COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Digitising European Industry Reaping the full benefits of a Digital Single Market
Date: 2016-04-19
Institutions: Directorate-General for Communications Networks, Content and Technology, European Commission
Subjects: EU industrial policy, cooperation policy, digital literacy, digital technology, digitisation, industrial development, information technology applications, information technology industry, innovation, single market

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 19.4.2016  COM(2016) 180 final   COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Digitising European Industry  Reaping the full benefits of a Digital Single Market {SWD(2016) 110 final}  
 
 
1  Context 

The  manufacturing  industry,  and  its  interplay  with  services,  is  playing  an  important  role  in  putting 
Europe's  economy  back  on  track.  At  the  same  time,  a  new  industrial  revolution,  driven  by  new 
generations of digital technologies such as big data, is taking place. 

Progress in digital technologies in combination with other key enabling technologies is changing the 
way  we  design,  produce,  commercialise  and  generate  value  from  products  and  related  services. 
Advances  in  technologies  such  as  the  Internet  of  Things  (IoT),  5G,  cloud  computing,  data  analytics 
and  robotics  are  transforming  products,  processes  and  business  models  in  all  sectors  ultimately 
creating new industrial patterns as global value chains shift. The challenge ahead is for the European 
industry to seize fully and swiftly these digital opportunities. This is essential to ensure Europe's mid 
and long term competitiveness with implications for overall welfare. 

Achieving  the  Digital  Single  Market  (DSM)  in  Europe  is  a  prerequisite  for  attracting  investment  in 
digital  innovations  and  for  faster  business  growth  in  the  digital  economy.  In  2015  the  European 
Commission initiated an ambitious strategy  to achieve a DSM. A  key success factor for reaping the 
full benefits of a DSM is a highly competitive digital industry in Europe and the integration of digital 
innovations in all sectors. Embracing digital technologies will help companies to grow beyond the EU 
internal  market  and  make  the  EU  an  even  more  attractive  location  for  global  investments.  Digital 
skills  are  of  crucial  importance.  The  openness  of  the  European  market  should  be  maintained  and 
developed further in the digital sphere. 

The DSM strategy, especially the pillar on "maximising the growth potential of the digital economy", 
contains all the major levers for improving industry digitisation with actions in areas such as the data 
economy, IoT, cloud computing, standards, skills and e-government. It is part of a coherent strategic 
framework of Commission initiatives aimed at strengthening the overall competitiveness of industry, 
especially small and medium-sized enterprises (SME). This includes in particular the Investment Plan 
for  Europe,  the  Energy  Union,  the  Capital  Markets  Union,  the  Circular  Economy  package  and  the 
Single  Market  Strategy.  The  DSM  strategy  builds  on  these  initiatives  and  provides  a  coherent 
framework for taking the digitisation of Europe's economy forward. 

Faced with the challenge of digitisation, industry across all sectors can build on European strengths in 
digital technologies for professional markets such as electronics for the automotive, healthcare and 
energy  markets,  telecoms  equipment,  business  software  and  advanced  manufacturing.  It  also  has 
areas where progress is to be made, namely in the level of small business investment in ICT, in the 
supply  of  digital  consumer  products  and  in  web  services.  High-tech  sectors  in  Europe  are  fairly 
advanced  in  embracing  digital  innovations  while  a  large  part  of  SME,  mid-caps  and  non-tech 
industries still lag behind. Large disparities in digitisation also exist between regions. 

Whilst it is for business to take the lead in adapting to market realities, an urgent EU-level effort to 
help coordinate national and regional initiatives to digitise industry is important. Today supply chains 
span  Europe  and  digitisation  raises  challenges  such  as  standardisation,  regulatory  measures  and 
volume of investment that can be only addressed at European level.   

This Communication introduces a set of coherent policy measures as part of a DSM technologies and 
public  services  modernisation  package.  The  package  includes  an  additional  three  Communications 
The Communication explains how the various measures relate to each other. It also aims to establish 
a  framework  for  coordination  between  national  and  EU-level  initiatives  in  this  area  and  relevant 
policy  actions  including  investments  in  digital  innovations  and  infrastructure,  accelerating  the 
development  of  ICT  standards,  exploring  regulatory  conditions  and  adaptation  of  the  workforce, 
including up-skilling. These challenges and opportunities are also valid for developing e-government 
actions and boosting the public sector's role in stimulating demand for digital solutions. 

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The focus is on actions with a clear European value added building on, complementing and ensuring 
the  scaling  up  of  national  initiatives.  It  is  based  on  the  engagement  of  all  relevant  stakeholders, 
namely  large,  mid-size  and  small  companies  from  all  industrial  sectors,  the  digital  supply  industry, 
social partners, Member States and regions. 

It is accompanied by three further communications and three staff working documents: 

  The Communication on a European Cloud Initiative presents the plan for building a world class 
cloud  and  data  infrastructure  for  science  and  engineering  that  will  provide  scientists  and 
engineers  in  the  EU  with  wide  computing  and  data  handling  capacity.  It  will  provide  a  virtual 
environment with open and seamless services for research data storage, management, analysis 
and  re-use,  across  borders  and  disciplines  ('the  European  Open  Science  Cloud').  The  initiative 
will boost Europe's innovation capacity in all areas and reinforce its digital technology capability 
from  high  end  computing  down  to  low  power  components.  The  initiative  will  give  Europe  a 
global lead in data infrastructures and services, and ensure that European science, technology 
and industry reap the full benefits of data-driven science. It is accompanied by two staff working 
documents on High-Performance Computing and on Quantum Technologies. 

  The Communication on Priorities for ICT Standardisation identifies the essential ICT standards 
and presents measures to accelerate their development in support of digital innovations across 
the  economy.  It  sets  out  priorities  for  standards  based  on  broad  consultation  and  presents 
concrete actions for achieving them. 

