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Constantin Măgdălina, Emerging Trends and Technologies Expert

How we stand with digitalization in Romania? Author: Constantin Măgdălina, Emerging Trends and Technologies Expert Words that transform In business, every period has its own star words. Their use is sometimes the mark of staying up-to-date, of affiliation to the business community, and sometimes the mark of user’s visionary character, or aspirations. Such words are at the moment innovation, agility and digitalization. On digitalization there is a lot of speaking going on in Romania. Conferences are hold and presentations are delivered. It is very good so, you could say. Eventually, there is a necessary request for information and education in a first phase. Still, if you limit yourself only to conferences and speeches, you miss the benefits digitalization produces when implemented consistently in a company. As digitalization increases county’s competitiveness index, how it is implemented digitization at micro level (company) depends on competitiveness at the macro level (country). Digitalization and competitiveness A country’s competitiveness refers to its ability, compared to another country, to ensure an economic and social environment that supports the accelerated creation of added value. Accelerated digitalization creates added value. From online shopping and paying taxes to the automation of production processes and chatbot digitalization generates added value. Therefore, we have identified two converging directions to implementing and achieving the benefits of digitization:

Bottom-up - from the corporate level up to industry / sector and the economy level, and

Top-down - from the state, cascading down to each company.

At this moment Romania stands not too good at either of the above two points. According to the European Commission, Romania is ranked last (28th), depending on the economy and society information index (DESI). This composite index integrates a set of relevant indicators, structured around five dimensions, which I want to detail below.

a.Connectivity This indicator refers to the coverage, speed and the number of fast broadband subscriptions. The coverage of households with fixed line broadband is low (89% in Romania compared with 97% in the EU). The coverage access to next generation network (NGA) in Romania is 72%, similar to the average EU. Regarding to the number of subscriptions to fast broadband (speed over 30Mbps), in Romania the percentage is 63%, 30% above the EU average. However access to ICT services remain unevenly among the population, with large gaps especially in rural areas. The use of mobile broadband networks is also below the EU average (59 vs. 75 subscribers in Romania in EU subscribers per 100 people). That is why, overall, Romania is below the EU average on this indicator. b. Human capital Despite the fact that we have approximately 100,000 IT professionals, digital literacy among the population and workforce are among the lowest in the European Union. Only 52% of Romanian use

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Constantin Măgdălina, Emerging Trends and Technologies Expert

the Internet regularly (compared to 76% in the EU) and 32% have never used the internet (compared to 16% in the EU). According to the composite index, DESI, digital literacy among the population of Romania are the weakest in the EU, only 26% of Romanian own basic digital skills over basic level (compared to 55% in the EU). c. Use of Internet In this respect Romania is making good progress, although is below the EU average in this respect. Internet use increased mainly due to a greater participation of people in social networks. On the other hand, companies in Romania want to better exploit the advantages of social networks, online commerce and cloud applications. d. Integration of digital technology Integration of digital technologies by companies, although very important in Romania, recorded results below the EU average and the progress is limited. Lack of budgets at company level, and the lack of confidence of the great mass consumer in online services, lack of a proper legal framework for managing the potential disputes between companies and consumers, and other concerns related to encrypted communications and payments, leading to poor integration rate of digital technologies by companies. e. Digital public services Romania's results are below the EU average in terms of digital public services, but significant progress is expected especially by promoting open data policies. However the use of e-government is at the lowest level in the EU, only 8% of users interacting with public authorities by submitting the completed forms. Perhaps the initiative of finding ways to reduce bureaucracy by collecting public suggestions using an online platform will contribute to better results on the digitization of public adminstration.

Companies as digitalization drivers A study conducted by the global consultancy company Cap Gemini shows what could be the benefits of digitalization in a company: increased profitability (EBIT) by 9-26%, increased return on asset (ROA) by 6-9% and increased company value by 7-12%. In 2015 the total turnover of the active companies in Romania was 275 billion euros, of which 500 top companies generated about 110 billion euros. So, by digitalizing the companies’ value could increase by 2-5 times in the coming years. Digitalization would then produce a domino effect and in the other dimensions discussed above, particularly in terms of human capital and the integration of digital technologies.

* * * About Constantin Măgdălina

Constantin Magdalina has a 8 years working experience, while he performed in multinationals both in Romania and abroad. Constantin owns a Master in

Marketing and Business Communication at the Academy of Economic Studies Bucharest. He is certified Lean Six Sigma and ITIL which provide him a good

understanding of processes and transformations within organizations. The Chartered Institute of Marketing and Hubspot certifications furthered on complemented

his expertise and knowledge in business. In those over 4 years working activity at EY he initiated and conducted studies which analyzed different aspects related

to the business environment in Romania such as the economic growth predictions of companies in 2013-2016, knowledge management, the buying experience

in the age of digital consumers, social media 2013-2015, the utilization of mobile devices in Romania. He is the author of numerous articles on topics related to

innovation, the efficiency of business processes, social media, the consumers’ buying experience in the age of digital, trends and emergent technologies. He is

invited as speaker at numerous events and business conferences.