EU falling short of digital transformation goals, new report finds

The Digital Decade initiative in Europe was created with the vision that digital technology benefits all citizens in the European Union (EU). Proposed in 2021, it set a series of 2030 targets designed to empower citizens and help businesses prosper. However, a new report suggests that current progress may be insufficient to meet these targets.

The latest instalment of the State of the Digital Decade report identifies crucial gaps, including the need for more investment, at both EU and national levels.

It calls for member states to be more ambitious – stating that achieving many of the Digital Decade goals is critical for Europe’s future economic prosperity and societal cohesion.

The Digital Decade policy programme set out ambitions in four areas, aiming to create: a digitally skilled population and highly trained digital professionals; secure and sustainable digital infrastructures; digital transformation of businesses; and digitalization of public services.

The new report finds that member states are collectively lagging. Key areas requiring additional investment and focus include digital skills, high-quality connectivity, artificial intelligence (AI), and business adoption of data analytics.

Digital skills targets are “still far from being achieved”, with only 55.6% of the EU population having at least basic digital skills. Fibre networks needed for people to use cutting-edge technology, including AI and cloud computing, only reach 64% of households, while high-quality 5G only reaches 50% of EU territory.

The uptake of AI falls far short of the target of reaching 75% of businesses by 2030 – at current rates, just 17% of European companies will be using it by the end of the decade.

Another major challenge identified is tackling the limited spread of digital technologies beyond large cities.

The report calls on member states to review and adjust their roadmaps to align with the programme's ambition.

As the State of the Digital Decade paper states, such initiatives are vital to realizing the benefits of technology for people, the planet and prosperity. Digital transformation is expected to unlock trillions of dollars of additional value for the world economy.

But many of the gaps identified by the EU report persist around the globe.

Today, 2.6 billion people are disconnected from the digital economy, according to the World Economic Forum report ​​Digital Transition Framework: An action plan for public-private collaboration. For example, over a third of the world’s population remains offline despite 95% being within range of some form of connectivity. The digital skills gap remains a key barrier to digital inclusion and opportunity.

Two-thirds of jobs, meanwhile, are exposed to some degree of automation, yet just 5% of companies have invested in significant AI reskilling. And the benefits of AI remain geographically concentrated, primarily in the Global North.

The progress of the world’s network of Lighthouses underscores the need for faster adoption of digital technologies.

Lighthouses are manufacturing companies recognized for their leadership in using advanced technologies to drive growth, improve resilience and deliver environmental sustainability. And they are seeing a big impact from implementing these technologies, including AI.

There are currently 153 recognized Lighthouses across the globe, with 21 new businesses added to the list in 2023. Every one of them has at least one generative AI pilot under way, and the technology is optimizing operations at every stage, including planning, asset management, quality and delivery.

Such companies are successfully adopting and scaling digital technologies by setting strong implementation strategies – such as “assetization”, or packaging use cases for speed and scale of deployment – building capabilities throughout their organizations, and implementing change management.

But what needs to happen to ensure technologies such as AI achieve broader impact?

Generative AI is expected to add between $2.6 and $4.4 trillion in annual value to the global economy. At the same time, the Forum’s Digital Transition Framework report says it is estimated that between $450 billion and $2 trillion is needed to reach universal digital inclusion.

It recommends governments engage in public-private partnerships to help facilitate comprehensive and affordable access to the digital economy.

As Margrethe Vestager, Executive Vice-President for a Europe Fit for the Digital Age, says in a statement about the EU’s Digital Decade progress: “We need additional investments in digital skills, high-quality connectivity, and uptake of artificial intelligence. We need to incentivize the use of digital tools.

“We need many more people to get digital skills – both basic and expert level – to leverage our strengths. And we need to foster cooperation and better integrate our single market to really enable the digital transformation across Europe.”