  The  E-Government  action  plan  on  the  digital  transformation  of  public  services  focuses  on 
business and citizen needs, i.e. solutions that are online, cross-border, interoperable by default 
and solutions that are, by design, end-to-end. 

  The  staff  working  document  on  the  Internet  of  Things  highlights  the  challenges  and 

opportunities of IoT in Europe. 

2 

The growing footprint of digital technologies 

With  about  4%  of  GDP,  the  ICT  sector  in  Europe  represents  an  important  share  of  the  economy 
employing more than 6 million people. The value added of this sector in the EU (production of digital 
goods), spanning from components to software products is above 580 B€1 and represents close to 10 
% of the added value of industrial activity overall.  

Recent  studies2  estimate  that  digitisation  of  products  and  services  will  add  more  than  110  B€  of 
revenue for industry per year in Europe in the next 5 years. Just in Germany, further digitisation of 
industry is expected to bring up to 8 % of productivity growth over ten years3 and a revenue growth 
of about 30 B€ per year4. It will also lead to a 6 % increase in employment. Close to a third of the 
growth of the overall industrial output in Europe is already due to the uptake of digital technologies5.  

the 

ICT  sector  originates  about  17%  of 

1  Moreover, 
is.jrc.ec.europa.eu/pages/ISG/PREDICT.html 
2  PwC,  opportunities  and  Challenges  of  the  industrial  internet  (2015),  and  Boston  Consulting  Group:  the  future  of 
productivity and growth in manufacturing industries (2015) 
3 Boston Consulting Group (2015), op.cit.  

total  business  expenditure 

in  R&D,  PREDICT  

the 

4 Close to 1% of German GDP 
5 Estimates by LIFE + series of studies 2016.  

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Today, more than a quarter of the growth of value added in the automotive sector comes from the 
integration of digital innovations in the car and in the design and production of cars. Finally, digital 
innovations  are  a  key  enabler  for  meeting  the  objectives  of  many  of  our  societal  challenges  from 
sustainable  health  systems  to  the  improvement  of  resource  and  energy  efficiency  as  addressed  in 
Commission  policies  like  the  Energy  Union  and  the  Circular  Economy.  The  internet,  the  web  and 
recent  developments  in  virtual  and  augmented  reality  continue  to  reshape  the  production  and 
business models of all creative industries.   

This additional value creation from digital innovations occurs in:  

  Products: Driven by the development of the Internet of Things, the further integration of ICT in 
all  types  of  products  and  artefacts  offers  a  wide  range  of  opportunities  for  the  growth  of  new 
industries  including  start-ups  and  is  transforming  all  sectors  of  the  economy.  This  includes 
developments of markets like the connected car, wearables or smart home appliances.  

  Processes: the further spread of automation in production and the full integration of simulation 
and  data  analytics  in  processes  and  supply  chains  are  bringing  substantial  gains  in  productivity 
and resource efficiency over the full cycle from product design to lifecycle management.   

  Business models by re-shuffling the value chains and blurring boundaries between products and 
services. Smart connected products come with services and customers adopt changing behaviour 
e.g. on "ownership", co-creation and sharing (the apps economy). The impact of adding services 
to the product portfolio of manufacturing companies has been shown to increase profitability by 
up to 5.3% and employment by up to 30%6. 

The convergence of a number of technologies is driving the digital change, notably IoT, big data and 
cloud, robotics and artificial-intelligence, and 3D printing. They enable industry to respond to major 
aspirations  of  today's  customers,  such  as  personalisation,  higher  safety  and  comfort  as  well  as 
energy- and resource efficiency. For example, the combination of advanced sensors and big data in 
industrial processes can reduce energy consumption7 and the use of raw materials.  

These  innovations  result  in  closer  interdependence  between  progress  in  digital  technologies  and 
their use across industries. To be able to reap the full benefits of digital technologies, Europe needs 
both,  a  highly  innovative  digital  sector  and  an  upgrade  of  the  digital  innovation  capacity  of  all 
industries.  It also requires an innovative public sector showing the way in digital transformation to 
improve efficiency and ensure high quality service for all citizens. 

3 

Seizing digital opportunities: Where does Europe stand? 

Several national and regional initiatives such as Industrie 4.0 (DE), Smart Industry (NL), Catapults (UK) 
and  Industrie  du  Futur  (FR)  were  launched recently  to  tap  into  the  opportunities offered  by  digital 
innovations in industry. They show the commitment across Europe to seize the digital opportunities 
ahead. However, addressing the challenges of digital transformation at national level alone bears the 
risk of leading to further fragmentation of the single market and to efforts below the critical mass 
needed to attract private investments. 

Competition  between  economies  world-wide  to  attract  private  investment  in  digital  innovations  is 
fierce. Between 2000 and 2014, investments in ICT-related products in the EU represented about a 
third of those made in the US.  Similarly, the overall amount invested by  EU  companies in research 

6 Crozet, M. and Milet, E., Should everybody be in services? CEPII working paper 2015.  
7 E.g. Sensors installed on machinery report back of abnormal behaviour saving energy in billions of Euros. 

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and  innovation  represents  only  40%  of  US  companies'  investments.  While  Member  States  and 
regions have an important role to play in facilitating access to finance and attracting investments, EU 
level actions can bring the necessary scale and coverage to ensure impact. The added value of further 
cooperation between national and regional innovation policy-makers is well addressed in the Smart 
Specialisation approach8 and bottom-up inter-regional initiatives have emerged9. 

The  state  of  the  digitisation  of  industry  varies  across  sectors,  particularly  between  high  tech  areas 
and  more  traditional  ones,  and  also  between  Member  States  and  regions.  There  are  also  large 
disparities between large companies and SME10. The large majority of SME and midcaps are seriously 
lagging behind in embracing digital innovations. European industry risks falling behind when it comes 
to building the very foundations of its digital future.  

