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IT & Cybersecurity

The digital industry in Italy

By Stefano Salvadeo and Nicola Seguino

According to the DESI (Digital Economy and Society Index) report 2017, Italy ranks 25th out of total 28 EU Member States. DESI is an index measuring the progress of EU countries within their digital economy, public system and society through five macro areas (Connectivity, Human capital, Use of internet, Integration of digital technology, and Digital public services) which divide into approximately thirty indicators.

Although Italy is placed in the last positions, data show interesting signals, which could lead the country to get out of the “low performing” group of countries, i.e. Romania, Bulgaria, Greece, Croatia, Poland, Cyprus, Hungary and Slovakia.

So, although data are negative, they bode well for the future.

The introduction of electronic invoicing on a large scale and the adoption of the Ultra-Fast Broadband plan has incentivized public and private investment in NGA networks (Next Generation Access networks, i.e. new optical fibre network). Coverage of the new network increased to 72% in 2016 compared to 41% in previous year.

So, what penalized Italy?

Italy slow performance is due mainly to human capital (i.e., in this case, users).

Internauts increased only by 4% in the last year, but the main problem is the lack of basic digital skills. Only 44% of Italians have such skills and failing an appropriate strategic plan to fill the past generations' gap in digital skills, it would be increasingly difficult to catch up with the European average (56%). Building digital skills is essential and should become part of educational and school programmes; otherwise, new generations entering the labour market in the next years will be negatively affected by such lack of basic education.

The use of the internet is substantial only with reference to entertainment and social media. The only datum above the average concerns the use of digital content: music, video and online games, and the number of people using the internet for social networks (Facebook, Instagram, Twitter, etc.) is only slightly lower, being equal to 60%.

Unfortunately, Italian users seem still hesitant about advanced services, such as e-commerce, online banking and e-government services.

On the other hand, “professional users”, i.e. businesses, made great progress in the area of digital technology integration.

The main step forward has been taken in the implementation of electronic invoicing (reaching 30% and considerably higher compared to 18% EU average), while e-commerce remains the tail end.

In 2016, the Italian government launched the Industry 4.0 strategy, aimed at modernizing the Italian manufacturing industry thanks to the use of digital technology. Industry 4.0 is neutral incentive from the perspective of both technology and industry, as its only aim is that of modernizing the Italian manufacturing sector without favouring a particular industry to the disadvantage of other ones.

The Italian Industry 4.0 plan is therefore a crucial step to revitalize the Italian manufacturing system, which is fundamental for the economy of the country.

Among the changes included in this strategic plan, there is the increase in tax credit for R&D costs, tax allowances for interests held in innovative start-ups, and venture capital for start-ups.

Bernoni Grant Thornton and Grant Thornton Financial Advisory Services strongly believe in opportunities connected to innovation, sustainability and growth offered by Industry 4.0 and by the incentive systems provided for innovative SMEs, and foster the seizure of such opportunities through the “Good Energy Award” and the “Open Innovative PMI” award initiatives.

In conclusion: there is still a large gap to be filled but, for the first time in years, there is some positive news that bode well for the future of the Italian digital industry. It’s up to involved operators to keep investing in this industry, innovating and looking for opportunities to increasingly develop and implement digital technology, without forgetting that the growing digitalization and big data require being able to manage new risks deriving from digital interconnection.