Three-part series: How Europe is dealing with digitisation – 1

Part 1: The starting point in Europe and digitisation strategies in Germany

The digital cosmos is rotating at breakneck speed, and new incarnations of the virtual world are continuously appearing on the technological horizon. Amidst this world of Big Data, Cloud Computing, Industry 4.0 and a rapidly-developing autonomous mobility, the possibility of achieving a universal understanding of the system for the purpose of managing our economic processes and building a sustainable society for the future seems to be barrelling out of control. The complexity of the digital world means that we have to pool all our efforts together.

Only with the “wisdom of crowds”, the combination of our best minds in economics, research and industry, will we be able to stop Europe, this once-flourishing continent of forward-thinking engineering, from falling further behind the global competition and carelessly jeopardising its options for preserving its prosperity.

Digitisation – can we pull it off?

The ambitious plan of reforming Europe to make it the most competitive economic area in the world by 2020 can only succeed if the small and medium-sized enterprises are also included in this, despite all the doubts and fears.

Awareness of this seems to be winning through, and is being supported across the board by various programmes. The coordinated interaction of the economic giants Germany and France, both in the European Union as well as in terms of their economically significant axis of cooperation, was declared to be the absolute priority of joint political action as part of a new, large-scale digitisation offensive. With reference to the words of the last US president Barack Obama, we should now underpin our commitment once again to a formative digital regulatory policy to promote growth, innovation, competition and democratic and social participation with a confident “Yes, we can!”

Digital innovation hubs promote the necessary ecosystems

With a “digital agenda”, the most industrially advanced members of the European Union, which Germany, France and Austria undoubtedly belong to, have laid the foundations for the necessary overhaul of their economies.

Based on the guidelines for the German government’s digital policy “Digital Agenda 2014-2017”, the implementation of whose measures since having been evaluated by a corresponding legislative report, Germany has now put its vision of the future onto paper in the “Digital Strategy 2025”. Among other things, this refers to establishing a gigabit fibre optic network (where Germany currently lags significantly behind its global competitors), encouraging entrepreneurial creativity on a larger scale by making it easier for start-ups, reorienting traditional major industries to meet the requirements of the digital platform economy, the compulsory promotion of SMEs to take part in the digital economy, but also in building up their technological know-how in order to establish a comprehensive domestic supply chain for software and hardware innovations, and ultimately by meshing all players into digital ecosystems. These ICT clusters and think tanks should produce stimuli for better-coordinated R&D funding policies as well as a campaign to improve skills to meet the requirements of new and in-demand jobs and to adapt to the realities of Work 4.0.

With its “Digital” initiative which it started in autumn 2016, the German government, spearheaded by the Federal Ministry for Economic Affairs and Energy (BMWi), has set up a genuine showpiece example which should act as a model for the rest of Europe. The hub initiative is based on the idea that close cooperation between founders, economists, investors and international world market leaders from the established economy can fuel innovations in the digital economy. Since a concentration of IT expertise like Silicon Valley is built up over decades and cannot simply be copied in Germany in any one single place, it was decided to organise the hubs around existing lively start-up scenes, areas based around universities with a reputation for scientific excellence, and areas with leading industrial expertise in various future-orientated industries. The BMWi capped the number of hubs at twelve in order to prevent arbitrariness, and has issued strict guidelines for candidate cities across Germany wishing to become a hub.

The internal and external appeal of the initiative, which has been received with great interest across the country – and is making a lasting positive impact on Germany’s position as a place to do business as a whole – is enhanced by a hub agency that was set up to link the twelve sites at a professional level under the one over-arching brand “de:hub – digital ecosystems”. This important function was awarded to the Rocket Internet spin-off “RCKT” based on a call for tender.

Mittelstand 4.0 – the digital transformation of SMEs

The Mittelstand 4.0 funding initiative has been set up to systematically advance the digitisation of procurement, production and distribution processes in SMEs across all sectors of business. The three core objectives of the funding initiative are as follows: Raise awareness among SMEs about the technological and economic potential of digitisation, and about the challenges involved. Support the development of needs-oriented, secure, and marketable solutions for SMEs by providing opportunities to view and test them out in practice, such as e.g. in Industry 4.0 installations. These measures will be accompanied by the provision of key information and knowledge about digitisation through established transfer agencies and multipliers.

The ten “Mittelstand 4.0 Competence Centres” scattered throughout the country and a “Competence Centre for Digital Skilled Crafts” with its four “showcases” for the north, west, south and east regions function as a overarching strategic framework. The competence centres in Hanover, Darmstadt, Dortmund, Kaiserslautern, Berlin, Chemnitz, Ilmenau, Hamburg, Augsburg and Stuttgart are dedicated to the various focal points of the digitisation of SMEs, which in total cover almost the whole range of digital expertise.

The main emphasis in the competence centres is on preparing SMEs for safely entering the world of Industry 4.0. Demonstrations are given in model factories at fixed sites as well as in mobile factories which enable SMEs to try out innovative new processes and logistics systems at their own premises. The competence centres offer SMEs of any kind the help they need to master the upcoming changes with a portfolio encompassing modularised test factories, efficient value creation processes, questions regarding Work 4.0, IT security, new business models, digital marketing, electronic customer retention, supply chain management, 3D printing and automation solutions as well as software and assistance systems and the meta topics of smart mobility, smart building and smart health.

With the level of coverage in the promotion of SMEs already achieved in Germany and the universal nature of the issues, the leading industrial power in the EU hopes to be able to quickly adjust its entire economy to the requirements of the digital era. In the next blog I will talk more about the digital initiatives in France, and in the third part of this series I will present the “Digital Roadmap Austria”.