Digital  industry  in  Europe  can  build  on  a  number  of  assets,  notably  the  size  of  the  EU  market  that 
should  attract  further  investments  as  it  develops  into  a  digital  single  market.  It  also  has  clear 
strengths in professional (e.g. B2B) and sectoral markets such as embedded and business software, 
telecom  equipment,  robotics,  automation,  laser  and  sensor  technology  as  well  as  electronics  for 
improve 
automotive,  security,  healthcare  and  energy  markets.  However,  Europe  needs  to 
significantly its attractiveness to investments in the production of digital products, from components 
to  devices  and  software,  for  consumer  markets  and  in  web  and  data  platforms  and  relevant 
applications  and  services.  This  is  also  the  case  for  personal  computing,  servers,  and  all  consumer 
packaged software.  

While  bringing  new  opportunities,  digital  innovations  are  also  transforming  the  whole  business 
landscape. They open the door for new competitors in key parts of the value chain (e.g. data or web 
platforms). European businesses11 are increasingly concerned that such a scenario will lock them in 
with a  few  suppliers  or  platform owners  and  will  also  shift  a major part  of value  creation  outside 
their business sphere.  

There is a need to accelerate the development of common standards and interoperable solutions. 
Interoperability  is  essential  for  the  deployment  of  the  IoT  and  the  seamless  flow  of  data  across 
sectors and regions. Availability of standards and common specifications is a clear requirement e.g. 
for  the  deployment  of  connected  cars  that  interact  not  only  with  the  road  infrastructure  but  also 
with other vehicles and devices, and for the avoidance of consumer lock-in with given providers.  

Digitisation of the industrial fabric brings also new regulatory challenges. This includes issues relating 
to  data  generated  by  the  multitude  of  new  smart  products,  liability  of  more  autonomous  systems 
and safety with the increasing need for interaction between humans and smart devices. It requires 
striking the right balance between legitimate business interests and the fundamental rights ensuring 
protection of personal data and privacy, as set out in the General Data Protection Regulation. 

The  further  development  of  the  Internet  of  Things  and  big  data  pose  also  important  trust  and 
security challenges for any company and for public acceptance.  

About  40%  of  EU  workers12  have  an  insufficient  level  of  digital  skills.  The  need  for  new 
multidisciplinary  and  digital  skills  is  exploding,  such  as  combined  data  analytics  and  business  or 

8 10 % of Smart Specialisation priorities relate to ICT, "Mapping Innovation Priorities and Specialisation Patterns in Europe," 
JRC-IPTS 2015, s3platform.jrc.ec.europa.eu/-/mapping-innovation-priorities-and-specialisation-patterns-in-europe  
9 e.g. the Vanguard Initiative for New Growth fostering complementarities among regions (s3vanguardinitiative.eu) 
10 The Digital Economy & Society Index (DESI), ec.europa.eu/digital-single-market/en/desi  
11 industry position papers 
12 EUROSTAT, digital skills of the labour force 2015 

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engineering  skills.  The  gap  between  the  demand  for,  and  availability  of  digitally  skilled  workers  in 
Europe  is  growing.  Digital  innovations  have  also  a  great  potential  for  additional  jobs  creation  in 
industry  with  the  growth  of  new  businesses  and  by  helping  preserve  and  re-shore  industrial  jobs. 
Looking only at ICT professionals, more than a million additional jobs have been created over the last 
three years. Despite this, it is expected that rapidly growing demand will lead to more than 800 000 
unfilled vacancies by 2020. At the same time, advances in automation, robotics and smart systems 
are  increasingly  transforming  the  nature  of  work,  not  only  for  repetitive  tasks  but  also  for 
sophisticated tasks in administrative, legal or supervisory functions. Work in a digitised economy will 
involve  also  new  skills  and  capacities  including  more  creativity,  communication  and  adaptability.  It 
will require a massive upskilling of the workforce at all levels. 

The above hurdles require a collective public and private effort. 

4 

The way forward  

Digitisation provides a unique opportunity for attracting further investments into innovative and high 
growth  digital  and  digitised  industries  in  Europe.  Industry  in  the  EU  can  build  on  its  strengths  in 
professional digital  technologies  and  on  its  strong  presence  in  traditional  sectors  to  seize  the  wide 
range  of  opportunities  that  IoT,  big  data  and  AI-based  systems  offer  and  capture  a  share  of  the 
emerging markets of future products and services. 

While  adapting  to  the  digital  industrial  change  is  primarily  a  matter  for  business,  a  targeted  public 
policy can play an important part in creating the best conditions for that to happen in all sectors in a 
competitive  environment  bolstered  by  the  competition  rules.  This  is  particularly  important  for  the 
vast  number  of  small  and  medium-sized  enterprises  that  underpin  the  European  economy.  Public 
policy  should  aim  at  a  thriving  digital  sector  fuelling  the  digitisation  of  the  whole  industrial  fabric, 
from construction, health and agro-food to creative industries. 

The  purpose  of  this  Communication  is  therefore  to  reinforce  the  EU's  competitiveness  in  digital 
technologies and to ensure that every industry in Europe, in whichever sector, wherever situated, 
and no matter of what size can fully benefit from digital innovations. 

Facilitated  by  a  dynamic  framework  for  coordination  and  experience  sharing  between  public  and 
private initiatives at EU, national and regional level, the proposed actions are expected to mobilise 
close to 50 B€ of public and private investment13 in the next 5 years, explore and adapt when needed 
the  legislative  framework14  and  reinforce  coordination  of  efforts  on  skills  and  quality  jobs  in  the 
digital age.  

