the full impact on business andsociety, it is very clear that Europe must be more united and forcefulin driving the adoption of digital technologies and building a first-class digital infrastructure. We cannot afford to be late ondigitalization while other parts of the world roll out cutting-edgeconnectivity and develop digital solutions, applications and use-casesat breathtaking speeds.

This Study identifies what could be the main accelerators for growthand barriers holding back the transformation. It has been built ontwo pillars: drawing on data that establishes the context ofdigitalisation in Europe and including insights from top executives ofDIGITALEUROPE members, thereby providing a hands-on andbusiness-oriented view on the digital industry in Europe.

DIGITALEUROPE seeks to bring as much clarity as possible toongoing debates and we conducted this study with PwC to assessthe state of play in the data economy as perceived by the digitalsector and in key European industries. I trust the insights this studyoffers will constitute a valuable contribution to policy deliberationsand contributes to Europe reaching its full potential in the digitaleconomy – a potential which we are very far from reaching today.

Markus Borchert, President DIGITALEUROPE

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Table of contents

Executive Summary

State of digital transformation in Europe:

• How can the EU become a leader in the global data economy?

• State of digital transformation: Europe is lagging behind

• European companies are not ready to deploy data models yet

• Deploying game-changing technologies at a higher pace

Recommendations for a strong data economy in Europe:

• Faster adoption of technologies and business models required

• Speeding up investments in ICT training and upskilling solutions

• Fostering data usage and exchange through sectoral data lakes

• Hard and expensive to obtain: spectrum is today’s bottleneck

• Shaping an innovation-friendly regulatory framework

• An urgent and EU-wide answer to rising cybersecurity threats

Deploying decentralised transformational projects to mobilise

About DIGITALEUROPE

References

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Executive Summary

The data economy is offering to Europe a tremendous opportunityfor growth and jobs. Digital technologies are thus increasingly seenas an opportunity to innovate, grow and thrive to remaincompetitive in the global marketplace. For instance, 80% of CEOssay data mining and analysis is strategically important to theirorganisation.

However, the old continent seems to struggle compared to itscompetitors. The state-of-play of the data economy shows thatEurope is lagging behind in terms of digital transformation. Thespeed and magnitude of digital transformation are still largelyinsufficient. This is shown by the limited uptake of data models bybusinesses. Also, Europe would need to invest annually aroundEUR 90 billion over the next 15 years, to position itself as atrailblazer in Industry 4.0.

Four major areas of action for a strong data economy in Europewere identified (see next page). These areas all share onecharacteristic: they require quick and large-scale efforts to betackled. Forward-looking policies at national and European levelsare urgently needed. These challenges can only be met if allrelevant stakeholders work together.

A mobilisation of all European public and private stakeholders tolaunch and achieve digital infrastructure, skills, regulatory andbusiness projects is urgently needed to reposition Europe at theforefront of international digital leadership. Only concrete projectswill have the power to catalyse available funds, people skills andleaderships to make Europe a leader in the new digital era.

Cecilia Bonefeld-Dahl, Director General DIGITALEUROPE

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Actions for a strong data economyin Europe

Speed upadoption oftechnologiesand business

models

Step upinvestments

in ICT trainingand upskilling

solutions

Supportcybersecuritysolutions and

innovationenabling

regulations

Foster therise of nextgeneration

infrastructure

State of digital transformation in Europe

EU in the globaldata economy

Europe is laggingbehind

EU companiesnot ready for

data models yet

Game-changingtechnologies at a

higher pace

How can the EU become a leader in the global data economy?

Big Data is considered the new asset class – the oil of the digital era. However, while oil is the world’s most traded asset by value,data are hardly traded at all, at least not for money at the moment. Digital information is not unlike any previous resource: it isextracted, refined, valued, bought and sold in different ways.

Why data matters

Data has rapidly become a game-changer for companies bringingnew opportunities to thrive in theglobal economy. Turning data intoactionable and valuable insight nowconstitutes a new type ofcompetitive edge with a decisiveimpact on company performance.

Navigating the data economy hastherefore become an imperativefor EU businesses. Failure to do socould strike a decisive blow to thecompetitiveness of EU businessesin the global marketplace.

Digital Transformation as thebedrock of the data economy

If EU businesses are to thrive in thedata economy, they must speed upinvestments in digitaltransformation. It is therefore hightime for EU countries to fill thedigital adoption gap withinternational competitors.

Given the rapid rise of the dataeconomy, the consequences of adigital gap could be far-reaching notonly for businesses today but evenfor future EU businesses.

