At the European Summit Meeting in Lisbon in March 2000, EU
government leaders set a new strategic goal for the Union for
the next decade: "To become the most competitive and dynamic
knowledge-based economy in the world". The Heads of State
and Government made this declaration in the context of the discussion
on the eEurope Initiative which they strongly backed at the Summit.
The goal of eEurope is to accelerate Europe's transition to the
information society, thereby achieving greater economic progress
and social cohesion. This paper will describe the objectives
and rationale of this initiative and explain the contributions
of the Information Society Technologies (IST) Programme, and
notably its Key Action II, New methods of Work and Electronic
Commerce, in creating a more competitive Europe in the digital
1. E-commerce in the Knowledge and Information Society
Digital technologies pervade corporate organisations in all
sectors of the economy. They enable, and demand, a radical overhaul
of business structures, and even the very nature of doing business.
This is a direct result of two fundamental developments: the
exponential growth of the Internet, and the growing power of
The Internet is truly the engine of the new economy. It both
responds to the needs of economic actors in an increasingly globalised
economy, and it further amplifies the trend toward globalisation
- not only of the economy, but also of people's ideas and ways
The Internet is the new platform for people to interact and
do business. It has transformed the patterns of commerce, giving
birth to electronic commerce. Three types of e-commerce have
been identified: first, business-to-administration, - B2A - which
includes the citizen's interactions with e-government as well
as business with government on the basis of e-procurement; second,
business-to-business - B2B; and third, business-to-consumer -B2C.
Of these, B2C can be seen as a mere "evolution" of
traditional consumer interaction. The real e-commerce "revolution"
involves B2B, which is the core of the e-commerce market, representing
over 80% of the total. B2A is embryonic, but major advances are
foreseen in communication between companies or individuals and
government, especially regarding public procurement, taxation,
and other business issues.
E-commerce is not only about doing business on the Net. It
revolutionises corporate structures such as logistics, production,
marketing, internal communications - turning companies into "smart
organisations", knowledge-driven, internetworked, dynamically
adaptive to new organisational forms and practices, learning
as well as agile in their ability to create and exploit the opportunities
offered by the new economy.
The second major development is the growing power of information.
Information is the "fuel" of the new economy and is
used here in its broadest sense, meaning not only data but knowledge,
ideas, and brainpower. Intangible goods (i.e. content and software)
represent an ever-growing share of the economy. The most successful
organisations, not only businesses but also public administrations,
are those which operate on the basis of collective intelligence.
This means co-operating efficiently, sharing information, generating
new ideas, and developing the capacity to exploit them. "Co-operative
competition" amongst individuals is at the core, as a major
driver for innovation and creativity.
There is an unlimited potential in digital technologies, not
only for growth, competitiveness and jobs, but also for societal
progress. Economic development no longer requires highly developed
and densely populated areas in which to take place. Anybody,
anywhere, can play an active role in the new economy. This means
that economic activities can be better centred on the needs of
individuals and communities and that remote regions are no longer
at a disadvantage.
Achieving the potential of the Information Society depends,
however, on fulfilling some essential conditions:
- First, exploiting the full potential of the Internet requires
a powerful and seamless communication infrastructure. Individuals
and regions that are not connected will be left out of the digital
- Second, people need new skills to play an active role in
the Information Society, through "digital literacy".
A reform of educational systems and the promotion of life-long
learning are essential to ensure that young people who come on
the job market are digitally-literate, and those already working
- Third (and this may be the most difficult to achieve), the
digital age calls for a new mindset and new behaviour. In recent
decades, the economy has been fairly static. Now the Internet
has opened up an era of intense creative interactive thinking
and economic growth. The digital age calls for dynamic and flexible
minds, an entrepreneurial and innovative spirit, open-mindedness
2. Europe in the New Economy
With this in mind, let us consider how Europe is doing in
the new economy. The telecommunications market is exploding.
The liberalisation of telecoms in the EU in 1998 has created
a very dynamic market, of which the fastest-growing segment is
mobile communications, which is expanding exponentially. There
are already 140 million mobile users in Europe - that's over
one third of the EU population. The growth rate last year was
30%, making Europe the undisputed world leader.
Furthermore, we are on the verge of a major qualitative change
in mobile communications. Mobile networks are being upgraded
with the GPRS technology, which boosts transmission speed and
quality. New, innovative services are rapidly gaining momentum,
of which WAP is an example. Soon, we will see the development
of broadband communications through wireless local loops, for
which licences are being attributed. This will rapidly be followed
by broadband mobile communications.