4.1  A framework for co-ordination of initiatives for digitising industry  

More  than  30  national  and  regional  initiatives  for  digitising  industry  have  been  launched  across 
Europe  in  recent  years.  With  value  chains  increasingly  distributed  across  Europe,  the  further 
digitisation  of  industry  brings  challenges  that  can  only  be  resolved  through  a  collective  EU-wide 
effort. It is at EU level that the pooling of public resources can rapidly reach the critical mass needed 
to  attract  the  right  level  of  private  investment.  There  is  a  need  to  address  standardisation  and 

13 Based on the planned activities in H2020, COSME and national public and private efforts amounting to about 35 B€, up to 
5 B€ for regional investment on innovation hubs, 10 B€ co-investment in first production capacities  
14  Possible  legislative  proposals  will  be  subject  to  Commission  better  regulation  requirements,  in  line  with 
Commission’s Better Regulation Guidelines, SWD(2015) 111 

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examine the regulatory fitness of legislation at EU level to ensure the development of a single market 
and there is also a substantial value in sharing best practices in areas like skills and jobs for the digital 
change. 

In  the  first  half  of  2016,  the  Commission,  together  with  Member  States  and  industry,  will  set  up  a 
governance framework to (i) facilitate the coordination of EU and national initiatives on digitisation,   
(ii) mobilise stakeholders, and resources across the value chain, on actions towards the achievement 
of a Digital Single Market, building upon existing multi- stakeholders dialogues  15, and (iii) exchange 
best practices: 

-  Twice a year, a high-level Roundtable of representatives of Member States' initiatives, industry 
leaders16, and social partners ensuring a continuous EU-wide dialogue, with preparatory activities 
developed, when needed, in specific Working Groups addressing both sector-specific and cross-
sector issues. 

-  A  yearly  European  stakeholder  forum  for  wider  consultation  and  outreach 

involving 

stakeholders from the full digital value chains.  

The Commission will regularly report on the progress of the actions. It will develop by end of 2016 
and update on a yearly basis a catalogue of national and regional initiatives and priorities. 

4.2 

Co-investing in boosting Europe's digital innovation capacities 

The stimulation of private investment in digital innovations in all industrial sectors across the EU is a 
major  challenge  to  be  addressed  at  regional,  national  and  EU  level.  As  shown  recently  with  the 
European Fund for Strategic Investment, the EU as a whole can mobilise resources for investment, 
when needed, that no individual  Member State could raise on its own and with leverage effect on 
private  investments  that  is  far  beyond  the  reach  of  many  Member  States.  The  approach  to  trigger 
further  investments  is  both  demand  and  supply  driven  and  mobilises  all  policy  instruments  from 
financial support to coordination and legislation. By ensuring the development of digital innovation 
hubs across Europe, access to latest technologies will be possible for any industry in Europe with the 
aim  of  spurring  a  wave  of  bottom-up  innovations  across  sectors.  Public  private  partnerships  on 
innovation  and  strategic  R&D,  will  be  established  and  reinforced  to  ensure  EU-wide  industry 
academia collaboration involving stakeholders across value chains. They will provide unique means 
to  pool  the  resources  needed  for  ground  breaking  developments  in  digital  technologies  and 
platforms including high performance cloud infrastructure for science and innovation as well as large 
scale test-beds to accelerate standards setting. 

4.2.1  Boosting digital innovations in all sectors: Digital Innovation Hubs across Europe 

Europe  can  gain  decisive  competitive  advantages  internationally  if  it  is  capable  to  generate  across 
Europe a wave of bottom-up digital innovations involving all industrial sectors. With the rapid pace of 
change in digital technologies, most decision makers in industry have difficulties to decide when to 
invest,  up  to  what  level  and  in  which  technologies.  Around  60%  of  large  industries  and  more  than 
90%  of  SME  feel  lagging  behind  in  digital  innovation17.  Similarly,  there  are  strong  digitisation 
discrepancies between industrial sectors18.  

15 Such as the Round Tables on digitising industry, Strategic Policy Forum and the MSs Board for Digital Transformation. 
16 Including PPPs leaders 
17 Roland Berger study on digital readiness of industry 
18 PwC study, the 2015 industry digitisation index for Europe 

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When  asked  about  public  support  to  address  the  above,  industrial  stakeholders  point  out  to  the 
urgent  need  for  "facilities  to  experiment  with,  and  test  digital  innovations"  before  investing  in 
digitisation.  Regions  and  cities  with  a  higher  digital  readiness  had  invested  in  digital  competence 
centres  (e.g.  Research  and  Technology  Organisations  (RTOs)  and  university  labs)  offering  such 
support to industry19. As regions with strong clusters in digital industries20 are characterised with very 
high innovation levels, there is also scope to better use clusters with technology infrastructure and 
innovation intermediaries. 

EU  actions21  supporting  such  competence  centres  have  shown  not  only  an 
increase  of 
competitiveness  of  existing  industries,  notably  for  SME  and  mid-caps,  but  also  additional  business 
creation  in  new  digitised  products  and  services.  This  is  also  the  case  for  networks  of  start-up 
accelerators such as Startup Europe and FIWARE initiatives. It is the ambition of the Commission to 
focus 500M€ over the next 5 years from Horizon 2020 budget to these actions. 

The impact is even higher when support to competence centres is combined with actions to facilitate 
access  to  finance  and  with  outreach  and  brokerage  actions.  The  result  is  a  full  "digital  innovation 
hub" (DIH) fostering "many-to-many" connections between competence centers, industry users and 
suppliers,  technology  experts  and  investors  and  facilitating access  to  EU-wide  markets.  Networking 
these DIH across Europe would create a one stop-shop to the latest digital technologies accessible for 
any  business.  In  this  context,  the  synergies  between  digital  and  other  key  enabling  technologies 
could also be encouraged. 

