Saving Europe from digital colonization

Embedded and cyber-physical systems are at the core of Europe’s future competitiveness. Value is shifting from components to systems and solutions. Artemis president Jean-Luc di Paola-Galloni explains how this upcoming market is both an opportunity and a threat to our continent. Europe needs to understand how the market is changing and gear up its investments to avoid getting digitally colonized.

Jessica Vermeer

We’re on the verge of another industrial revolution. Embedded and cyber-physical systems will act as a bridge between the real and digital worlds. According to Jean-Luc di Paola-Galloni, president of the European industry association Artemis, the only way to achieve success in this upcoming industrial revolution is to create the best value chain we can on our continent. We need to make sure Europe is self-sustaining throughout the entire chain going to application software, while simultaneously being a global force to be reckoned with. “This Europe-inside concept is what we need to protect more, also within our funding schemes. We need to build, enforce and protect our innovation.”

Di Paola-Galloni knows how to deliver his concerns. “Do we want to get digitally colonized in this continent or what? Or do we want to grab the opportunity to resist?” The EU is being outspent by the US, Japan and China. The Chinese are investing heavily in key policies focused on the transition from being the world’s factory to becoming a self-sufficient leader in innovation. The US is also putting its weight behind R&D investments in software applications. European private-sector R&D in embedded and cyber-physical systems seems to be falling behind, in both hardware and software technologies. “We need to resist. Private-sector research and investments are lagging.”

A splash of fresh water

Artemis is Europe’s association for actors in embedded intelligent systems. It aims to secure the whole value chain, from hardware to software. Last year, it presented the report “Embedded intelligence: trends and challenges”. Di Paola-Galloni launched the study two years ago, when he joined Artemis as president,

to assess what’s exactly at stake in the global competition for embedded systems and to determine the themes where Europe can create value. Specifically for embedded intelligence, which is the domain of the Artemis-IA community.

“There’s an unstoppable trend,” says Di Paola-Galloni, who’s also an executive at the French automotive supplier Valeo. “Value is shifting from hardware to solutions and applications. The industry is going from less and less just mechanics and mechatronics to more and more digitalized.” Progressively, automation will be added and the industry will get its own revolution of softwarization. “At Valeo, half of our products are less than three years old. It’s as if you have a shop and change more than half of your stock every three years.”

The value chain runs from raw materials to fully integrated systems and solutions. Simple components are located upstream and as a product goes through the chain, it gains value. The most advanced products such as integrated software and hardware systems are located downstream. Nowadays, as is stated in the report, value is mostly located upstream, but it’s expected to move downstream significantly, with a major shift from products towards solutions. The fully integrated systems and system solutions together with the embedded and enmeshed electronic systems will be key in creating value.

Key application areas are transport & smart mobility, energy, healthcare & wellbeing, digital industry and digital life. Their market growth potential is huge and could be a signifi

At the 2019 SoftwareCentric Systems Conference, Jean-Luc di PaolaGalloni discussed the outcomes of the Artemis study on embedded intelligence and gave an outlook on software development in Europe.

Jean-Luc di Paola-Galloni

Jean-Luc di Paola-Galloni is president of Artemis, the European association for actors in embedded intelligent systems. Next to this, he’s vice president at Valeo, responsible for strategy and external affairs. The French company is a global tier-1 supplier to the automotive industry, generating nearly 20 billion euros in sales. Valeo buys billions of euros worth from the software and chips supply chain to electronize vehicles. More than 30 percent of its turnover is invested in its 60+ research centers around the world. cant growth driver for Europe in the years to come. This becomes apparent when comparing the projected domestic product growth per year, 2.3 percent, to the projected growth of these new markets, which is up to 65 percent for specific areas like augmented reality.

In the meantime, value is shifting geographically as well. Over the last few decades, it has been moving away from the West towards emerging countries like China. This shift is expected to continue over the coming years. Looking at the value chain for embedded and cyber-physical systems, the final stage (systems of systems, applications and solutions) is expected to grow tenfold.

It’s in no way guaranteed that Europe will be able to keep up with this tremendous growth. Given the rapid, ongoing changes and their expected scale, the cards are likely to be reshuffled. “We need to understand the world,” says Di Paola-Galloni. “We need to get a splash of fresh water in the face of many Europeans. Particularly in Brussels, where they only think inward, while they need to understand that we are in a global setup.” If Europe wants to succeed, we need to spend more on applications and increase public support. In terms of public R&D support relative to GDP, we’re being outspent five to six times by China, Japan and South Korea.

Di Paola-Galloni’s main task is to educate those that can make a difference, namely politicians and decision-makers, about the ecosystem and the value chain. “We’ve been voicing the importance of making the right funding decisions and strategic choices to administrations and member states. We also underline the need of coherence in strategy.” Europe should collaborate with partners from outside while protecting certain innovations in order to sell and promote them across its borders.

A staunch believer

According to the recent Artemis study, Europe is leading the developments in transport & smart mobility, energy and digital industry but lagging in some of our historical strongholds, such as health & wellbeing. Di Paola-Galloni states: “We have real strengths. For example, we have the best in mobility. There’s no avoiding our devices there. We also have a strong position in manufacturing, digitalization and industry 4.0.”

On the flip side, Di Paola-Galloni sees Europe lagging in AI, cloud and digital applications. “That’s where I think we’re the weakest. We don’t have an IT giant here. We need to check where we’re strong and where we need to bring future strength. Our objectives aren’t just to create jobs but to build leaders. It’s about scalability, about size, but also about culture, mentality, approach.”

Europe also needs to prepare for more convergence between the applications. For example, a bridge is being built between mobility and health with drowsiness detection in cars. “30 percent of deadly accidents with other vehicles are due to heart attacks. So there’s a huge opportunity to develop a functioning device that can recognize a driver having a heart attack.” The complete system should be able to move the car to the right lane, adapt its speed and eventually stop when the driver is unconscious, or worse, has died. “We can create converging applications like these because we can create a true ecosystem.”

Unavoidability is key, Di PaolaGalloni emphasizes. “We can make sustainability with ethical value chains a key protective aspect.” To achieve this, Europe needs to stop importing rival subsystems from countries where the value chain is known to be lacking. “This is the message to link to the protection of sovereignty. We need to be more careful about what we accept.”

Similarly, Europe needs to become a globally recognized force in software. “We need to create unavoidable pieces of embedded software, systems and applications with which we can grab a substantial piece of the market – 10, 15, 20 percent is enough. 0.5 percent doesn’t cut it, because then we’re running into problems. Our companies should be bolder.”

Di Paola-Galloni is a staunch believer in embedded and cyber-physical systems being at the core of competitive growth for Europe. “These systems can have a long-lasting, positive impact, both in terms of economics and research, but also for society. We need to gear up our investments in software technology so that they’re at least on equal footing with those in hardware. The Artemis-IA community has a key role to play as a tool for European R&D&I environment to capture the upcoming opportunities in a structured way.”