The Digital State of Affairs in the EU

The annual Digital Economy and Society Index (DESI) by the European Commission sheds light on the state of digitalization across the 28 member states of the European Union. For the current year, there are once again highly interesting numbers and facts available regarding the digital performance and progress of each individual member country.

The “DESI” is derived from various factors, considering different (technical) dimensions:

• Connectivity, especially access to fast broadband connections for mobile and fixed networks.
• Human capital: What are the digital skills of the people?
• The use of internet services by EU citizens (online news, music, videos and games, streaming and on-demand services, video calls, social media, etc.)
• Integration of digital technologies by the economy
• Digitization of public services (eGovernment)

At the top of the digital European rankings are Denmark, Sweden, Finland, and the Netherlands. At the bottom of the list are Italy, Greece, Bulgaria, and Romania. Germany ranks 11th with 0.56 points, showing an improvement of 0.02 points compared to 2016. Furthermore, Germany’s “DESI value” is above the EU-28 average of 0.50 points.

Here’s how digital Germany is:

Let’s focus on Germany, its digital standing, and its potential for development. The 2018 Digital Economy and Society Index by the EU Commission summarizes:

“Overall, the country [Germany] has made only slight progress in the last year. It excels in frequency allocation, which benefits the development of modern mobile technology in rural areas. Germans have good digital skills (ranked 7th). However, the shortage of ICT professionals could slow down the potential development of the German economy. Germans are particularly active in online shopping, and German companies utilize the opportunities of the digital economy. A high level of digitization is observed mainly in large companies and small businesses. The greatest digital need is in online interaction between authorities and citizens. Only 19% of the population uses electronic government services.”

In other words, eGovernment is still in its infancy while companies are not doing so badly in terms of digitizing their communication, processes, production, and services. However, there is a risk that this digital progress may slow down due to a lack of skilled workers. Overall, Germans have good digital know-how and use it accordingly, especially when it comes to online shopping. More and more companies are venturing into social media, e-commerce, and cross-border online trade.

High digital competence and minimal increase in the use of online services

On average, Germans have well-developed digital skills. With a score of 0.61 points, they are above the EU average of 0.55 and slightly above the 2016 score of 0.59. Germany ranks a good 8th place in the EU in this field.

However, the situation is not as good concerning internet usage. With 0.47 points, Germany ranks 18th in the DESI ranking (2016: 0.45 points and 15th place; EU average: 0.48 points). Despite a slight increase in the corresponding value, Germany has lost places, mainly because other countries have made significant progress in this area or because the “inclination of citizens to use internet services have hardly increased in the last year,” according to the EU Commission report.

Breaking down to specific areas of internet usage, a diversified picture emerges regarding which online services Germans use and how often. E-commerce is a clear favorite, with 82% of German internet users shopping online last year. This exceeds the EU average of 66% and lands Germany on the podium (3rd place). Nearly as many – precisely 78% – went online last year to listen to music, watch movies, or play games. 72% read news online, and 59% conducted their banking online. With 56%, slightly more than half used social media, and only 31% of German internet users stayed in touch with friends, relatives, or business partners through video calls. Video-on-demand services or streaming platforms lag far behind, with only 23% of German internet users using them.

Comparing Germany with the online champion Denmark reveals significant differences.

Integration of digital technology

How far have German companies come in terms of using and integrating digital technology into their business models, internal and external communication, and the sale of products and services? According to DESI, the integration of digital technology is still improvable in every aspect and area. In this regard, Germany ranks 10th in the EU-wide comparison with a score of 0.43, dropping three places compared to 2016.

However, there are some areas where companies have made progress. This is primarily the case for the use of social media, where 18% of all companies are present, as well as for small and medium-sized enterprises (SMEs) that sell their products and services (also) online. With 26%, these are well above the EU average of 17%. Almost every tenth SME (9.2%) engages in cross-border e-commerce. Finally, German companies excel in electronic information exchange.