Almost  90  %  of  regions  either  prioritised  ICT  (two  third  of  Member  States)  and/or  advanced 
manufacturing (half of the Member States), or plan to use ICT for supporting their priorities, in their 
smart  specialisation  priorities.  In  those  regions  the  European  Structural  and  Investment  Funds  and 
the  European  Fund  for  Strategic  investment  (EFSI)  and  more  specifically  its  SME  window  could  be 
used to support DIH. To create new, or reinforce competence centers offering the services of a DIH 
across  the  whole  EU  and  stimulate  their  use  by  industry,  e.g.  with  digital  innovation  and  skills 
vouchers, a significant national and regional effort is needed, in the order of 5 B€ investment over 5 
years. 

A thematic smart specialisation platform for industrial modernisation and investment supported by 
the related European strategic cluster partnerships, among others will support cross-regional access 
to competence centres and digital clusters. 

The Commission plans to focus 500M€ investment from Horizon 2020 on digital innovation hubs on: 

-  Networking and collaboration of digital competence centres and cluster partnerships. 

-  Supporting cross-border collaboration of innovative experimentation activities. 

-  Sharing of best practices and developing, by end of 2016, a catalogue of competences. 
-  Mobilising regions with no Digital Innovation Hub to join and invest22. 

-  Wider  use  of  public  procurement  of  innovations  to  improve  efficiency  and  quality  of  public 

sector 

19 E.g. UK Catapult, NL Smart Industry Field Labs, German SME and mid-caps centres, … 
20 Map of European digital clusters in the Atlas of European ICT Poles of Excellence: is.jrc.ec.europa.eu/pages/ISG/EIPE.html  

21  I4MS:  www.i4ms.eu, SAE:  smartanythingeverywhere.eu, ECHORD++:  echord.eu, ACTPHAST:  www.actphast.eu, FIWARE: 
www.fiware.org and Start-up Europe initiatives 
22 E.g. the mentoring programme in I4MS  

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The Commission will also set up in June 2016 a thematic smart specialisation platform for industrial 
modernisation. 

The Commission encourages Member States and Regions to invest in DIH and incentivise industry to 
embrace digital innovations and foster synergies with other key enabling technologies.. 

4.2.2  Partnerships for leadership in digital technologies value chains and platforms  

Amongst  the  challenges  that  can  be  addressed  through  pooling  of  public  and  private  resources  in 
Europe  are  the  large  investments  needed  in  high  performance  computing  facilities  and  data 
infrastructures  for  science  and  engineering.  The  accompanying  Communication  on  the  European 
Cloud Initiative shows how such a collective effort in partnership with Member States and industry 
can  boost  Europe's  innovation  capacity  across  scientific  disciplines  and  industrial  sectors.  It  also 
shows  how  such  an  investment  can  help  reinforce  the  supply  chain  for  strategic  high  performance 
computing in Europe from low power components to computing architectures, Cloud technology and 
data analytics.  

More  should  also  be  done  to  facilitate  coordination  of  the  large  but  fragmented  R&D&I  efforts  in 
other key digital technology fields. This can be achieved by strengthening the coordination role of the 
Public  Private  Partnerships  (PPPs)  established  in  H2020  so  that  they  become  real  aggregation 
frameworks  and  ecosystems  for  digital  industrial  innovations.  PPPs  can  act  as  main  vehicles  for 
implementing  EU-wide  digital  industrial  strategies,  ensure  closer  links  between  R&D&I  and 
standardisation  efforts  and  foster  the  use  of  all  available  financial  instruments,  such  as  the  work 
started  towards  a  5G  Action  Plan  calling  for  coordinated  investment  in  the  next  generation 
ubiquitous 5G networks, in order to deliver on industry's connectivity needs. 

Current PPPs cover the whole digital value chain from components up to applications. They include 
PPPs  in  nano-electronic  components  and  embedded  software  (ECSEL),  photonics,  robotics,  5G 
communications, high performance computing, cybersecurity (planned), and big data23.  

The  example  of  the  ECSEL  Joint  Technology  Initiative24  shows  that  such  alignments  of  regional, 
national and EU strategies are feasible and can draw considerable private investments and achieve 
ground-breaking  impact  on  competitiveness.  They  provide  unique  means  to  support  large-scale 
federating  initiatives  such  as  pilot  lines  for  production  or  large  scale  reference  implementations 
bridging the so-called innovation "valley of death"25 and translating research ideas into marketable 
products and services.  

Of  particular  importance  in  this  context  is  the  use  of  the  Important  Project  of  Common  European 
Interest  (IPCEI),  in  accordance  with  the  TFEU,  to  foster  large  scale  investments  in  production 
capacities  in  highly  innovative  areas  with  large  spill  over  effect  across  the  economy.  Such  IPCEI  is 
being prepared by industry and MSs to boost Europe's production capacity in low-power components 
for  the  IoT.  It  represents  a  total  of  6  B€  of  investment  with  1  B€  from  the  public  sector.  Similar 
initiatives are also being explored for the areas of HPC and big data and in connected and automated 
vehicles.  

23 Details can be found at ec.europa.eu/research/industrial_technologies/other-ppps_en.html  
24 ECSEL is a tripartite PPP in the area of electronic components and embedded software. It is supported with 
1.2 B€ from the EU in H2020, 1.2 B€ from MSs and from industry. So far, industry investment is close to the 
double of public investment and should therefore reach up to 5 B€ in 2014-20 
25 High-level expert group on Key Enabling Technologies, June 2011 

9 

 
 
 
                                                            
Overall,  more  than  20  B€  are  already  planned  to  be  invested  in  the  coming  5  years  in  the  digital-
sector PPPs by industry and the EU in support of strategic R&I agendas26. Given the national level of 
public  support  to  R&I  in  ICT,  the  total  investment  can  reach  up  to  35  B€  in  the  next  5  years  if 
Member  States  would  dedicate  at  least  3  B€  per  year  to  these  strategies  including  financing 
opportunities from EFSI and ESIF. Such levels of focused investments will bring a radical step change 
to Europe's innovation capacity and endow industry with unique differentiating factors to compete 
at a global scale.  