DIGITALEUROPE - 6

“Now companies comprehend the value of data, buthaving a business model based on data is far from theircurrent concerns and awareness, both for SMEs and LEs.” –

Godefroy de Bentzmann, Syntec

2017: this is what happens in an Internet minute 1

Facing the data economy: Last call for Europe!





data models yet


higher pace

Scaling up EU actions to seizedata economy opportunities

Europe is already lagging behindin the transition to the dataeconomy. EU industry leaders andpolicy-makers need to rapidly sizeup what is at stake to scale upinitiatives to put Europeanbusinesses in a leadership positionin the data economy.

Key actions required include:• Incentives for faster adoption;• Investments in ICT training and

workforce upskilling solutions;• Implementation of EU data

lakes;• Harmonising the spectrum

policy;• Data-friendly regulatory

framework;• Cybersecurity as a top priority.

DIGITALEUROPE - 7

All lights on the data-basedindustrial revolution

Industrial leaders have soonrealised the wide-rangingopportunities of the transition tothe data economy. We are at theadvent of a global transformation— the Fourth IndustrialRevolution— characterized by theconvergence of digital, physical,and biological technologies inunprecedented ways.

National initiatives such asIndustry 4.0 in Germany orIndustrial Internet Initiative in theUS are emerging to grasp the fullpotential of the “data-basedindustrial revolution”.

“Our customers are all atdifferent stages of thetransition. They are allnavigating one of the biggesttransitions ever seen intechnology – and one that ishappening very quickly.” –

Edwin Paalvast, Cisco

Bigger effortsare needed!

Investments in trainingand upskilling

Faster adoption andnew business models

Rising cybersecurity threats

Data usage and data lakes The spectrum bottleneck

Innovation friendly regulations




data models yet


higher pace



State of digital transformation: Europe is lagging behind

Varying digital performanceamong EU countries

As with the heterogeneous digitalperformance of EU countries, thetransition path towards the dataeconomy varies tremendouslybetween European countries.According to the Digital EvolutionIndex, between 2008 and 2013, EUMS fell either under Stall Out (i.e.high digital evolution but weakmomentum) or Watch Out (i.e. lowdigital evolution and weakmomentum). At the same time,international competitors such asthe US, Singapore or Israel were inthe Stand Out category (with highdigital evolution and strongmomentum). ²

Few EU countries can competefor the global data economyleadership

EU digital leaders are competingwith global leaders in the race tothrive in the global data economy.According to the 2017 GlobalConnectivity Index, the US,Singapore and Sweden representthe top global leaders (see globaldigital economy map below). ³

However, many EU countries arestill lagging behind. They are notyet investing, adopting orcapturing the potential ofadvanced technologies includingCloud, Big Data and IoT.Investments in ICT infrastructure,enhanced user applications andexperiences, as well as robustdigital policy environments aretherefore required to address thisrisky gap.

“There are lots of talks but limited action in the EU. The pacein US and China is much faster. EU should now focus onimplementation of strategic common goals.” –

Barry French, Nokia

2017 Global Connectivity Index (GCI): A majority of EU countries lagging behind 4

DIGITALEUROPE - 8Facing the data economy: Last call for Europe!



data models yet


higher pace



Limited adoption of newdigital technologies laying thefoundations of the dataeconomy

Yet, companies are focusing on thefirst wave of digital technologies(broadband access, ITinfrastructure, digital tools foraccounting and CRM). The secondwave of recent technologies stillsuffers from a limited adoptionrate (from a 16% adoption rate forcybersecurity solutions up to 26%for mobile services).5

High awareness of theimportance and potentialbenefits of digital

Today, 75% of EU companiesregard digital technologies as anopportunity. Companies are slowlymoving from talk to action, as mostfirms have taken the first step tointegrate digital technologies andrecently increased investments indigital factories. 5

“Companies understandwhat is at stake but theyare questioning the howand the speed.” –

Franck Cohen, SAP

Low adoption rate of the second wave of digital technologies5

Mobileservices

26%

Cloudtechnology

23%

32

Socialmedia23%

Roboticand

automatedmachinery

22%

Internetof Things

19%

Big dataand dataanalytics

19%

Cybersecsolutions

16%

DIGITALEUROPE - 9

Digital transformation spursnew business models

The rise of digital trends enablesmore than just technologicalinnovation. They also createinnovative business models. Recentexamples of these new businessmodels include new trends such asservitisation, productisation, mass-customization, sharing orcollaborative economy.

of companies are investingin digital factories 6

90%

European companies are not ready to deploy data models yet





data models yet


higher pace


Two game-changingtechnologies

Two technologies seems to havethe most profound impact on thebusinesses. Artificial intelligence(AI) and robotics prove to be gamechanging within all industries andfor all sizes of companies aroundthe globe.

The availability of greater volumesand sources of data together withincreased computing power haspushed AI and machine learning tonew boundaries. Businesses cannow generate meaningful learningsin real-time to improve instantdecision making.

