Beyrer: The Digital Economy Provides Growth Opportunities for All Sectors and Society as a Whole

The digital economy and the single digital market are the most important topics for growth in the EU, as they could add 4 percent to the growth of the EU economy by 2020. However, this requires an acceleration of the digitalization process of the economy and society, in which the EU is lagging behind global trends, stated Markus J. Beyrer, the Director General of BusinessEurope, in Zagreb.

Beyrer was in Zagreb last week on behalf of BusinessEurope (European Employers’ Association) at the invitation of the Croatian Employers’ Association (HUP), participating in the conference “Digital (R)evolution,” which, in addition to theoretical and statistical data and estimates, offered a range of concrete advice and examples on how to start digital transformation in business as soon as possible, noting that this often does not require large investments but primarily human capital, knowledge, ideas, and innovative solutions.

Calling the digitalization of the economy a true, new fourth industrial revolution, Beyrer emphasized that innovations and disruptions, or shifts in business, are some of the main characteristics of new digital-technical processes that provide opportunities for growth in practically all sectors and society as a whole.

“We expect that by 2020, more than 75 percent of added value will come from traditional sectors through the application of digital technologies, which today are no longer an option but a necessity, even for the business world of the EU to function better and strengthen its positions in the global economy,” Beyrer stated.

He highlighted two examples of digital transformation and business – smart factories, where entirely new products can be made on existing production lines, which is called integrated production and has until now been quite unimaginable, and self-driving cars as a huge potential for cities and reducing traffic accidents, but for which a double safety net with constant and stable internet access is needed, as well as addressing numerous ethical issues.

Accelerating the processes of digitalization.

He also presented data from research indicating that about 90 percent of executives from companies in the EU want the application of digital technologies, but only about 50 percent have a strategy for it, while only 1.7 percent of companies are fully ready to experience digital advantages, and 40 percent do not use it at all.

“Such data best show that the EU and all of Europe are actually lagging behind global trends in these processes, and the business community in the EU expects acceleration. The slowness in digital transformation occurs primarily due to significant market fragmentation, but also due to data localization in some member states, which is an obstacle to the development of e-commerce, as well as due to different VAT rates, excise duties, customs, and the level of maturity of countries for e-government,” Beyrer said.

He pointed out that regulation significantly stifles investments and that, in his opinion, something like a tax incentive for the digitalization of small and medium-sized enterprises will need to be invented.

One billion euros of added value.

In everything, Beyrer considers the policies of individual member states important, which are not coherent regarding digitalization, so changes and alignment of the basic political and legal framework are expected from that side, because without digital transformation, the EU economy will be at a loss.

“If we manage to implement digital transformation by 2025, we can hope for 1,250 billion euros of added value to the European economy, and if we do not do that, we will lose about 600 billion euros, which is 10 percent of our industrial base,” Beyrer warned, emphasizing the importance of a free market, the protection of human rights, and especially investments in broadband networks for fast Internet, in which the EU is also weaker than, for example, the USA and Canada.

“Investing in broadband worldwide averages around 109 euros per capita, in Canada it is 226 euros, in the USA around 180 euros, while in the EU it has fallen to about 90 euros, and according to estimates, more than 200 billion euros will be needed for this in the next few years. Here, a balance among member states will need to be achieved and processes accelerated, which would be helped by allowing companies to retain profits and making taxes and regulations less stringent so they can invest,” he said.

He also believes that there will need to be some consolidation of the telecom market, as there are as many as 150 telecoms operating in Europe, while there are eight in Asia and three in the USA, which is also a significant challenge, especially in terms of the upcoming fifth generation of mobile networks or 5G, which will, as is already known, offer services and speeds previously unimaginable.

Some examples and concrete advice – talk to the ‘digital natives’ generation.

Explaining what the digital economy is and how to digitally transform business for greater efficiency and competitiveness, Beyrer and Boris Drilo from Hrvatski Telekom (HT) emphasized that digital business involves connected devices (via the internet), cloud IT solutions, social networks, and data and analytics, where companies and organizations need to have agility in developing strategies, as well as meaning a shift in business, creating value from the data they have, and positioning business in a broader ecosystem.

“What you can do immediately, next week, and what should not be difficult for anyone, is to formalize the topic of digital strategy, appoint a responsible person and team for it, and set goals for digital transformation. What you can do continuously is to create and encourage an innovative work environment, revise your business and technological ecosystem, learn, and why not copy from examples in other industries, but also be open to new ideas and especially talk and socialize with the ‘digital natives’ generation,” Drilo advised.