Digital TV too is evolving very favourably. Europe has already
closed the gap with the USA with its 10 million subscribers,
and the European market is growing faster. This enables the development
of Internet access and interactive services via a whole new set
of access devices.
In the last 18 months, Europe's situation in terms of venture
capital has improved significantly. Venture capital is now readily
available for fast-growing start-ups, which are now mushrooming
in Europe, notably in the Internet and e-commerce markets. As
elsewhere, these are being created both by young people and by
established professionals. The leading start-ups already have
market values of several billion Euros.
An increasing number of companies, in all sectors of the economy,
are now aware of the importance of e-commerce. According to Andersen
Consulting, 80% of European top managers recognise the importance
of e-commerce for their competitive edge - not only for marketing
and sales, but also for purchasing and procurement. They expect
to use e-commerce intensively by 2004. This may sound like great
news, but 2004 is very late. Too late.
This may explain why Europe currently lags the USA in e-commerce
growth. According to estimates, the EU e-commerce market is only
a third that of the US. But things have started to change in
Europe, and we are heading in the right direction.
On average, Internet penetration rates in the EU remain lower
than in the United States. Actually, the situation is very diverse,
with some EU countries matching the US and others being well
behind. But this is no reason for pessimism - as Internet penetration
figures could soon become irrelevant in Europe. This is because
they are based on the US model of Internet access via a computer,
whereas as we have seen above Internet access platforms in Europe
will be more diversified, with mobile devices and interactive
digital TV playing a crucial role. Soon, more people will be
accessing the Internet via a mobile terminal than a PC. Europe
is already moving into the post-PC era.
It is already clear that the Internet will be the most important
economic development in Europe in the year 2000. It is therefore
realistic to say that Europe is now en route to the digital age,
though many difficulties remain: communications prices are still
too high; the Internet services sector is still insufficiently
developed; e-commerce growth is slower than in the USA; SMEs
are slow to embrace digital technologies; regional discrepancies
persist; and the digital skill gap is widening - to the extent
that while 15 million Europeans are still out of a job, companies
find it difficult to recruit IT capable personnel. There is still
a lot of work ahead.
3. The eEurope initiative
The eEurope initiative was launched in December 1999 by the
President of the European Commission. The goal of eEurope is
to accelerate Europe's transition to the Information Society
- thereby achieving greater economic progress and social cohesion.
After the eEurope initiative was launched and following its
positive reception from the Member States, the European Parliament
and key actors, the European Commission submitted a Progress
Report to the Lisbon Summit of March 2000. At this Summit, the
Heads of State and Government committed themselves to a number
of measures, including target dates, to bring eEurope forward.
The European Commission then produced the eEurope Action Plan
which has been endorsed at the Feira Summit on 19-20 June. It
sets out a strategy to address key barriers to the uptake of
the Internet in Europe and ensure that the conditions are set
for a decisive move towards the new economy. It proposes that
Member States and the Commission bind themselves to achieving
the following three objectives quickly: a cheaper, faster, more
secure Internet; investing in people's skills and access; and
stimulating the use of the Internet. All key elements should
be in place by 2002. The thrust of the plan is to accelerate
legislation, roll out infrastructure and services across Europe
and open co-ordination between Member States - including benchmarking
activities by the Commission.
4. The IST Programme
IST is one of the thematic programmes of Europe's 5th framework
programme of research. With more than 3.6 Billion Euro of Community
funds, it is the largest programme, but also one of the richest
in terms of the strengths and diversity of skills it addresses.
Framework 5 is different to its predecessors. The Council
decided that it should be made up of thematic programmes of research.
For the IST programme, this means that all research is to be
carefully focussed on finding solutions for those technological
barriers that still inhibit the emergence of an Information Society.
It does not mean funding all research opportunities in the ICT
sector, but only those areas where European intervention makes
good strategic sense, and where the added value of our limited
financial contribution can really have a significant impact on
the rate of technological development.
A further facet of Framework 5 is ensuring that all research
is strongly geared to supporting the mainstream policy objectives
of Europe. Research is by its very nature forward thinking and
ground breaking, and it is particularly the case in the ICT industries
that policies and regulation must evolve in response to rapid
The IST programme is one integrated Research and Development
programme aiming at focusing European efforts in order to ensure
that Europeans both develop through, and benefit from, the transformation
from an industrial to an information society. The Programme is
doing more than simply develop technologies: it will help ensure
that all of Europe's citizens and companies benefit from the
opportunities the Information Society will provide. The Programme
has been structured in order to features a small number of key
actions, each of which encompasses the complete range of Research
and Development and take-up activities from basic research through
to demonstration projects.
