Seven billion smartphones are used in the world. Theoretically, every inhabitant of the planet, but in reality the vast majority of the planet’s population has a computer in their pocket. And cloud computing gives people access to software, services, and content anywhere, anytime. Artificial intelligence (AI) enables computer systems to learn and solve problems, blockchain is changing the concept of money, contracts and identity, and the list of paradigm-shifting innovations goes on – 3D printing, virtual reality, the metaverse, and more. All of them are very new technologies and their role is not limited to certain activities, they do not only change certain behaviors, they do not simply complement previous production structures, but they provide the means to modernize all existing industries and activities, leading to the transformation of social and economic norms And in 2023, enthusiasm for the potential of technology to accelerate the development of companies and society returned, with generative artificial intelligence as the main theme.

Business leaders and governments need to understand that technological change has the chance to redefine industries and everyday life in beneficial ways, but it can also carry numerous risks. And this transformation should be seen in a broad perspective, because it involves skills that need to be learned, it brings new business models while others disappear, it changes the way citizens and government interact.

Although the transformation in Romania is slower than in other countries, as shown by the European Commission’s recently published report on the Digital Decade 2023, authorities and companies are aware of the transformative role of digitalization. Romania is gradually starting to recover from the EU average gap in certain indicators of digitalization of companies, but the way is still long to achieve the goal of the EU Digital Decade program, according to which by 2030, 75% of local companies use advanced technologies – cloud, artificial intelligence and big data.

But the estimates for the adoption of these advanced technologies are very low: 1% for the adoption of artificial intelligence, compared to the EU average of 8%, 11% for the adoption of cloud services, compared to the European average of 34. % and 5% for big data, compared to 14% in the EU. Only in terms of the degree of digitization of SMEs, the gap with the EU is not so great, 53% versus 69%. The use of e-government services also ranks Romania very low, with only 24% of internet users using these services, compared to the EU average of 74%.

Adopting the European conceptual matrix of NextGenerationEU, focused on digital and green, the National Plan for Recovery and Resilience (PNRR) can make a decisive contribution to the digital transformation of the country by financing the development of digital infrastructure, the digitization of processes in the administration, but also from the private environment, the funds allocated to this component, amounting to 5.97 billion euros (20.5% of Romania’s total allocation). The government cloud is a central pillar of this transformation, which should not transfer the bureaucracy to a digital environment, but simplify the services and interaction of citizens and companies with public administration. Of the total, €1.81 billion is targeted at digital transformation of the public sector, cybersecurity and communications, including reforms such as the 5G Security Act, the 5G Auction and the Government Cloud and Interoperability Act. Other relevant measures can be found in the components of the digitization of transport, tax administration and the pension system, support for the digitization of companies and research and development, and the digitization of education.

If implemented, all these measures will eventually bring concrete results for citizens and companies and bring significant benefits to the economy, as the changes caused by new technologies affect both companies, the public and public services and authorities that work together interdependently. .

The good news is that Romanian companies are aware of the long-term impact of technology. Half of the respondents who run local companies surveyed in the PwC CEO Survey 2023 believe that the development of technology is a factor that will disrupt the profitability of the industry in which they work, along with a lack of skilled workers, changing consumer preferences, the transition to new energies or strict regulation. Basically, the competitive advantage of companies depends on having the right technology strategy to achieve operational efficiency, flexibility and innovation.

Thus, technology-oriented investments and workforce improvement are considered priorities for most general managers in Romania, with 73% indicating that they will focus in the next year on automating processes and systems, as well as improving the professional skills of their own employees. About three out of five organizational leaders mention the introduction of advanced technologies such as artificial intelligence or cloud computing.

Digital transformation is accompanied by the need to improve the skills of employees in the use of technologies. And in terms of basic digital skills, Romania continues to lag behind. Only 28% of adults have at least basic digital skills, well below the EU average (54%) and below the target of 80% by 2030. Furthermore, only 9% have digital skills above basic level, compared to the EU average of 26%. Governments and companies must make significant efforts to close these gaps. Therefore, investments in training, including public ones, can reduce the pressure on the labor market in the future. Companies must analyze business processes, assess needs, and at the same time provide employees with training and development programs. The willingness to learn and adapt seems to be there, especially among Gen Z. In the PwC survey of employees in Romania, Hopes and Fears 2023, when asked about the impact of artificial intelligence on their careers, they appeared to be optimistic and more likely cite the positive impact of AI rather than the negative, such as that it will increase their productivity, enable them to acquire new skills or create employment opportunities.

As we showed at the beginning, over the past 15-20 years there has been a wave of innovation that has swept all industries, and the pace at which new, revolutionary technologies are being created is unprecedented. And all this unrest, with far-reaching implications at all economic, social and political levels, needs to be understood in order to adapt so that, ultimately, it affects quality of life and well-being for the better. The opportunities for innovation and transformation in the next decade will abound, but so will the risks of turbulence and crisis if these changes are not understood not only by companies, but also by politicians and regulators.

This article is part of PwC Romania’s “Agenda for Tomorrow” editorial project, which will run until the end of this year and aims to discuss the context and perspectives that can guide companies to make informed decisions in the midst of change. You can read the first articles here and here

Article supported by PwC Romania