The advances in networkedconnection between people,process, data and things gave birthto the emergence of the Internetof Everything (also known as“Programmable World”) precededby the IoT.

DIGITALEUROPE - 10

Enabled by supportingtechnologies

However, AI and robotics are fullydependent on the advances ofother technologies to scale up.High performance computing,storage and sharing of datathrough cloud, the presence ofhigh speed broadband followed byfuture 4G and 5G networks are allcritical catalysts.

Transversal to all, cybersecuritysolutions are a precondition for theproper functioning andco-evolution of all othertechnologies. The interdependencebetween the technologies alsomeans that none can beoverlooked or put aside.

of CEOs say data miningand analysis is strategically

important to theirorganisation. ⁹

80%

“Artificial Intelligence androbotics are thetechnologies of the future.All others are purecommodity.” –

Franck Cohen, SAP

Deploying game-changing technologies at a higher pace

2530

37

44

52

59

6571

7680

83

0

10

20

30

40

50

60

70

80

90

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

Big data market size revenue forecast worldwide from 2016 to2026 (EUR bn) ⁸

By 2022, the AI marketis expected to be worth

EUR 14.3 bn⁷





data models yet


higher pace


DIGITALEUROPE - 11

Developing European B2Bdigital platforms

Global digital platforms are mostlyactive in B2C services/contentdelivery. Thanks to its industrialbase and technology capacity,Europe has a competitiveadvantage in the development ofB2B digital platforms.

Industry leaders and policymakershave to ensure the creation of B2Bplatforms, by proactively fosteringcollaboration. For example, theautomotive industry could benefitfrom cooperation by leadingGerman and Frenchmanufacturers to develop world-leading B2B platforms.

CEOs are particularly anxious thatbreaches in data security andethics, and IT outages anddisruptions could impair publictrust in their industry.

Two-thirds of CEOs thinkautomation and artificialintelligence pose a threat andraise various ethical issues.

Ultimately, trust is not just a risk,but an opportunity. 64% of CEOsthink the way their firm managesdata will be a differentiatingfactor.

“Europe benefits from the combination of technologies andindustry. If done right, this is a true competitive advantage.” –

Barry French, Nokia

The question of trust in the digital age is a make or break challenge

What are CEOs thinking?

Since 2002, trust has been high onthe business radar, jumping from37% to 58% over the last 3 years,exacerbated by technology. 69%of CEOs agree on the difficulty ofgaining – and retaining – people’strust in an increasingly digitalisedworld.

87% of CEOs believe social mediacould have a negative impact onthe level of trust over the next fiveyears thanks to newly emergingtechnologies and new uses whichmight expose them to newdangers.


Recommendations for a strong data economy in Europe

Faster adoptionand new business

models

Investments intraining and

upskilling

Data usage anddata lakes

The spectrumbottleneck

Innovation-friendly

regulations

Risingcybersecurity

threats

Faster adoption of technologies and business models required

Limited adaptation to thebusiness models

Services industries are far aheadcompared to other industries inthe integration of data in theirbusiness model. However, only amarginal number of firms plan tosignificantly change their businessmodels.

Low levels of investmentsmust be scaled up

Europe is today lagging behind interms of level of investments. Forinstance, companies planning toexpand their digital factoriesintend to invest on average 6% oftheir total annual revenues overthe next five years, i.e. 1.2% perannum.

There are some differencesbetween industries, though.Industries where customerexperience is key are at the highend of the scale, while companiesin the metals and mining orelectronics industries are laggingbehind.

“Current investments arehappening but they are notmassive. We are in the earlydays, with a limited vision, andlots of trials and errors.” –

Franck Cohen, SAP

Investments levels vary across industries (% of turnover invested in digital factories) 6

DIGITALEUROPE - 12

40%of firms believe adopting

a platform-based businessmodel and engaging inecosystems of digital

partners are critical to theirbusiness success ¹¹.




models


upskilling



Innovation-friendly

regulations

Risingcybersecurity

threats

Last call for Europe: a sense ofurgency is imperative!

European companies must actquickly to catch the digital train.Top management must lead andfully integrate digital transformationin their long-term strategy. Digitalinvestments are often sizeable andROI is expected in a five-yeartimeframe.

“A stable, secure network isthe foundation that everycustomer needs as they lookto become ‘digital ready’and embrace the dataeconomy.” –


DIGITALEUROPE - 13

The road ahead is surely a longone, but competition is moving fastaround the world. Europe is alreadylagging behind its maincompetitors. It operates at 12% ofits digital potential, compared withthe United States’ 18%. It simplycannot afford to lose any moreground.

