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John Chambers: The Digital Transformation of Europe

Europe is on the cusp of an unprecedented technological transformation. I call it the Internet of Everything: the penetration of the World Wide Web into the everyday aspects of our lives. Wearable technology will tell us how well we are sleeping and whether we need to exercise. Sensors in the street will help us avoid traffic jams and find parking. Telemedicine applications will allow physicians to treat patients who are hundreds of miles away.

This massive transition will transform how citizens interact with their governments, revolutionize entire industries, and change the way we engage with one another. In Europe, the Internet of Everything is emerging as the single most promising way to revive a moribund economy and tackle the continent's stubborn unemployment problem, with companies, cities, and even countries positioning themselves as leaders in innovation, growth, and the creation of jobs.

The most recent example is France. Last month, Prime Minister Manuel Valls and I announced an ambitious partnership to promote a digital transformation of the entire country. The collaboration, which includes a $100 million investment from Cisco in French startups, could transform energy management, health care, and education – boosting France's economic competitiveness, job creation, dynamism, and growth in the process.

France's program is a major step toward a digital Europe, following German Chancellor Angela Merkel's Industrie 4.0 initiative and the United Kingdom's planned expansion of innovation centers to foster technological breakthroughs and pioneer solutions in energy, transport, health care, and education.

Cities too are embracing digitization. Barcelona has installed in-ground parking sensors and launched connected public transportation as part of its Smart City strategy. Nice has constructed a "connected boulevard," including smart lighting and environmental monitoring. And the Port of Hamburg has a digital system to reduce water, rail, and ground traffic congestion.

Projects like these are being replicated across the continent, generating billions of dollars in value in terms of reduced costs, productivity gains, and increased revenues. As a result, Europe's leaders see not only opportunities for growth, but also the need to avoid being left behind.

To create a truly digital Europe will require a foundation of high-speed, high-quality broadband, both wired and wireless. As part of Europe's Digital Agenda, policymakers have set out to connect 50% of European households to superfast broadband (100 mbps or greater) by 2020. They also aim to connect all residences to broadband (at least 30 mbps) by this time. These targets should be fully embraced, and policymakers should continue to encourage major investments in broadband, as well as in the infrastructure needed to support the wireless devices in which we have all come to depend.

Of course, Europe will also have to encourage entrepreneurship, which requires fostering a culture of risk-taking, facilitating access to venture capital, and investing in strong educational institutions. Many countries are doing just that, implying that the next game-changing technology may not come from Silicon Valley; it could just as easily be developed in a lab in Paris, London, or Berlin.

Over the longer term, Europe will need a workforce trained for careers in the new digitized economy. It is estimated that Europe will have an e-skills gap that, if filled, could lead to 850,000 potential jobs in 2015, rising to twice that by 2020. On a continent where youth unemployment exceeds 50% in some countries, there should be no problem finding young and eager people able to do these jobs, provided they receive the proper training.

This gap cannot be closed overnight, but countries that do nothing to overcome it could very well fall behind. Widening the talent pipeline sufficiently will require a generational commitment to teaching math and science, providing technical training, and mentoring young people of all backgrounds so they understand the full range of possibilities that a career in technology affords.

As Europe continues down the road of digital transformation, the possibilities for growth are immediate and significant. The continent is already the world's largest economic bloc, with a GDP of more than €14 trillion ($15.2 trillion) in 2014. But its growth has been waning. The European Commission estimates – conservatively, in my opinion – that the digital revolution could spur an "additional 2.1% of GDP growth over the baseline."

On the jobs front, the Internet of Everything will be a key driver of employment. Advances in cloud computing alone are expected to create 2.5 million additional jobs in Europe by 2020. The digital transformation will bring opportunities and create new types of jobs: systems developers, transportation network engineers, medical device consultants, data analysts, electrical engineers for smart grids, and many more.

As Europe charts its economic course for the next decade, its leaders must ensure that digital transformation forms the foundation of their strategy. This will allow them to create a Europe that is stronger, faster, more dynamic – and more digital.

John Chambers is Chairman and CEO of Cisco.

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Posted: March 13, 2015 Friday 08:30 AM