The  Commission  plans  to  launch  a  set  of  initiatives  supporting  the  building  of  the  digital  industrial 
platforms  of  the  future.  Platforms  here  are  to  be  understood  as  multi-sided  market  gateways 
creating value by enabling interactions between several groups of economic actors. Among others, 
platform  building  requires  the  development  of  reference  architectures  and  their  gradual 
implementation, testing and validation in evolving ecosystems that trigger broad value creation27.    

One  group  of  platform  building  initiatives  aims  at  combining  digital  technologies,  notably  IoT,  big 
data  and  cloud,  autonomous  systems  and  artificial-intelligence,  and  3D  printing,  into  integration 
platforms addressing cross-sector challenges. These include: 

 

Leadership  in  IoT:  The  Commission  will  invest28  in  demand-driven  large-scale  pilots  and 
lighthouse29  initiatives  in  areas  such  as  smart  cities,  smart  living  environments,  driverless  cars, 
wearables,  mobile  health  and  agro-food.  The  investment  will  address  notably  open  platforms 
cutting across sectors and accelerate innovation by companies and communities of developers, 
building on existing open service platforms, such as FIWARE30. The accompanying staff working 
document  on  IoT  outlines  a.o.  standardisation  and  regulation  challenges  and  opportunities  for 
IoT and the role of the Alliance for IoT Innovations (AIOTI).  

  Data platforms: More than 2.7 B€ are invested by industry and the Commission in R&D&I actions 
within  the  PPP  on  big  data  established  as  part  of  the  Data  Economy  strategy31.  The  aim  is  to 
support  the  growth  of  innovative  data-driven  businesses  in  Europe  and  the  exploitation  of  the 
potential of the value of data across sectors. This includes the development of competitive open 
data  platforms  and  the  availability  of  world  class  data  infrastructure  in  Europe.  Key  aspects 
include  cyber-security  solutions  for  restoring  trust  in  the  data-driven  economy  and  for  helping 
businesses to make safe and secure use of data. Such platforms will support the uptake of data-
driven business models by European industries, notably by SMEs.  

A  second  group  of  planned  platform  building  initiatives  addresses  the  integration  of  converging 
digital innovations into sectoral platforms and full solutions, such as: 

  The  Connected  Smart  Factory:  Investments  in  the  Factories  of  the  Future  (FoF),  Sustainable 
Process Industry through  Resource and energy Efficiency (SPIRE) and Bio-Based Industries (BBI) 
PPPs allow industry to seize the new opportunities offered by the convergence of HPC, Big Data, 

26  This  includes  ~5  B€  already  foreseen  as  EU  support  to  PPPs  in  H2020  and  the  ~15  B€  private  investment 
committed by industry to these PPPs.  
27  Examples  of  existing  industrial  platforms  include  AUTOSAR  (www.autosar.org)  in  the  automotive  sector, 
ISOBUS  (www.aef-online.org)  in  the  agricultural  machinery  sector.  On-going  industrial  platform  initiatives 
include RAMI (www.plattform-i40.de), Industrial Data Space (www.fraunhofer.de).   
28 H2020 budget. 
29 Under the ECSEL Joint Undertaking 
30 The FIWARE platform provides a set of APIs and an  open source reference implementation  that ease the 
development of smart applications in multiple vertical sectors.  
31 COM (2014)442 final 

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Robotics, IoT and Cloud in manufacturing. A larger number of industries (in particular SME) can 
access simulation tools and testing facilities to produce better products and services. Laser-based 
manufacturing is also supported under the Photonics PPP. 

  Connected  and  automated  driving:  The  Commission  has  launched  work  to  facilitate  and 
accelerate  their  deployment  across  the  EU,  including  the  work  of  the  platform  on  Cooperative 
Intelligent  Transport  Systems  and  will  deliver  a  Masterplan  in  2016.  It  will  build  on  large-scale 
pilot  deployment,  testing  and  experimenting  facilities  available  across  Member  States  and 
stimulate EU-wide interoperability and continuity of services. With the support of industry fora 
such  as  the  GEAR2030  high  level  group,  the  Commission  will  also  foster  cooperation  between 
telecoms  and  automotive  industry  to  accelerate  the  deployment  of  connected  and  automated 
driving in Europe, including through large-scale federating engineering projects across borders.  

Other  sectoral  PPPs  address  important  aspects  of  digitalisation,  such  as  the  Innovative  Medicines 
(IMI) Joint Technology Initiative with its knowledge management pillar and the 'Big Data for better 
Outcomes'  programme32.  The  Commission  will  also  coordinate  the  actions  dedicated  to  digital 
industry  with  the  wider  framework  of  actions  dedicated  to  improve  competitiveness  in  the  Digital 
Single  Market,  including  sector-specific  PPPs  such  as  Energy-Efficient  Buildings  and  Green  Vehicle 
Initiative.  

The European Commission in co-operation with Member States will  focus investments in the PPPs 
to: 

–  Reinforce  the  role  of  PPPs  as  coordinators  of  EU-wide  R&I  effort,  national  initiatives  and 
industrial  strategies  by  focusing  on  key  technologies  and  their  integration  including  through 
large scale federating projects;  

– 

Focus a significant part of the PPPs and national investments on cross-sectoral and integrated 
digital  platforms  and  ecosystems  including  reference  implementation  and  experimentation 
environments in real setting. 

The Commission will monitor the commitment by the private sector to invest, on average, at least 
four times as much as the EU investments in the PPPs and the use of the opportunities offered by 
financial instruments under EFSI and ESIF.   