Europe and the United States have captured only a small percentage of the potential fromdigitisation



models


upskilling



Innovation-friendly

regulations

Risingcybersecurity

threats


Without a digital-savvy labourforce there can be no dataeconomy. Yet, European businessesare increasingly struggling to securedata-skilled professionals.

In an increasingly data-driveneconomy, Europe cannot afford tofail to train career-ready studentsand to retrain workers to helpthem cope with unpredictablechanges in the labour market.

new data-related jobswill be created inEurope by 2020with the uptakeof big data ¹³

100,000

Speeding up investments in ICT training and upskilling solutions

“Next to developing the skillsof young people, we needa large-scale solution to trainthe existing workforce.” –


“Digital transformation andpeople development arekey challenges facedby the industry.” –

Markus Naegeli, Canon Europe

DIGITALEUROPE - 14

Tackling the shortage of datascientists: an imperative forthe EU’s competitiveness inthe data economy

European businesses areincreasingly struggling to securehighly skilled data-savvyprofessionals such as softwaredevelopers, systems engineers androbot maintainers to make themost of the data economy.

Yet, the demand for advanceddigital technologies will continue togrow, as will the demand for highlyskilled digital professionals.

Companies consider technology and skilled workforce as main ingredients for innovation ¹⁰



models


upskilling



Innovation-friendly

regulations

Risingcybersecurity

threats


Human capital as an enablerof value creation in the dataeconomy

Translating data into economicvalue entails more than justtechnical skills. It embraces a newway of thinking, the developmentof horizontal skills and the abilityto rapidly generate new operatingmodels. From data collection todata transfer, storage and analytics,human capital is key across theentire data value chain.

Massive investments neededin ICT training programmes toease workers’ job transitionpath

Educating and training students andworkers for the new jobs of todayand tomorrow require jointinvestments by the private andpublic sectors.

New skills required to harnessthe full potential of the dataeconomy

New skills and occupations arerequired for the uptake of dataservices and to accelerate theadoption of data-driven decision-making processes. ‘Learning torelearn’ has therefore become acrucial skill which should be taughtboth within and outside thetraditional education system.

Education systems providingcareer-ready data scientists

Robust and comprehensive skilldevelopment strategies are criticalto mitigate the negative effectsand accelerate the positive effectsof the data revolution onemployment.

“For digital technologiesto be successful, we needto increase focus on theinterplay between technicaland organisational skills.” –


2.3 millionjobs ¹⁴

The net effect on jobs of theDigital Single Market andworld-class level ofdigitisation in the EUfrontrunner nationscould reach

DIGITALEUROPE - 15

“We need to develop the right skills. Today, we have lessthan 1,000 PhDs in Artificial Intelligence in Europe.” –

Franck Cohen, SAP



models


upskilling



Innovation-friendly

regulations

Risingcybersecurity

threats


Fostering data usage and exchange through sectoral data lakes

A data lake is a repository for large quantities and varieties of data, both structured andunstructured ¹⁵

Risk of having to rely on non-EU data

Data are recorded and saved indifferent nomenclatures, formats,and types depending on the entityor the country producing them.This lack of interoperable standardsfor metadata curation andintegration limits the developmentof analytical platforms and datamonetisation.

DIGITALEUROPE - 16

Data accessibility is the primaryenabler of data aggregation andmonetisation. In order forcompanies to gather and use data,they must overcome the currentbarriers linked to the lack of clearconsent and exploitationguidelines.

In this sense, the origin, rights andconsent attached to different typesof data must be well defined.Otherwise, companies will have todepend on data gathered outsidethe EU and face higher costs ofobtaining data.



models


upskilling



Innovation-friendly

regulations

Risingcybersecurity

threats


Data lakes create a levelplaying field and spurinnovation

This would enable stakeholdersacross the value chain in differentindustries to exchange data withina specific protocol in a rapid andsecure manner.

Ensuring high-quality data willmake SMEs more competitive. Forexample, in the healthcareindustry, so far, only establishedplayers have the resources to cleanthe data and offer datasets ofsufficient quality for clinical trials.Promoting data quality andcuration standards will offer SMEsthe chance to compete with largerplayers and bring new innovationsto the market.

The need for pan-Europeandata lakes

A clear definition of data usage andrights will boost the potential ofpan-European data lakes. A datalake is a subject-specific repositoryfor large quantities and varieties ofdata, both structured andunstructured.

The data lake accepts input fromvarious sources and can preserveboth the original data fidelity andthe lineage of datatransformations.

The lakes could help resolve theissue of accessibility and dataintegration for Europeanbusinesses and citizens in differentindustries and application areas.Registered access is an essentialcomponent to data lakes, as itmakes it possible to narrow orwiden the scope of a specific datalake and reduce or increase thenumber of participants in that datalake.

