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Is there a Dutch digital delusion?

To stand still is to decline. The Netherlands seems to be losing ground in the digital world, according to new reports

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The Netherlands is one of many nations that want to lure companies by flaunting their digital prowess. The country has a good national IT infrastructure, is home to the AMS-IX internet exchange, offers access to skilled IT workers and enjoys healthy digital adoption. On government and business levels, the Netherlands aspires to be a digital leader in Europe.

And fulfilment of that ambition is well under way. This year, the European Innovation Scoreboard (EIS) showed the Netherlands as a European leader for innovation. The EIS, an instrument of the European Commission (EC), classifies member states into four groups, based on their average innovation performance.

The recent EIS 2016 report identified the Netherlands as one the fastest-growing innovators. While the UK’s innovation performance is roughly on a par with the European average, the Netherlands is well above the average.

“The Netherlands is, for the first time, an innovation leader instead of a follower,” tweeted the Dutch ministry of economic affairs in July. Economic affairs minister Henk Kamp said the country’s improved score validated the government’s policy to strengthen the Netherlands’ knowledge economy.

To maintain this position, the country would need to invest more in research and development in the coming years, said Kamp – but that is where there might be a problem. Although the ministry’s official Twitter account also reported a worldwide positive score for innovation, the Netherlands appears to be losing ground.

The Netherlands’ digital competitiveness has been questioned by a report from the World Economic Forum (WEF), the same organisation that places the country in the top five most competitive and innovative economies in the world. In its Global Information Technology Report 2016, the WEF drops the Netherlands to sixth place in its ranking of digital economies after showing it in third place for the past three years.

Flywheel effect

So it appears the Dutch are currently well-practised in research, development and ICT usage, but it is imperative to keep up. The WEF report states: “Technology-enabled innovation, in turn, unleashes new competitive pressures that call for yet more innovation by tech and non-tech firms alike.” Essentially, a flywheel effect that requires constant running just to keep up.

This image is also conveyed in the Boston Consulting Group (BCG) report Digitizing The Netherlands. A position among the top-ranked nations is by no means a reason for complacency and could even give a false sense of reassurance. This is despite the country’s sound IT infrastructure, broad internet usage and international competitiveness. But its front-running position based on these factors is not as solid as it might seem, the BCG researchers state.

Read more about enterprise IT in the Netherlands

The BCG’s report on how the Netherlands can drive and benefit from an accelerated digitised economy in Europe emphasises the need for speed. “The Netherlands, as one of the leading digital front-runner nations in Europe, must make further digitisation a top priority,” said the report.

The analysis, which was commissioned by Google, outlines several steps that are needed “to secure growth and jobs in a rapidly changing digital world”.

So the drop from third to sixth place in the WEF ranking could be a wake-up call for the Netherlands. Dutch IT entrepreneur organisation FME had already called for the country’s digitisation to be speeded up. In its Industry Agenda 2016-2018, the industry organisation, which represents 2,200 tech companies, suggested five areas in which the government needed to invest to ensure the Netherlands’ digital future.

Education impact

One of the five areas is education. Henk Volberda, a professor teaching business and innovation at the Erasmus University in Rotterdam, said the Netherlands should focus more on life-long learning. Lagging investments in education and in-service training had resulted in an under-utilisation of 18% of the Netherlands’ human capital, said Volberda, who derives this figure from the WEF Human Capital Report 2016.

In September, the Netherlands was shaken by news that Dutch universities were slipping in the worldwide rankings. Of the 916 universities worldwide evaluated in the QS World University Ranking, only two Netherlands universities were in the top 100. Last year, five made the list.

Among those is the Technical University in Delft (TU Delft), which has risen two places to 62nd. Meanwhile, TU Eindhoven has slipped from 117th to 121st, a slight drop after climbing from 147th in 2014.

Student capacity crisis

The Netherlands’ four technical universities face a capacity crisis. As of this academic year, they are full up and will have to stop enrolling students. This situation has been met with disbelief and uproar from Dutch businesses, which face a growing need for technical and IT-educated employees in the coming years.

The universities say they see no other option unless the Dutch government allocates more funding. Education minister Jet Bussemaker responded by saying the quality of technical studies should take precedence over the quantity.

Meanwhile, the WEF notes that computer science rates as the second best bachelor’s degree in terms of getting a graduate a job. On a master’s degree level, computer science ranks number one, according to a US poll conducted last year by the National Association of Colleges and Employers.

The European and Dutch tech landscape should not be much different. The so-called Stem (science, technology, engineering and mathematics) subjects are most in demand, so it comes as no surprise that all Dutch universities want to pioneer courses in so-called human aimed information technology. “Digitisation is going to take off in a big way” is the message in a pamphlet presented by the universities at the start of the current academic year.

Digital Agenda

But big strides still need to be made and timing is of the essence. And to keep up, business-wise and education-wise, the Dutch have a masterplan. The so-called Digital Agenda aims to grab the opportunities offered by the fourth industrial revolution – digitisation. It was formally launched by minister Kamp back in July, and arrived not a moment too soon.

But the government’s plans on how to move forward in 2017 have met with criticism. DINL, the Dutch non-profit body representing digital infrastructure companies, complains that the Digital Agenda contains hardly any investments in digital infrastructure, and DINL director Michiel Steltman said he fears for the country’s digital future.

Of course, he has a vested interest, but the digital economy is indeed founded on hosting, telecoms and other digital infrastructure services. Such business activities are seen as essential for the Netherlands’ progression from a physical trading nation to a digital hub in the modern world. Time will tell whether the Dutch really are digitally driven or suffering a digital delusion.

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