4.2.3 

Standardisation:  Prioritisation  and 
experimentation  

intensified  efforts  on  reference  architectures  and 

An  effective  standardisation  environment  for  digital  technologies  is  crucial  for  Digitising  European 
Industry, and is key for the Digital Single Market. ICT standards allow devices and services to connect 
seamlessly  across  borders  and  technologies.  In  the  future,  billions  of  connected devices  -  including 
appliances, industrial equipment, and sensors – depend on such seamless communication, regardless 
of  manufacturer,  technical  details,  or  country  of  origin.  ICT  is  rapidly  moving  into  all  economic 
sectors.  Yet  in  many  industrial  domains,  the  traditional  cycle  of  development,  testing  and 
standardisation  is  no  longer  adequate  for  the  fast  evolving  and  complex  converged  technologies. 
Furthermore,  the  multiplicity  of  'ad-hoc'  global  standard  setting  bodies  significantly  challenges 
conventional approaches.   

The accompanying Communication on Priority ICT Standards for the Digital Single Market contains a 
series  of  measures  that  aim  to  streamline  standard  setting  for  ICT  technologies  through  two 

32 Details can be found at www.imi.europa.eu/content/imi-2-call-6-launch  

11 

 
 
 
                                                            
interlinked pillars – firstly by providing strategic focus on core set of key technology building blocks, 
and  secondly  by  a  robust  delivery  mechanism.  This  approach  is  in  line  with  the  foreseen  broader 
Joint Initiative on Standardisation, announced in the Single Market Strategy.  

In  order  to  provide  strategic  focus  to  standardisation,  the  Communication  identifies  five  priority 
areas  for  standardisation  efforts  -  5G,  Cloud  Computing,  the  Internet  of  Things,  Data  technologies 
and Cybersecurity. Focusing efforts in these areas and integrating them along industry value chains 
shows where our strategic interests lie in realising the DSM and helps concentrating resources, bring 
innovators  and  standard  setters  together  more  effectively,  develop  reference 
researchers, 
architectures  and  test  infrastructure33.  Streamlined  cross-domain  approaches  to  standardisation  in 
these areas will also help progressing in eHealth, smart energy systems, intelligent transport systems 
and connected vehicles, advanced manufacturing, smart homes and cities. 

This strategic focus is supported by a robust delivery mechanism, building on regular monitoring by 
the  Commission,  a  sustained  political  dialogue  of  the  Commission  with  all  stakeholders,  reinforced 
cooperation  with  standardisation  organisations,  and  strengthened  international  engagement.  In 
addition, ICT standardisation needs to rely on a balanced intellectual property rights policy for access 
to standard essential patents (SEPs), based on FRAND licensing terms. The policy measures outlined 
in  the  accompanying  Communication  on  Priority  ICT  standards  for  the  Digital  Single  Market  aim  at  
ensuring a fair return on investment to incentivise global R&D and innovation, and for a sustainable 
standardisation process, whilst ensuring wide availability of technologies in an open and competitive 
market. 

4.3 

Providing the appropriate regulatory framework conditions  

From  data  protection  and  security  to  the  availability  of  world  class  networking  and  cloud 
infrastructure, the Digital Single Market strategy includes essential actions for digital innovations in 
industry.  

The  fast  development  and  wider  use  of  digital  technologies  may  however  also  require  further 
modernisation of the current regulatory framework. Clarifying and possibly adjusting the legislative 
framework is important to establish the necessary trust and legal certainty for industry in Europe and 
will be taken forward as part of the Commission's Better Regulation REFIT programme34. The REFIT 
platform  will  focus  on  barriers  to  innovation  and  discuss  how  they  can  be  removed  or  reduced 
through  innovative  regulatory  approaches  as  set  out  in  the  Single  Market  Strategy35  or  through 
innovation deals36.  

33  Reference  architectures  and  shared  test  environments  are  of  particular  importance  as  they  provide  a 
common language and test infrastructure for the development of solutions by multiple actors. They also allow 
for cooperation across value chains, across industrial sectors and across functional layers. They are particularly 
important for SMEs and start-ups. 

34  The Commission already considers a digital assessment for each initiative. This can be part of retrospective evaluations 
and  Fitness  checks  of  existing  legislation  under  the  Regulatory  Fitness  and  Performance  Programme  (REFIT)  or  part  of 
forward-looking impact assessment in order to ensure that legislation is digitally fit for purpose. 

35 Upgrading the Single Market: more opportunities for people and business, COM(2015)550  

36 "Better regulations for innovation-driven investment at EU level". SWD of the EC, 2016 

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In fact, digital technologies are developing so fast that the legal framework needs to be monitored 
constantly to make sure it remains in line with the technological development. Some Member States 
have started adapting national legislation to allow for testing and experimentation such as the ATLAS 
dedicated  testing  and  training  airspace  for  drones  in  Spain  and  the  Italian  RoboTown  city  in  which 
service robots can be tested in real-life environments. The need for action at European level is to be 
explored.   

As  regards  personal  data  and  privacy,  the  General  Data  Protection  Regulation  already  provides  a 
framework to increase trust in digital services, as individuals, public administrations and businesses 
will profit from clear data protection rules that are fit for the digital age, that give strong protection 
and  at  the  same  time  create  opportunities  and  encourage  innovation  in  a  Digital  Single  Market.  
‘Data protection by design and by default’ will become an essential principle to incentivise businesses 
to  innovate  and  develop  new  ideas,  methods,  and  technologies  for  security  and  protection  of 
personal data. In particular, techniques such as anonymised or pseudonymised data will encourage 
the use of "big data" analytics. 

Stakeholders  expressed  a  need to  examine the  regulatory  framework  for  digital  innovations  with a 
view to provide further clarity on the following: 

  Ownership and use of data generated in an industrial context are major areas of concern. When 
it is personal data, protection is dealt with in the General Data Protection Regulation, together 
with the ePrivacy Directive. The already foreseen initiative on "free flow of data" under the DSM 
will  examine  issues  of  ownership,  interoperability,  exploitation  and  access  to  data,  including 
industrial data.  