DIGITALEUROPE - 17

By 2030,the overall revenue poolfrom car data monetizationat a global scalemight add up to

EUR 500 –670 billion¹⁶

“Using data, not only storingit, represents a huge growthpotential for Europe.” –


“The burning issue is not data hosting and safety, but datautilization. The priority is to use this hidden potential” –




models


upskilling



Innovation-friendly

regulations

Risingcybersecurity

threats


Hard and expensive to obtain: spectrum is today’s bottleneck

“The next priority for Europe is full LTE coverage andsecuring 5G spectrum in time.” –

Barry French, Nokia

Spectrum, the first andforemost infrastructuralchallenge

Spectrums can be viewed as datahighways, and with increasingtraffic comes the need forextended roads. Demand for radiospectrum is thus increasing rapidly.

To fully benefit from the massiveincrease in telecom users and theirdata, spectrum must be availableand used in order to enlarge fluxcapacities. Hence, spectrum plays astrategic role for decision makersand stakeholders willing to take thedata economy to the next level.

Across Europe, spectrum prices vary by up to a factor of 50 ¹⁷

DIGITALEUROPE - 18

Between 2016 and 2021,mobile traffic in Europe will be

multiplied by 4 ¹⁸

Member StateRevenues

(€/MHz/pop - 800MHz)Revenues

(€/MHz/pop -2.6GHz)

Germany 0.73 0.022

France 0.68 0.103

Spain 0.47 0.023

Italy 0.82 0.06

Netherlands 0.5 0.002

Portugal 0.28 0.028

UK 0.48 0.054



models


upskilling



Innovation-friendly

regulations

Risingcybersecurity

threats


… and regulation is the keyenabler

Access to spectrum remains anopen issue as the requirements toobtain the exploitation of afrequency remain high in the EUMember States.

As the data economy is rooted ininnovative utilisations of data byany type of business in any sector,a functioning and open spectrummarket could irrigate the wholevalue chain by providing affordabletelecom access costs. ¹⁸

Access to spectrum markets isessential to boost the dataeconomy

To incentivise private players toinvest in the ICT networks,sufficient spectrum shall belicensed in due time and atreasonable prices. This optimalpricing should avoid anyunbearable transfer of costs to thefinal user. This goal cannot beachieved without strong Europeancooperation, especially to ensureharmonised licensing of 700MHz,3.4-3.8GHz and higher frequencybands (for 24GHz and beyond) by2020.

ICT investment per inhabitant is

EUR 684 in the US,

against EUR 435 in EU28. ¹⁹

The total volume ofservices depending onradio spectrumavailability is estimatedto be worth annually inEurope

EUR 200billion²⁰

DIGITALEUROPE - 19

Catching up with NorthAmerica and Asia

While the EU focused itsregulations and efforts on telecomwholesale cost to widen the accessto infrastructure, the United Statesincentivised the building of newinfrastructure, enabling the ratio oftelco investments per inhabitant toskyrocket.

Hence, the US overtook early theEU with an infrastructuralcomparative advantage. Accordingto the EU Parliament, in 2013, only26% of EU citizens had access to4G/LTE mobile coverage; 90% ofthe US population had thiscoverage from one provider alone.Since then, Europe has managed tonarrow the gap to reach a coverageabove 80%, but these effortsshould not be stopped.

“5G networks have the potential to bring mobileservices opportunities to a new stage.” –

Franck Cohen, SAP



models


upskilling



Innovation-friendly

regulations

Risingcybersecurity

threats


Building up a highlycompetitive and attractiveframework for the ‘algorithmeconomy’

Complex algorithms lie at the heartof the data economy by creatingthe necessary information streamsthrough correlation and predictionmodels. Consequently, people willincreasingly act based on algorithmrecommendations which willdefine new products and services.

It is therefore urgent to incentivisecitizens’ trust in the usage ofalgorithms and to accelerate thedevelopment of new activities andskills. This can be achieved througha European initiative aimed atraising the awareness,attractiveness, competitiveness andthe ethical framework of thealgorithm economy.

Shaping an innovation-friendly regulatory framework

Regulations enabling risk-taking for common benefits

The data economy obviouslyrequires general regulations. Butevery sector has specific data andspecific bottlenecks to remove orfields to protect. Thus, a sectorialapproach could unlock the datapotential in every sector.

Further, a new technology or newbusiness models should be givensome regulatory room to evolve.

Developing a concrete use case willallow businesses and regulators toassess the positive and negativeoutputs of the innovation. Theregulatory adjustment can thenfollow depending on increasingneeds.

An idle regulatory frameworkunsuited to spur innovation

The future regulatory systemshould encompass the realities ofdynamic and changingtechnologies, which is possiblewithout threatening safety andcompetition.

