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How to accelerate the digital transformation of the CEE: ideas from the Three Seas Forum

The panelists discussing digital transformation at the Three Seas Forum
Image credit: The panelists of the Digitalization Panel of The Three Seas Forum
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After the end of the two-day Three Seas Forum, that was held in Sofia last week, there is a sense of hope and excitement. The initiative aims to bring more regional cooperation in the energy and digital sectors among the 12 CEE participant countries. Many topics of strategic ecosystem importance were discussed and many regional innovation leaders and officials shared their optimistic and actionable ideas about the future of the CEE region. The Digitization Panel that took place on Friday gathered representatives from the whole spectrum of the regional digital transformation ecosystem – from the vendors of the infrastructure and the officials regulating the industries to the application service providers who are using the smart infrastructure to fuel the economic growth of Eastern Europe. 

Some of the participants in the round table were Assen Vassilev, the Bulgarian caretaker Minister of Finance, Petar Ivanov, the Executive Director of AmCham Bulgaria, Isabella Groegor who is the Vice-President of Amazon Web Services for EMEA, Magdalena Dziewguc, the Country Manager of Google Cloud in Poland, and Raycho Raychev, CEO and Founder of Bulgarian deep tech company EnduroSat. The speakers focused on discussing how to best digitize infrastructure аcross the different sectors for Industry 4.0, why the cloud is the key enabler for smart infrastructure services, and why access to open data is so crucial. 

How to change the playing field for new companies

Assen Vassilev, the Bulgarian caretaker Minister of Finance opened the Digitalization panel with a talk on the cycle of creative destruction. According to him, when talking about innovation everybody focuses on the creative part – how do companies create new products and the world changes, but nobody pays attention to the destructive part. “What we see in all countries is that established companies that need to die in order to open up space for the new companies are very well embedded in the existing infrastructure. They control the protocols, they are very close with the banking system and the financial system in the country, and they are very good at putting roadblocks to change,” Vassilev said. 

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Tapping into the role of regulations in the innovation ecosystem, he pointed out a key difference between the VC landscape in Europe and the US. American VCs are large enough and have enough political support and connections to help starting companies break through the gridlock and change the industry by changing the regulations. According to him, because of that, the US has so many unicorns and many European scale-ups move overseas when they reach the growth stage. “In Europe, we don’t have this type of VCs that know how to take on the political fight to open up space for the new companies. And everything that we are going to see in terms of change from autonomous vehicles to the digital transformation of healthcare touches upon very heavily regulated industries, with embedded large companies that have written the regulations, and that has made it close to impossible for startups to enter the space,” Vassilev stated. 

However, most of these companies and regulations tend to be in the Western part of the continent which is a unique chance for Eastern Europe to change the playing field. Vassilev concluded his speech by remarking that: “We can use this opportunity to move ahead of the rest of Europe by creating an environment for companies and entrepreneurs where they can build the new processes, and they can embed the new technological possibilities, faster, quicker, and at a much lower cost.”

Google and Amazon’s advice on building a competitive advantage

According to Isabella Groegor, the Vice-President of Amazon Web Services for EMEA, the Three Seas Initiative Investment Fund needs to integrate digitization into infrastructure and energy in order to “leapfrog”. “Everything is now smart and if you want to leapfrog, you need to go beyond what is currently available. Embedding digitization, not for the sake of digitizing but for the sake of making the world a better place and giving back to the citizens, is critical. She urged the 12 countries part of the Initiative and the Fund to combine their digital strategies and efforts under one umbrella framework to achieve the leapfrog effect. 

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Magdalena Dziewguc from Google Cloud Polska spoke about the opportunity of the region to build a competitive advantage in digital transformation by opening up modern and connected data centers. “What we expect to happen in the next three to five years, is that the existing standalone and a bit outdated data centers in Western Europe will have to be closed because they are a threat to cybersecurity. The fact that we already have a regional CEE public cloud is an opportunity for the IT ecosystem from the Eastern countries to support these potential future migrations. I think this is the main motivation for Google Cloud to be in this region,” Dziewguc said.

After going into a strategic partnership with Poland’s Domestic Cloud Provider in September 2019, in April 2021, Google opened its first CEE Google Cloud region in Warsaw to help regional companies build highly available applications. “We have actually decided that CEE will be the main place for R&D of Google Cloud in Europe. And this comes from the fact that we see amazing ambition in this region, combined with high-level high-quality education, people who are willing to work hard, who want to learn, and who really want to create new solutions and new platforms,” Dziewguc concluded. 

The perspective of the digital service providers

At the end of the Panel of the Three Seas Forum, Raycho Raychev from EnduroSat stated that some of the biggest problems in the areas of integrated energy and transportation are connected to energy generation, energy distribution, and expenditure. He outlined that the countries in our region need high frequency and high-resolution data to create smart energy and transportation infrastructure which can only be done efficiently and jointly through satellite imagery. 

“We need to ensure independence in infrastructures, especially when we talk about communication. We need to have transparent, open, and democratic access to information for foundations, administrations, and energy insurance companies, all at the same place. We need to level the playing field so that the new entrepreneurs can come to the cloud and stun us with incredible innovations, as long as they have the resources and the data needed for that,” Raychev said. 

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Elena is an Innovation Reporter at The Recursive, an online media dedicated to the emerging tech and startup ecosystems in Southeast Europe. She is keen on sharing the innovation stories that shape the regional ecosystem and has a great interest in fintech, IoT, and biotech startups. Elena is currently finishing her Bachelor's Degree in Business Administration and Political Science at the American University in Bulgaria.