5. Key Action II: New Methods of Work and Electronic Commerce
The mission of KAII is to support the development of Information
Society Technologies and policy to enable European workers and
enterprises to increase their competitiveness in the Global Information
Society, whilst at the same time improving the quality of the
individuals' working life, and consumer confidence.
Although many aspects of the work to be covered in the Key
Action II have their roots in the previous activities of the
ACTS, ESPRIT and Telematics Applications Programmes, the overall
Key Action is one of the innovations of the new IST Programme.
Not only does it bring together the closely related developments
of New methods of Work, Smart organisations, Electronic Commerce
and Trust, but by setting objectives in terms of these developments
it draws together many different areas of technology development
and social change.
Both 1999 and 2000 have been marked by a rapid acceleration
in the development and adoption of new business solutions and
practices for e-business. As enterprises, workers and consumers
world-wide are awakening to the opportunities of the digital
economy, there is a growing realisation that the transition has
barely started and that a vast number of challenges remain to
be addressed before potential benefits fully materialise.
Challenges range from building a global infrastructure that
promotes trust and confidence to the research, development and
broad take-up of novel technologies, applications, business process
and organisational practices aimed at empowering individuals-
entrepreneurs, workers or consumers - and enterprises, small
and large, as participants in the global economy.
In spite of its relative novelty, Key Action II has attracted
a strong response to the three calls for RTDs and Accompanying
Measures projects so far. The total number of projects selected
for funding to date is 170 with a total contribution of more
than 200 MEuros.
5.1 Key Action II in 2001 and beyond
The Fifth Framework Programme covers the period 1998-2002.
Key Action II will soon enter the last phase of the programme
and the transition towards next Framework Programme. The main
lines of action for the programme are described in the yearly
IST workprogrammes, which constitute the basis for calls for
project proposals. The Workprogramme 2001 is at the time of writing
still being prepared, and so the information contained here describes
its expected evolution. Readers are encouraged to refer to the
official document on www.cordis.lu/ist/home.
It is expected that Key Action II will focus its 2001 activities
in the context of the eEurope initiative, on ensuring that Europe
plays a prominent role in shaping and capitalising on the next
wave of innovation in e-Work and e-Commerce. In 2001 the Key
Action will strengthen its focus on long-term/high-risk research
complemented by high impact take-up activities supportive of
eEurope objectives. The expected timescale for exploitation of
the research is envisaged to be 5 to 10 years.
Key Action II will aim at supporting even more innovative
projects which complement and extend what the market is already
providing. Selected projects should both incorporate a clear
multiplier effect in order to offer benefits beyond the project
partners, and involve key players capable of influencing technology,
industry and market developments. Priority will be given to projects
addressing interoperability and pre-standardisation issues with
a mid- to long-term perspective. These projects should facilitate
the emergence of new platforms on which individual companies
could later develop and embed their own products and services.
Calls in year 2001 will not favour short-term technology developments
based on proprietary solutions whose benefits would be limited
to the participant organisations, nor pilot applications which
would be just another example of the thousands of cases of e-commerce
or e-work already ongoing in Europe. Though such efforts are
worthy, they are not the best investment of public money intended
for research and development.
Innovative research on e-Business and e-Work as described
above will be complemented with socio-economic research and promotion
of early and broad adoption through take-up actions and large-scale
demonstrators and testbeds. Support measures will facilitate
the establishment of working groups and thematic networks to
link Key Action II activities with major external efforts.
Key Action II will reinforce its already strong synergy with
IST Cross Programme Actions in areas such as regional and sectoral
testbeds, smart cards, dependability, socio-economic analysis
and indicators, advanced interactions, etc.
As in 2000, the structure of the Work programme will most
likely reflect the three layers at which Key Action II intends
to contribute: Technology, Strategy and Adoption. This structure
helps Key Action II players better concentrate their efforts
and present proposals more focused on the targets that this Key
Action wants to achieve at the end, namely:
- A new generation of systems and services for new methods
of work, smart organisations, digital markets and trust and confidence;
- Strategies, concepts, and policy contributions to support
implementation on the above subjects; and
- A representative set of trials and testbeds showing innovative
patterns of progress towards the digital economy. This may be
considered as a European testbed of the digital economy.
In 2003 Europe will have the biggest Internet population worldwide.
The number of users will be triple that of 1999 and the value
of the transactions will multiply by 20. In most of the EU countries
the on-line population will be above 40% of the total, and the
companies doing business on-line will represent 80% of the GDP.
The challenge Europe faces is to become a world leader in e-commerce.
Through the IST programme's Key Action II: New methods of Work
and Electronic Commerce and the eEurope initiative that the EU
has put in place, Europe hopes to succeed in this goal - for
the benefit of all.