Austria’s digital economy is on the rise

30 May 2016

“DESI 2016”, the new EU country comparison, shows considerable improvements for Austria’s digital change. But there is still a lot to be done.

We are without any doubt right in the middle of the most significant social and economic structural changes in the history of humanity. In that we are talking about life and work in a digital society, where high-quality data become a central production factor and draw level with capital in their economic implications.

What is now the fourth Industrial Revolution will see those people winning who are most capable of quickly adapting their genetic code to the often disruptive laws of digitisation and data economy. For this reason all countries are today in a permanent race of adapting to the current technological developments.

Changing from a linear social development of an analogue kind to a highly complex, interconnected and digital economy also offers room for innovation in which an advanced economy can find new formulas for success.  

With its exemplary “Digital Agenda”, the European Union has set up a programme that has the power to substantially reform the continent economically by 2020. The Digital Agenda is also providing the instruments necessary to track the member states’ progress in their digital conversion of society and economic structures, to take targeted measures based on the findings, and to derive political prioritisations in the case of scenarios of acute vulnerabilities: the Digital Scoreboard together with the Digital Economy and Society Index (DESI), which is annually being published in February.

DESI – a reliable indicator for digital performance

The “Digital Economy and Society Index” (DESI) indicates the key factors of Europe’s digital performance and tracks the evolution of the EU member states’ digital competitiveness. It is structured around five dimensions with different descriptive sub-dimensions (indicators), which are added up to a total score in the following way: Connectivity (25%), Human Capital (25%), Use of Internet (15%), Integration of Digital Technology (20%) and Digital Public Services (15%). In its 2016 edition, DESI evaluates a total of 30 indicators. The index was first published in 2015 based on survey data from 2014 for the 28 EU member states as well as Iceland, Norway and Turkey.

Running Ahead: Austria’s DESI 2016 result is encouraging

Compared to last year’s overall ranking, Austria only made up one position in DESI 2016 – going from rank 13 to rank 12. At first glance this does not seem spectacular. However, the current DESI is not limited to evaluating the total score of a country, but also correlates this value with the EU average to evaluate the speed of digital evolution of a country in a Europe-wide comparison. In this context, Austria’s result looks much better. Together with Estonia, Germany, Malta, the Netherlands and Portugal, Austria’s growth rates in the individual DESI dimensions are making the country one of the “Running Ahead” nations. The total scores of these forerunning countries are above the EU average, and in the course of the past year have increased faster than the evaluated EU average. DESI shows that these countries have made for a good annual performance, and recognizes much future potential in the speed of their digital transformation.

Rural broadband coverage needs to be strengthened

With regard to the dimension “Connectivity”, Austria lost two ranks compared to the first index and now holds rank 14 instead of 12. Austria has good marks both for fixed broadband coverage (99% of all households) as well as for affordability of broadband (0.85% of the average income for a broadband connection). However, Austrians are rather reluctant to use broadband: In the case of fixed broadband, take-up is 65% of all households; for mobile broadband, the ratio of usage is 67:100 (67 out of 100 persons). Next-generation access coverage shows similar figures: 89% of all households have coverage, while only 21% of all broadband subscriptions fall into the category of fast connections with more than 30 Mbps. In rural areas, NGA is only at 21% and thus lies below the EU average of 28%. The current broadband strategy of the Austrian Federal Government, however, aims at achieving an almost universal access to high-speed Internet by 2020. Let’s hope that this is not an empty promise!

Austria has shown significant improvement in the dimension “Human Capital”. While our country ranked 14th in 2015, we rank 8th this year. With ranks 11 and 9, Austria is above the EU average for Internet users (aged 16 to 74) and basic digital skills. The evaluation of the number of graduates aged 20 to 29 holding a degree in technology or science is highly positive. With 22 graduates out of 1000 people, Austria won the bronze medal, so to speak, behind the United Kingdom (24) and France (23).

A shortage of skilled workers in the digital area

Similar to almost all of Europe, there is still much room for improvement when it comes to ICT specialists. Only 3.8% of all jobholders are ICT specialists, leaving Austria at rank 15 with no improvement compared to the past year. In education policy and vocational training, a new approach is needed unless we want to risk the aspiring trend for digitisation in the coming years. Besides University-trained STEM graduates (science, technology, engineering and mathematics), a modern network and data society primarily needs practical persons who are able to program, configure and maintain networks and Clouds. It also takes more specialists in electronic domains such as up-to-date encryption as well as safe administration of accounts and access. New occupational profiles and training elements need to be formulated and implemented by vocational schools and training companies to overcome this shortage.
Above all, what is called for is political innovation on the part of the Federal Minister of Labour and Social Affairs!

Low affinity to entertainment via the Internet

In the dimension “Use of Internet”, DESI 2016 holds a negative surprise for Austria with rank 25 (2015: 24). The private use of the Internet was measured via the sub-dimensions News; Music, Videos and Games; Video on Demand; Video Calls; as well as Social Networks. Despite digital skills above the European average, the vast multimedia content on the web is only used moderately. Within this dimension, news from the web achieved the highest value (67% of people aged 16 to 74), making for rank 21. Even the use of social networks only has a usage rate of 54% (rank 25). Austrians rather focus on more practical uses of the Internet, such as Internet banking (59%, rank 14) or shopping (68%, rank 9).

European champion in eInvoicing

In the course of the past evaluation period, the Austrian economy has put more trust in the use of digital technology than before, resulting in an improvement by three ranks as compared to the results of 2015. DESI 2016 now lists Austria at rank 10. Within the dimension “Integration of Digital Technology”, our country’s best performance is for “eInvoices”. 25% of all Austrian businesses are sending their invoices electronically, making Austria the EU’s Number One as compared to rank 11 in DESI 2015. The ranking for “Electronic Information Sharing” went into the opposite direction: following rank 2 in last year’s DESI, Austria now only holds rank 8. Social media is perceived peripherally by Austrian businesses: 16% of all businesses using interactive social media for customer communication and product marketing make for rank 14 in DESI 2016, an improvement of one rank compared to last year. SMEs, however, still struggle to gain a foothold in online commerce. Only 14% of the country’s businesses sell online, which puts Austria only at rank 17. In the most digitised sectors of our economy such as tourism, however, the situation is very different. 10% of Austria’s SMEs sell their products and services across the border, resulting in rank 6 of DESI. The EU average for the value of SMEs with cross-border sales lies only at 7.5%.

Digital public services rising steeply

Following rank 9 in DESI 2015, Austria shows significant improvement in the new index and is now well positioned at rank 6 in the dimension “Digital Public Services”. For Open Data, the country has also made it into the Top 5 (rank 5). Within the dimension “Digital Public Services”, Austria primarily has to focus on promoting the quality of its online and citizen services to increase the willingness to conduct transactions with public authorities on the Internet (online forms). Last year, 37% of all users of the Internet made use of public online services, bringing us only to the middle range rank 13.


Helmut Fallmann
Member of the Managing Board

Almost 30 years ago, Helmut Fallmann founded the software group Fabasoft together with Leopold Bauernfeind. Today he is a member of the Managing Board of Fabasoft AG. Fabasoft has developed into a leading European software manufacturer and Cloud provider headquartered in Linz, Austria.

Follow this blog