A New Connected Europe – An Opportunity for SMEs

The EU and the SME
The European Union's Multiannual Financial Framework 2014-2020 allows the EU to invest up to EUR 960 billion in commitments (1.00% EU GNI) and EUR 908.4 billion in payments (0.95% EU GNI). This framework is specifically geared to sustainable growth, jobs and competitiveness in line with the EU's growth strategy Europe 2020. This is a significant increase on previous years. Whilst, the focus and attention has been on improving the access to capital for Small Medium Enterprises (SME) in the form of the COSME programme, the other facets of the framework are frequently overlooked which can have a very real impact on SMEs. The following describes the very real and tangible programmes that are instituted primarily to support the SME – there is more than meets the eye!

Small and medium-sized enterprises are the backbone of Europe's economy accounting for around 99% of all European businesses and providing two out of three private sector jobs. The importance of the sector is of paramount importance to the European Parliament and to the European Commission (EC). There is a broad consensus that a vibrant SME sector is one of the principal driving forces in the development of a market economy. This is borne by the direct funding of the COSME programme to provide direct financial assistance to SMEs, support for entrepreneurs that create SMEs, improving SMEs access to target external markets and improving the general business environment for SME’s starting up.

Research and Innovation - Horizon 2020
The lack of global competitiveness historically of the European Union in comparison primarily to the existing US research programmes was recognised many years ago and the EU aggressively implemented funding for research programmes which culminated in the FP7 programme that ended in 2013. The continuation of this funding for research and innovation through integrated project support is now encapsulated in the Horizon 2020 programme. Integrated projects form consortia that include governmental bodies; academic institutions; SMEs and related bodies. It was always strongly encouraged that SMEs form part of these consortia. The reason for this is primarily to bridge the gap between research and the market by, for example, helping innovative enterprises to develop their technological breakthroughs into viable products with real commercial potential. The European Institute of Innovation and Technology (EIT) will also endeavour to enhance links between higher education, research and business, and to support entrepreneurial start-ups and specialised post-graduate training.

Connecting Europe Facility
To support SME growth and the creation of jobs in Europe crucially depends on infrastructure investment. Citizens and businesses are hindered too often because the infrastructure networks across Europe, in transport, energy or ICT, are incomplete, inefficient or simply not existing. The instituted Connecting Europe Facility (CEF) pretends to be the key instrument for strategic infrastructure investment at a European level. It helps building roads, railways, electricity grids and gas pipelines, and the infrastructure and services for the Digital Single Market by bringing the crucial financial support needed to close the missing links in Europe's infrastructure networks that otherwise would not be built. Better interconnections will enhance business opportunities and energy security, and make work and travel easier. It benefits citizens and businesses alike, across all Member States. The CEF, together with the solutions for accelerated permit granting and regulatory incentives introduced by the new TEN-E guidelines regulation, radically improves the investment climate for these projects. The CEF is also the first ever EU-level investment programme in broadband networks and digital service infrastructures to help making the digital Single Market a reality. SMEs are at the core of the fundamentals of a ‘Connected Europe’. The European Commission is constructing the central platforms based on the Digital Services Infrastructure (DSI). The core concept is the DSIs will facilitate the cross-border and cross-sector interaction between European public administrations. This, in turn, will enable the provision of essential services for businesses and citizens in areas as diverse as electronic identification and procurement and interoperable health services. The SMEs are the ones to create and deliver the services within the Member States and Associated Countries.

Research Projects The EC is funding a number of domain specific research projects (Large Scale Pilots – LSP) to instantiate and test a number of the DSI implementations. Research projects are firmly focused on deploying a relatively small number of trans-European infrastructures based upon mature technical and organisational solutions, and aimed at supporting exchanges and collaboration with and within the public sector, across the EU. The domain areas include: e-Procurement; e-Health; e-Justice; Business Mobility; OpenData; European and Safer Internet for Children.

One of the LSPs with a wide cross domain specific emphasis is the e-SENS project. This project is focusing on: making it easier for companies to set up business electronically; enabling electronic procurement procedures for businesses; creating seamless access to EU legal systems and making it easier to use healthcare services abroad in cases of emergency. A large number of SMEs are participating in this project due to the variance and the number of potential cross-border services that are being established. The SMEs are participating in this project for the following reasons:

  1. Early adopter – SMEs are able to build up knowledge and expertise within the DSIs that are implemented by CEF as a clear strategic opportunity and advantage. This is primarily the technical and consulting oriented SMEs which have already established a national competency. These SMEs aim to use this national competence and further differentiate themselves from competition by taking first mover advantage of the instantiation of the CEF.
  2. Research and development (R&D) – SMEs traditionally shy away from R&D as it can be expensive and the returns are difficult to estimate. The EC supports financially SMEs to participate in R&D activities as part of their wider European initiatives. The EC promotes the involvement of SMEs in the research projects by allowing the project coordinators to include SMEs in national consortia. These private entities, in turn, are included in purposely created legal bodies such as e-SENS.com to contractually participate in the projects.
  3. Create competitive advantage – SMEs are aligned to the Member States and Associated Countries through contractual consortia arrangements. It is within these countries where there is a requirement to connect the cross border services to existing national infrastructures – the last mile! Clear competitive advantage can be created by providing solutions, frameworks and toolkits to make the connection of these cross border services to the national/local agencies easier. The majority of national governments will not have realised or substantiated the impact that CEF brings, thus it is important that SMEs reduce the ‘barrier to connection’ for these governments to benefit from a ‘Connected Europe’.
  4. Enter into new markets – traditionally SMEs view their markets restricted to single geographical area. New cross border services will make it easier for SMEs to broaden their horizons to a larger market within and outside the EU. The CEF forces SMEs to broaden their horizons in a changing world. The successful SMEs, which will harness the opportunity of the CEF, will be the ones that emerge into new markets where previously they would have been reluctant to. Successful global companies are the ones that have historically endured strong national competition before they emerged onto the global stage.
  5. New products - the instantiation of the CEF radically changes the fabric and manner in which citizens and business interact with each other within the EU. There is a plethora of new products and services that emerge from SMEs from the advent of such a dynamic delivery platform. New products will develop from existing national infrastructures that will be amended and augmented to interact with the new reality. New products will appear from the consolidation and standardisation of the required interface points to the CEF from national consumers. The demand by the market for the ease and speed of integration to CEF drives this consolidation.
  6. Commercialise – the EC nor the Member States or Associated Countries can commercialise the potential from the CEF. This work can only be undertaken by the private sector. At a national level it is generally accepted that governments create the environment in which business grows and jobs are created. The same is true but the effect is amplified at a European context. An ecosystem of SMEs within the countries can and will create value and growth to unlock the potential of the CEF.

The objective of the Horizon 2020 research programme is to increase the global competitiveness of the EU. As the backbone of the European economy is the SME, Horizon 2020 must in turn enhance the competitiveness of European SMEs through research and innovation instruments. This means that SMEs will be forced to actively and effectively commercialise their research in the context of a global market. The ultimate result of increasing SMEs’ commercialisation of research will be to increase the return on investment in the form of gross value added and jobs. There are no current figures for the return on investment from SMEs’ dedicated instruments in the Framework Programmes. However, given the enormity of budget of H2020 and the likely levels of participation of SMEs there will be a significant impact on European competitiveness. Any SME that is not currently involved or not seeking opportunities to be involved may miss the opportunity of a generation.

John Murray, Enterprise Registry Solutions Limited