DIGITALEUROPE’s Ray Pinto to EU governments: Don’t over-regulate – nurture, support and prioritise digital transformation

As the EU is about to release over EUR 750 billion worth of recovery and resilience funds to its member states, we talked to Ray Pinto, Digital Transformation Policy Director for DIGITALEUROPE, to find out more about the advantages, challenges and perspectives on the EU’s road to digital transformation.

What are the industries that can help the EU take the leadership in the global race for digital sovereignty? How data protection mechanisms affect progress and what are Bulgaria’s unique strengths, but also weaknesses as a tech nation? To find the answers to these questions, read our interview with one of the masterminds of the EU’s ambitious digital transformation drive.

Q: What do you believe are the three main innovative industries that can help the EU become the global economic force in the next 10 years? 

Ray Pinto: The EU is on the edge of becoming a global leader in its digital decade. It has the data of almost 450 million citizens. It is on the cusp of releasing over a trillion in recovery and resilience money to be invested in green and innovation projects. Digital is the number one industry but it is mainly driven by small to medium-sized developers, as well as software and hardware companies. The development of emerging technologies and services will be the game changer for competitiveness. But

the main question is can the EU ensure the right incentives, funding and harmonised rules for this community to grow and succeed?

This means addressing red tape in each country but also addressing the barriers to the Single Market.

There are far too many obstacles for data, both personal and non-personal, most of it in the public sector.

I also see digital as a powerful enabler of innovation and a tool to dramatically cut waste, resources, and deliver important social services. One example that comes to mind is industries embracing digital technologies in the manufacturing sector. The EU is already a leader in the discrete manufacturing of a wide range of important goods. However, when it comes to process manufacturing such as water processing and treatment, digital has a direct role to play which we recently demonstrated in a use case we published here.

This sector has a long tradition in automation and robotics, and our workforce has a strong foundation of skills. But we can and should do more. For example,

digital twins

The technology to duplicate a process virtually is only now starting to be adopted. Previously, the building construction sector used to be the cause of over 30% of energy consumption and CO2 emissions. Today, construction can be planned and pre-built in a virtual space. All unforeseen errors, waste, and complications can be simulated and avoided leading to a 30% cut in emissions, not to mention deep cuts in costs.

Q: A lot of experts believe that the EU’s Green Deal can have some negative economic effects on member states, specifically in coal-dependent regions. Can digitalisation be the key to minimizing that negative impact? 

Ray Pinto: I would not want to undervalue the challenges those countries face. Digital is a powerful tool in the creation of jobs and economic growth. Byron Reese, the CEO of technology research company Gigaom, said that in the turn of the last century, when hundreds of millions of devices were connected to the newborn internet.

While many foresaw the loss of jobs and impact on various sectors, very few predicted the creation of thousands of new companies worth trillions of dollars and how “virtually everyone on the planet would be touched by technology”.

Technology also led to the creation of many new professions – from web designers to data scientists and online marketing experts. The cost of starting a business with worldwide reach plummeted, and the cost of communicating with customers and leads went down to nearly zero. Vast storehouses of information were made freely available and used by entrepreneurs around the globe to build new kinds of businesses.

Q: How have digital technologies helped Europe tackle the Covid-19 pandemic and how do you think they will continue to help in overcoming the aftermaths? 

Ray Pinto: Digital played a vital role to ensure that Europe’s workforce could continue to function; that medical teams could be provided with much needed equipment, and the virus could be better tracked and traced. It also helped inform billions on the risks and spread of the disease, allowing the world to make a decision to stay indoors in a bid to support countless front line heath practitioners in battling the virus.

The silver-lining to COVID, if there ever was one, is accelerating the discussion on the digital transformation of the healthcare sector.

Startups have reported a tenfold increase in uptake of tele-consultations on their platforms,[4] and physicians have seen a sixfold expansion in remote patient engagement across specialties and geographies, which they believe will endure post-crisis.[5]

We can expect more from technology to advance healthcare. The availability of data will only accelerate the discovery of much needed medicines such as vaccines, detecting the onset of diseases invisible to the human eye but not to an algorithm, or improving the delivery of care. A McKenzie study shows that AI can extend life expectancy by up to 1.3 years. But

unfolding the full potential of AI will require huge amounts of data to boost self-learning algorithms. We can change the way we deliver healthcare but a lot more efforts will be needed.

