Cloud infrastructure and services are increasingly the engine that helps power and grow our economies. The cloud helps organizations access, build, and run the software they need to achieve digital transformation at a rate and scale that would be prohibitive to most if done alone. In a world where technology helps European companies reach customers, break into new global markets, create efficiencies, or develop new data-based business models, access to state-of-the-art cloud solutions is key to Europe’s potential to produce digital innovation and maintain global competitiveness.
That is why the European Commission made the use of cloud computing a central part of its Digital Decade goals by setting an uptake target of 75% by 2030. There is still more to do to meet that target. Last year, the number of enterprises using the cloud was 41%, but only 73% of those businesses were using advanced cloud services.
TRADITIONAL INDUSTRY, DIGITAL FUTURE
A look at Europe’s automotive industry shows just how essential the fast and successful adoption of technology can be for the future of an entire sector. Car manufacturers are an important contributor to the EU economy, with a turnover representing more than 8% of the EU’s total GDP, a key export industry bringing in an annual trade surplus of €79.5 billion and providing direct and indirect jobs to 13.8 million Europeans.
Cars are becoming more and more software-defined and have increasingly more in common with electronic devices than a piece of mechanical engineering - a shift that not only creates challenges but also unlocks new business models and revenue streams in the form of connected experiences and mobility services for customers.
It also puts traditional automakers at a potential disadvantage vis-à-vis their digitally native competitors with more experience in the software space. The choice is between building vehicles and letting others build and monetize smart services or catching up fast to provide hardware and software, creating value from collecting and analyzing data and generating profit from data-driven cloud services.
Partnerships with technology providers like Microsoft allow the European automotive industry to transform, creating efficiencies in production and logistics, enabling innovation in areas like road safety and autonomous driving and unlocking new mobility solutions by leveraging insights from connected vehicle data
It is clear where European car makers increasingly see their future. VW estimates industry revenues from software and services could hit €1.2 trillion in 2030, and Stellantis’ projections are €4 billion a year by 2026 and €20 billion by 2030. It is why we are now seeing these companies hire more software than mechanical engineers. Partnerships with technology providers like Microsoft allow the European automotive industry to transform, creating efficiencies in production and logistics, enabling innovation in areas like road safety and autonomous driving and unlocking new mobility solutions by leveraging insights from connected vehicle data.
Advanced cloud technology rests at the core of this transformation.
WORKING BETTER WITH THE CLOUD
Take Mercedes-Benz, for example, using the Microsoft Cloud to connect its around 30 passenger car plants worldwide to enhance transparency and predictability across its digital production and supply chain. By using enhanced access to AI, data and analytics tools, the company can identify global supply chain issues faster, improve quality control, track and forecast emissions, optimize energy and water usage, better manage waste and roll out its best practices across its entire production network.
Working with Microsoft, Mercedes-Benz aims to improve production efficiency by 20% by 2025, helping to predict and prevent problems in production, and logistics before they materialize - a major competitive advantage on the path to an all-electric future.
Similarly, data and cloud are transforming the automotive retail experience. FIAT, owned by Stellantis, launched the first-of-its-kind metaverse-powered car showroom running on the Microsoft Cloud, allowing customers to discover, configure and even buy a new car, without ever setting foot in a car dealer.
Data innovation-based growth in the automotive sector and beyond is enabled by cloud-powered software tools. As part of the work with the Eclipse Foundation, Microsoft is helping to solve a key challenge to sharing data across multiple organizations and their global supply chains both in the cloud and on-premises systems. This is done based on the European concept of dataspaces in compliance with organization policies, while allowing them to maintain full control over their data. The Eclipse Foundation’s Dataspace Components are made up of open-source libraries that enable multi-cloud, policy-based federated data sharing. To support innovation in the software-driven and autonomous vehicle space, Microsoft also contributed to projects that aim to significantly improve developer efficiencies and reduce the complexity involved in developing in-vehicle applications. The Eclipse project provides the central data sharing engine for the automotive alliance Catena-X to enable sovereign data exchange amongst all contributors along the automotive value chain.
BUILDING UP EUROPE’S TECH CHAMPIONS
Focusing on building up new European tech champions of the future is essential, and Microsoft is ready to do its part. As a major technology provider, we have a responsibility to support a healthy competitive economic environment and support trusted local providers to meet customers’ technology needs. It is something we have committed to as part of our European Cloud Principles and program for European Cloud Providers
It is important to maintain sight of the fact that European businesses need access to advanced native cloud-based technology here and now to innovate, lead and compete.
In order to reach this goal, we require supportive frameworks. A view that is shared by the head of the German automotive association VDA, Hildegard Müller. In a recent speech, she stressed the need for the right conditions for European and German industries to remain global leaders in developing transformational technologies, further promoting sustainable and digital innovations and exporting them worldwide.
Looking to the future, we must ensure European companies can continue to have access to the most sophisticated applications that suit their business needs, have sufficient incentives for investments in data-based services and business-to-business data sharing.
This includes proposed legislation like the Data Act where we see caution from the business community. The Executive Board member of the Federation of German Industries (BDI), Iris Plöger, recently warned that data access and sharing obligations could create barriers for the internal market and impact the attractiveness of Europe as a business location.
When it comes to cloud technologies, we need to shift our focus to the economic opportunities they sustain and enable. For that, Europe needs conducive digital policies and access to state-of-the art technology, and it needs to remain open and connected to the global economy to realize its digital ambitions and compete globally.
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Jeremy Rollison is Senior Director of European Government Affairs within Microsoft’s Corporate, External, & Legal Affairs (CELA) group. Based in Brussels, he manages the team responsible for Digital Transformation and Sustainability policy portfolios. He's also personally engaged on data policy specifically, increasingly focused on regulatory and policy topics including data access, re-use, IP, and the increasing importance of such policy to AI innovation and the digital transformation journey(s) of Microsoft customers.