The examples of the fastest-growing data economy marketsthat are India, China, and theUnited States call for flexibility inthe regulation withoutcompromising privacy.

“In my opinion, the regulatory framework is today’s mostimportant issue for the digital transformation agenda” –


DIGITALEUROPE - 20

“Enable the use cases andassess the impact beforethinking of regulating.” –

Barry French, Nokia



models


upskilling



Innovation-friendly

regulations

Risingcybersecurity

threats


The example of autonomouscars: two possible scenariosfor its uptake

Europe is home to some of thelargest auto manufacturers acrossthe globe. With growingcompetition from the US and Asia,the stakes related to thedevelopment of a Europeanregulatory framework for self-driving vehicles are simply too highto be dismissed.

DIGITALEUROPE - 21

The uptake of autonomous cars depends largely on the resolution of the current regulatory issues ²¹

The speed and scope of potentialfuture regulations open up thepossibility for two most likelyscenarios: a low-disruption scenarioand a high-disruption scenario.

The former considers that currentsales growth and regulations willremain on the same track, whilethe latter anticipates revised safetyregulations and enthusiasm on thepart of consumers. ²¹

50 bn EUR ²¹

By 2022, revenue fromautonomous driving isexpected to increase to



models


upskilling



Innovation-friendly

regulations

Risingcybersecurity

threats


An urgent and EU-wide answer to rising cybersecurity threats

Increased interconnectionraises the stakes ofcybersecurity threats

Cyberthreats are rising steeply inthe EU, and will keep going up withthe ever-increasing technologicalchanges. Technological advancesalso entail more sophisticated cyberattacks.

The financial cost of these cyberattacks for EU businesses istherefore also likely to increase. Noindustry or sector will be spared bythese threats, with some attacksnot only putting the economy atrisk but also the public’s health,safety and well-being.

“You cannot questioncybersecurity, it is anecessity. The moreconnected you are,the more cybersecurityis an issue.” –

Franck Cohen, SAP

Collective efforts required toprevent and manage cyberattacks

2017 saw a surge in cyber attacksnot only in volumes but also in thediversity of means used. In May,the WannaCry ransomwareprogram was qualified asunprecedented in scale by Europol.The scale of these attacks driveshome the point that companiesneed to cooperate and work withgovernmental bodies to preventcyber attacks by sharing experienceand information.

“Robust cybersecurity isthe foundation to asuccessfuldigital transformation” –


DIGITALEUROPE - 22

Cybersecurity spending priorities for the next 12 months ²²

51% 46% 43%46% 46%

Improvedcollaborationamong business,digital and IT

Security needsrelated toevolvingbusiness models

Security for theInternet ofThings

Digitalenterprisearchitecture

Biometrics andadvancedauthentication



models


upskilling



Innovation-friendly

regulations

Risingcybersecurity

threats


Investing in and implementinga fully operational securityincident response plan

Investing in cybersecurity solutionsis fundamental in order to developrobust risk-based cybersecurityprogrammes. It is therefore criticalfor European businesses to assesstheir current level of security byensuring a thorough understandingof the assets covered (and notcovered) by current securitymeasures to properly take intoaccount cybersecurity risks.

Prevention and preparednessas the best response to fightcyberattacks

Cyberattacks cannot be easilyanticipated and remaincomplicated to manage. However,in order to avoid critical mistakes,European businesses need toensure they can have a trustworthyteam combining both technicalexpertise and business knowledgewith robustly enforced incidentmanagement governanceprocesses.

Top cyberthreats in 2016 ²³



To become a leader in the globaldata economy and to accelerate itsdigital transformation, Europewould need a new and morepragmatic approach.

Only concrete projects have thepower to bring together the vastnumber of stakeholders andovercome the complexity of theenvironment and market.

New and more transformationaldigital projects will catalysefocused investment, fast trackapproaches supported bypragmatic partnerships betweengovernment and industry and helpEurope to catch up with othercontinents in terms of digitalmaturity and competitiveness

Fast track transformationprojects to support Europe’sindustrial policy

The areas of action identified inthis report could not only beundertaken by policy makers at EU,national or regional levels. Industryprojects on artificial intelligence,high-performing computers, e-payment, cybersecurity or keyother topics are fundamental tomobilise the best EU competenciesand to develop a new generationof commercial solutions.

These projects can provide theright scale immediately to competewith other international players.Europe has proved it can be highlysuccessful with large-scaleprojects, creating new industriesand new products and services. Forexample, since its creation in the1970s, Airbus has been a leadingplayer in the aerospace industry.

Europe needs more of suchprojects, specifically aimed attomorrow’s growth engine: thedata economy. Global issuesrequire European collaboration tobe tackled.