 [4] Allied for Startups (2020). Telemedicine in Europe Opportunities and Challenges

[5] McKinsey (2020). Winning against COVID-19: The implications for biopharma

Q: In an interview back in June you mentioned that increasing Europe’s digital capacity and capabilities will require a lot more funding than the one foreseen in the DIGITALEUROPE Programme and related H2020 projects. Is this valid now and how can digitalisation be a priority of the EU if there are not enough funds to back this? 

Ray Pinto: When I made that interview DIGITALEUROPE had been insisting for well over a year that digital needed to be an important part of each part of the funds defined in the annual multi-annual financial framework (MFF) discussions. Around the time of that interview, President Ursula von der Leyen announced that 20% of the over EUR 750 billion worth of recovery and resilience funds to be released to the member states should be dedicated to digital transformation.

Member-state plans that fully embrace this opportunity to invest in delivering faster internet speeds, creating skills, supporting SMEs to grow and innovate will greatly benefit.

These benefits will include transforming sectors to be more efficient, improving lives, and driving sustainability.

Q: Recently, you spoke about Bulgaria’s digital transformation and the digital leap that Bulgaria can take. What do you think should be the main focus of the country in the coming years to ensure a successful digital transformation? 

Ray Pinto: In the little time I had to prepare for the conference in question, I learned that Bulgaria has a strong community of entrepreneurs and startups. It has

a growing outsourcing economy increasingly contributing to its GDP and it is strong in the life sciences sector. These are areas that the government can nurture by providing important funding, skills, and prioritising.

The country prepares to finalise its RRF; it will also ensure there is internet for all its citizens. This will ensure no one is left behind and faster internet is the tide that raises all ships.

Q: You mentioned that you became familiar with the situation in Bulgaria – what are the enablers for digital transformation and what are the barriers that the country faces? Is there a good practice/s that can be explored by Bulgaria for successful digital transformation? 

Ray Pinto: The key enablers to digital transformation are access to cloud computing, fast internet, accelerating the development and adoption of emerging technologies, and advancing skills. Any country that focuses on this and does its utmost to open data from the public sector to be available to AI developers will have a strong advantage. Governments need to shepherd this process and ensure the soon-to-be-released recovery money is going to the right place. This means making sure that every project – from water treatment to healthcare – has a digital component. Because we already know that digital transformation in every case means more efficient processes. For the public sector this means reducing waste, cost and CO2.

Governments also need political courage and will to not over-regulate, adopt protectionist measures, and be vigilant to constantly overhype concerns or negative effects of technology.

A good example of how health systems embrace new technologies is the NHS in the UK. They have developed a risk framework to remove the risk, fear and legal uncertainty for the public sector to use health data in the Cloud.

In regards to barriers, Bulgaria is not unique in that freeing data siloed in the public sector and the adoption of new technologies is moving far too slowly. The EU has the world’s leading data protection rules known as the General Data Protection Regulation (GDPR). However, those same rules also allowed each member state to exclude health data from being shared. This has led to a massive fragmentation and barriers to connecting life saving data across borders within the single market.

More clarity and guidelines are needed from data protection authorities to understand how such data can be processed and shared over borders.

Furthermore, more harmonising efforts are needed by each member state. This year, an important proposal will be announced to remove these barriers and everyone from public officials, data protection authorities and the private sector will need to work together to make it successful. DIGITALEUROPE has developed a series of recommendations on how governments should be regulating health data.

Q: In your opinion and experience, which are going to be the next countries in the EU that we can call champions in digital transformation and why?

Ray Pinto: I believe that it will be difficult to name specific countries as digital transformation does not necessarily mean only the very large and rich countries will lead.

Digital often has the power to allow the smallest, most dedicated, best focused and most agile companies to grow fast and take the crown from the most established ones.

The best known tech giants of today were unknown 15 years ago. I think the countries that can create a valuable pool of data accessible by developers and protected by the GDPR if personal that accelerate the digital transformation of its public sector, put digital in the heart of their sustainability and RFF plans, and invest and nurture their technology-focused SMEs will be well-placed to be leaders. Such leadership can be in a vertical sector – for example Bulgaria in life sciences.