  Autonomously  acting  systems  such  as  self-driving  cars  or  drones37  pose  a  challenge  to  current 
safety and liability rules where a legal person is ultimately responsible. Legal implications of the 
roll-out of IoT are wider than the allocation of liability as recognised in the DSM strategy and also 
need to be addressed.  

  Apps and other non-embedded software (not contained in a tangible medium) might also raise 

potential safety risks and are currently not fully addressed by the EU legal framework.  

With the support of industry and Member States, the Commission will: 

-  Propose in 2016 the initiative on free flow of data within the EU in order to remove or prevent 
unjustified localisation requirements in national legislation or regulation as well as to examine in 
greater  detail  the  emerging  issues  of  data  ownership,  access  and  re-use  rules,  including  as 
regards  data  in  an  industrial  context  and  especially  data  generated  by  sensors  and  other 
collecting devices. 

-  Explore the legal frameworks for autonomous systems and IoT applications in particular safety 
and liability rules and the legal conditions to allow large scale testing in real life environments. 

- 

Initiate work on the safety of apps and other non-embedded software not covered by sectoral 
legislation, assessing a possible need for further action at the EU level. 

37  In December 2015, the Commission proposed a basic legal framework for the safe development of drone 
operations in the EU as part of the new Aviation Strategy for Europe, COM(2015) 613 final of 7.12.2015 

13 

 
 
                                                            
4.4  A human capital ready for the digital transformation with the necessary skills 

The digital transformation is structurally changing the labour market and the nature of work. There 
are concerns that these changes may affect employment conditions, levels and income distribution. 
Addressing these challenges requires a comprehensive dialogue on the social aspects of digitisation 
that engages all stakeholders involved in all aspects of work, education and training.  The European 
social  partners  have  recognised  that  digitisation  is  not  just  a  technological  issue,  but  it  has  wider 
social,  work  and  economic  implications.  It  is  also  a  question  of  economic  development  and  social 
cohesion.  In  line  with  the  recognition  of  their  fundamental  role,  the  Commission  invited  the  social 
partners to include the Digital Single Market in their social dialogue at European level and they have 
responded positively.  
Work  in  industry  at  all  levels  from  operators  to  engineers  and  administrative  staff  will  increasingly 
consist of designing, maintaining and supervising intelligent machines that assist in the performance 
of tasks. This will require different skill sets.  

In addition to digital skills and competences, there is an increasing demand for other complementary 
skills,  such  as  entrepreneurial,  leadership  and  engineering  skills.  Future  jobs  will  require  an 
appropriate mix of basic, soft and technical skills, notably the digital and business-specific skills, that 
education and training systems are not yet fully addressing. Industry has an active role to play in the 
definition and training of the key skill sets and competences38.  

While this is on the one hand clearly a cross-European issue, most relevant competences lie in the 
hands  of  Member  States  and  Regions,  and  it  is  at  national  and  regional  level  that  specific  issues 
should be identified and addressed. Moreover, the retraining of the existing workforce needs to take 
place  in  companies  and  therefore  a  strong  involvement  of  businesses  and  social  partners  is 
necessary. 

Starting in 2013, the Commission initiated the Grand Coalition for digital jobs39 as a cross-European, 
multi-stakeholder  initiative  to  increase  the  provision  of  digital  skills  through  stakeholder  pledges 
offering  ICT  training,  apprenticeships,  placements,  actions  to  facilitate mobility and/or  carrying  out 
awareness  raising  activities  to  encourage  young  people  to  study  and  pursue  careers  in  ICT.  The 
initiative has been successful in attracting over 60 pledges from more than 100 stakeholders, largely 
from the ICT sector, to train hundreds of thousands of people in new digital skills. It has also led to 
the  development  of  13  national  and  local  coalitions,  with  more  being  planned.  Going  forward,  the 
forthcoming  New  Skills  Agenda  will  build  upon  the  success  of  these  Coalitions  and  set  out  specific 
actions to increase digital skills in Europe.  

Close  links of  DIH  with education  and  training  providers  at  all  levels  would ensure  capitalisation  of 
local  innovation  by  business  actors  as  well  as  graduates'  skills  and  competences  in  the  local 
employment context and the availability of locally relevant and cutting-edge training and retraining 
offers. 

The  forthcoming  New  Skills  Agenda  for  Europe  will  provide  a  comprehensive  framework  for 
employability, including the need for digital and complementary skills.  

38 Recommendation of the European Parliament and of the Council of 18 December 2006 on key competences 
for lifelong learning 

39  https://ec.europa.eu/digital-single-market/en/grand-coalition-digital-jobs 

14 

 
 
 
                                                            
Together with all stakeholders, such as Member States, industry, social partners and education  and 
training providers, the Commission will:  

  Address these challenges as part of the dialogue with social partners on the impact of digitisation 

on work.  

  Reinforce  the  role  of  industry  and  research  organisations  in  the  Grand  Coalition  and  stimulate 

further commitment from industry to take action. 

 

Improve the understanding of skills requirements for new technologies, including within H2020, 
and  promote  the  development  of  digital  skills  and  stimulate  partnerships  for  skills  within  the 
framework of the New Skills Agenda for Europe.  

  Engage Digital Innovation Hubs (DIH) in skills for mid-caps and SME. 

5  Conclusion 

Less than a year ago, the strategy for a Digital Single Market proposed transformational actions for 
the  European  economy  and  society.  This  Communication  presents  measures  to  reinforce  the 
industrial  and  innovation  pillar  of  the  DSM  strategy.  It  invites  to  mobilise  significant  investments 
from Member States, regions and industry and calls on industry to join forces across the value chains 
and across sectors. The Commission invites the European Parliament and the Council to endorse this 
Communication and its accompanying Communications with a view to completing the Digital Single 
Market as soon as possible and to actively engage in its implementation, in close cooperation with all 
relevant stakeholders. 

15