Digital gridlock in Germany

Digital gridlock in Germany

What a curious debate was conducted in Germany at the end of 2017. While in all media the drum is being banged for the importance of digitalisation, and all companies are grappling with the digital future in projects, one has the impression that many of those in charge are observing this topic as onlookers.

People are kind of fascinated by what is going on in Silicon Valley, but do not really want to get involved, preferring to sit by and watch how the next industrial revolution plays out. There is a lot of talk in congresses and symposia, but in reality not much is actually being done. It seems that debating is more important than taking action. Although most people are welcoming the fact that the start-up scene in Germany is growing, by European standards, there is still a tendency to observe rather than support.

The start-up pioneer Christoph Gerlinger attacked the media and German investors in the Frankfurter Allgemeine Sonntagszeitung in July 2017, writing that it was pathetic. He said taking action meant investing, but the best German start-ups were being funded by US sponsors. The Germans were sitting in the front row as spectators while US investors were earning the money. They did not understand how innovation actually worked. All German corporations such as Krupp or Mercedes Benz had started with losses in the last industrial revolution 120 years ago, to then go on and become market leaders. The financial press had showered companies like Amazon or Spotify with invective because they had not understood the basic rule of innovation investment that important innovations are loss-making in the beginning, yet the investment is worthwhile for all concerned. For innovation courage is needed and not market observers. The press is reinforcing this mixture of German anxiety and ignorance about the innovation business.

Failed government investments that underline the digital procrastination

The health card for all insured persons in the statutory health insurance system has been in the pipeline for 20 years. The aim was that all health data and findings would be stored on the card, so that the attending doctors could access them when seeing patients. There is a separate company devoted to this, and the service provider is T-Online. More than a billion euros has now been spent. The reason for the failure has been non-cooperation between the participating interest groups.

At the start of the energy transition it was clear that where previously a few large power stations had fed into the grid, in future the three million participating wind energy, photovoltaic and biomass plants and private operators feeding electricity into the system could be coordinated through digitalisation. The German federal government decided that meters in German companies and, soon after, private households should be digitalised. There is an echo of Radio Yerevan here.

The planned system changeover faces major obstacles

This marked the beginning of a journey by the many different parties involved, namely the Zentralverband der elektrotechnischen Industrie (German Electrical and Electronic Manufacturers’ Association – ZVEI), the Bundesamt für die Sicherheit in der Informationstechnik (German Federal Office for Information Security – BSI), the Bundesnetzagentur (German Federal Network Agency), the grid operators, and the public utilities and their trade association, the Verband kommunaler Unternehmen e.  V. (VKU) – a complex interplay of indecision and obstruction. The Bundesnetzagentur observed, “there is an accepted view that the planned system switch to the specified ‘target model’ with intelligent measuring systems by 1 January 2020 is up against some ‘big hurdles”. So far the parties involved have tripped at every hurdle along the way.

In addition to the health card and digital expansion of the supply networks, the targets for generally expanding internet broadband availability are not being reached either. Germany needs gigabyte networks, but instead around half the German population has no access to fast internet. It is still normal to travel by train and have no internet access – not even on the route from Hamburg to Berlin.

Digitalisation as the key objective

In coalition talks between the CDU and SPD, digitalisation will be a key objective. It can only be hoped that the coalition partners will carry out a digital readiness study and look at how digital projects in Germany have fared until now. The objective might be to use the failures and set-backs of recent years as a springboard for a bold, successful digital strategy. Action could then be taken accordingly. In the area of education and training, an Education Council is to be set up. There is reason to fear, however, that this will be another body setting targets without achieving anything, if the quality of the government’s previous digital initiatives is anything to go by.