Deploying decentralised transformational projects to mobilise

Mobilising all available fundsfor digital transformation

Catching up with other continentsrequires massive Europeaninvestments in infrastructure,companies and people skills. Themagnitude and type of requiredinvestments do not match thecurrent size and capital allocationof the relevant institutions whichhave been defined for supportingthe traditional economy.

For instance, mobilising availablefunds at European InvestmentBank and European Social Funds toachieve the vision of DigitalAcceleration for Europe wouldspeed up the projects definitionand deployment for the sixrecommendations identified in thisreport.

EUR 700million ²⁴

The European Commission isinvesting in a public privatepartnership on high-performance computing

EUR 85 billion ²⁶

In 2016, the EuropeanInvestment Bank Group(EIB & EIF) invested almost

30-90 million people ²⁵

Digital transformation will severely impact 10% to 30% of theworkforce within the EU

ABOUT DIGITALEUROPE DIGITALEUROPE represents the digital technology industry in Europe. Our members include some of the world's largest IT, telecoms and consumer electronics companies and national associations from every part of Europe. DIGITALEUROPE wants European businesses and citizens to benefit fully from digital technologies and for Europe to grow, attract and sustain the world's best digital technology companies. DIGITALEUROPE ensures industry participation in the development and implementation of EU policies.

DIGITALEUROPE’s members include in total 25,000 ICT Companies in Europe represented by 61 corporate members and 37 national trade associations from across Europe. Our website provides further information on our recent news and activities: http://www.digitaleurope.org

DIGITALEUROPE MEMBERSHIP Corporate Members

Adobe, Airbus, Amazon, AMD, Apple, BlackBerry, Bose, Brother, CA Technologies, Canon, Cisco, Dell, Dropbox, Epson, Ericsson, Fujitsu, Google, Hewlett Packard Enterprise, Hitachi, HP Inc., Huawei, IBM, Intel, JVC Kenwood Group, Konica Minolta, Kyocera, Lenovo, Lexmark, LG Electronics, Loewe, Microsoft, Mitsubishi Electric Europe, Motorola Solutions, NEC, Nokia, Nvidia Ltd., Océ, Oki, Oracle, Panasonic Europe, Philips, Pioneer, Qualcomm, Ricoh Europe PLC, Samsung, SAP, SAS, Schneider Electric, Sharp Electronics, Siemens, Sony, Swatch Group, Tata Consultancy Services, Technicolor, Texas Instruments, Toshiba, TP Vision, VMware, Western Digital, Xerox, Zebra Technologies.

National Trade Associations

Austr ia: IOÖ Belarus: INFOPARK Belgium: AGORIA Bulgaria: BAIT Cyprus: CITEA Denmark: DI Digital, IT-BRANCHEN Estonia: ITL F inland: TIF France: AFNUM, Force Numérique, Tech in France Germany: BITKOM, ZVEI

Greece: SEPE Hungary: IVSZ Ireland: TECHNOLOGY IRELAND Italy: ANITEC Lithuania: INFOBALT Netherlands: Nederland ICT, FIAR Poland: KIGEIT, PIIT, ZIPSEE Portugal: AGEFE Romania: ANIS, APDETIC Slovakia: ITAS Slovenia: GZS

Spain: AMETIC Sweden: Foreningen Teknikföretagen i Sverige, IT&Telekomföretagen Switzerland: SWICO Turkey: Digital Turkey Platform, ECID Ukraine: IT UKRAINE United Kingdom: techUK

Contact details:Cecilia Bonefeld-DahlDirector General of [email protected]

This report was prepared in collaboration with PwC.Editors: Laurent Probst, Bertrand Pedersen, Olivia-Kelly Lonkeu, Nuray-Unlu Bohn, PwC


References

1 Twitter, @LoriLewis, 2017, What happens on internet in 60 seconds, available at: https://www.inc.com/tom-popomaronis/every-60-seconds-an-incredible-breakdown-of-what-happens-on-the-internet.html

² Tufts University, September 2014, Digital Evolution Index, available at:

http://fletcher.tufts.edu/~/media/Fletcher/Microsites/Planet eBiz/Digital Planet - Executive Summary.pdf

³ Huawei, Global Connectivity Index (GCI) 2017, http://www.huawei.com/minisite/gci/en/4 Ibid5 European Commission, May 2017, European Digital Scoreboard, available at:

https://ec.europa.eu/digital-single-market/en/policies/scoreboard6 PwC, May 2017, Digital factories 2020 - Shaping the future of manufacturing, available at:http://read.pwc.nl/i/821043-digital-factories-2020-shaping-the-future-of-manufacturing⁷ Marketsandmarkets, November 2016, Artificial Intelligence (Chipsets) Market by Technology, available at:

http://www.marketsandmarkets.com/Market-Reports/artificial-intelligence-market-74851580.html

