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01/09/2016

The data revolution: Europe’s chance to lead in the digital economy

Innovation & Industry

The data revolution: Europe’s chance to lead in the digital economy

Spotify and other European companies have built their business models around data.

[Flickr/Johan Larsson]

Europe needs to cash in on the data economy—and in a lot of ways, it already is, argues Paul MacDonnell.

Paul MacDonnell is head of European policy at the Center for Data Innovation.

Many European policymakers, business people, and citizens lament that the United States has been leading in the Internet economy, while Europe has been slower to adapt.

But we should all take heart, because a new era of data-driven innovation is upon us, revolutionizing everything from healthcare to business supply chains. If Europe seizes the moment, it has every opportunity to lead. Doing so will not only mean new jobs in the data economy, but also an array of societal benefits, including reduced energy use, better healthcare, and higher productivity.

But the European data economy will not happen on its own; smart public policies are needed. EU governments at the local, national, and EU levels will need to embrace the data economy to improve delivery and management of government services. The McKinsey Global Institute estimates that public sector data-driven innovations could save Europe more than €100 billion annually. At the same time, national and EU-level regulation needs to be structured in a way that allows innovators to use data to create value while simultaneously protecting privacy. 

Without data there can be no data economy. 

>>Read: Vestager says EU will eye ‘big data’ concerns in merger probes

To be sure, parts of the EU’s public sector are already marshalling data to improve performance. For example, schools in the UK, Norway, and the Netherlands are using analytics software and online dashboards to improve teaching. The European Commission has reported that adding this kind of data analysis to traditional classroom instruction allows teachers to better assess students’ progress through the curriculum and tailor lessons to individual needs.

In the area of environmental management, European officials are beginning to take advantage of data-driven decision support systems to monitor and respond to storms and ecological hazards. For example, the Mediterranean Decision Support System for Maritime Safety, a collaboration between Mediterranean countries, combines weather, ocean wave patterns, and shipping-traffic data to provide oil-spill monitoring and forecasting.

Europe is also leading the way in technologies that enable what have become known as “smart cities” by allowing interconnected urban systems such as traffic lighting and other elements of public transportation to function with optimal efficiency. For example, the Denmark Outdoor Lighting Lab has installed LED streetlights equipped with sensors into a Copenhagen neighbourhood to demonstrate the energy-saving potential of lighting that can respond to vehicles in real-time. When there is little traffic, the intensity of lighting can be cut by 10 to 30%.

With an ageing population that is set to increase demand for healthcare, European policymakers have similar opportunities to use data to improve quality and bring down costs. Researchers are using data-driven insights from clinical trials and genomics to develop new drugs for specific populations, unlocking the promise of personalised medicine. Healthcare providers are analysing treatment histories to improve patient care. And public health officials are using vast data sets incorporating disparate information such as hospital admissions and Internet search terms to improve surveillance of communicable diseases and control them before they spread.

>>Read: EU official: Big data ‘here forever and in all sectors’

The private sector will benefit from data innovation as well. In the automotive sector, Schmitz Cargobull, the German manufacturer of truck bodies and trailers, uses telematics to monitor not just the routes taken by its trailers but also the weight and condition of their cargo—allowing customers to save on fuel and cut spoilage of perishable goods.

British retail giant Tesco uses in-store sensors and predictive modelling to optimize heating, cooling, and refrigeration in its stores to cut costs and prevent spoilage. And the Swedish company Spotify has used data from its music streaming service to recommend new music that its customers may like.

The key to getting Europe’s data innovation strategy right is to create an environment where the EU’s burgeoning community of innovators can succeed. Policymakers need to be open to solutions that these innovators will develop for both government and the private sector to tackle challenges in the areas of public health, urban management, and education, among others. Lawmakers and regulators should also focus on crafting policies that allow innovators to unlock the benefits of data.

They should avoid precautionary regulations that limit the collection and use of data and actively encourage experimentation, both with technologies and with service delivery models across Europe’s public and private sectors.

Given the significant challenges that the EU faces—including slow growth, shaky public finances, and an ageing population—getting aboard the data economy is not just an opportunity. It is a necessity.

>>Read: We need to make big data into an opportunity for Europe