⁸ Statista, 2016, Global big data market forecast, http://www.statista.com/statistics/254266/global-big-data-market-forecast/

⁹ PwC, 2015, Global Digital IQ Survey, Available at: http://www.pwc.com/gx/en/services/advisory/2015-global-digital-iq-survey.html

¹⁰ PwC, April 2017, 2017 CEO Survey, available at:

https://www.pwc.com/gx/en/ceo-agenda/ceosurvey/2017/us.html

¹¹ Accenture, 2016, Platform Economy: Technology-driven business model innovation from the outside in, available at:

https://www.accenture.com/t20160823T222808__w__/us-en/_acnmedia/Accenture/Omobono/TechnologyVision/pdf/Platform-Economy-Technology-Vision-2016.pdf

¹² McKinsey & Co, June 2016, Digital Europe – Pushing the frontier, capturing the benefits, available at:

http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/digital-europe-realizing-the-continents-potential

¹³ European Commission, 2014, Factsheet Data cPPP, available at:

https://ec.europa.eu/research/industrial_technologies/pdf/factsheet-cppp_en.pdf

¹⁴ Boston Consulting Group, May 2016, Digitizing Europe – Why Northern European frontrunners must drive digitizationof the EU Economy, available at: http://image-src.bcg.com/BCG_COM/BCG-Digitizing-Europe-May-2016_tcm22-36552.pdf

¹⁵ PwC US blogs, May 2015, Data lakes: An emerging approach to cloud-based big data, available at:

http://usblogs.pwc.com/emerging-technology/data-lakes-and-the-promise-of-unsiloed-data/

¹⁶ McKinsey & Co, September 2016, Monetizing car data - New service business opportunities, available at:

http://www.mckinsey.com/~/media/McKinsey/Industries/Automotive%20and%20Assembly/Our%20Insights/Monetizing%20car%20data/Monetizing%20Car%20Data.ashx

¹⁷ European Parliament, March 2015, Radio spectrum - A key resource for the Digital Single Market, available at:

http://www.europarl.europa.eu/EPRS/EPRS-Briefing-554170-Radio-Spectrum-FINAL.pdf

¹⁸ Statista, 2017, Mobile Traffic in Western Europe 2016-2021, available at:

https://www.statista.com/statistics/292864/western-europe-mobile-data-traffic/


¹⁸ Plum Consulting, July 2015, The future of licence-exempt spectrum in Europe, available at:

http://plumconsulting.co.uk/news/plum-study-future-licence-exempt-spectrum-europe/

¹⁹ European Parliament, 2015, Broadband infrastructure - Supporting the digital economy in the European Union,available at:

http://www.europarl.europa.eu/RegData/etudes/IDAN/2015/565891/EPRS_IDA(2015)565891_EN.pdf

²⁰ European Commission, May 2017, What is Radio Spectrum Policy?, available at:

https://ec.europa.eu/digital-single-market/what-radio-spectrum-policy

²¹ McKinsey and Co, January 2016, Disruptive trends that will transform the auto industry, available at:

http://www.mckinsey.com/industries/automotive-and-assembly/our-insights/disruptive-trends-that-will-transform-the-auto-industry

²² PwC, October 2016, CIO and CSO Survey – The global state of Information Security, available at:

https://www.pwc.com/gx/en/issues/cyber-security/information-security-survey.html

²³ ENISA, February 2017, Threat Landscape 2016 report: cyber-threats becoming top priority, available at:

https://www.enisa.europa.eu/news/enisa-news/enisa-threat-landscape-2016-report-cyber-threats-becoming-top-priority

²⁴ European Commission, 2017, EU ministers commit to digitising Europe with high-performance computing power, available at: https://ec.europa.eu/digital-single-market/en/news/eu-ministers-commit-digitising-europe-high-performance-computing-power

²⁵ Carl Benedikt Frey & Michael A. Osborne, 2013, The future of employment: How susceptible are jobs to computerisation?”, available at: http://www.oxfordmartin.ox.ac.uk/publications/view/1314

²⁶ European Investment Bank, 2017, Key statutory figures, available at: http://www.eib.org/about/key_figures/data.htm


List of interviewed stakeholders

• Barry French, Chief Marketing Officer at Nokia

• Franck Cohen, President SAP Europe, Middle East & Africa

• Godefroy de Bentzmann, CEO at Devoteam & President at Syntec Numérique

• Edwin Paalvast, Senior Vice President Cisco EMEAR

• Markus Naegeli, Executive Vice President & Head of Business and Information Services EMEA, Canon Europe

14 rue de la Science, 1040 BrusselsTel: +32 2 609 53 10 | [email protected] | www.digitaleurope.org

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