Companies across a range of sectors in Central and Eastern Europe (CEE) believe that digitalisation is key to enabling them to achieve business goals such as reducing costs, increasing productivity and becoming more competitive. In a survey exploring CEE’s digital future, conducted by leading international law firm CMS, almost two-thirds (65%) of companies in the region confirm that digitalisation is a priority in realising these immediate goals.

While the trend towards digitalisation was underway before the outbreak of Covid-19, the pandemic has undoubtedly pushed the digital agenda of CEE businesses upwards: 38% of respondents have completed or initiated new projects while 45% say that the pandemic has served to accelerate ongoing projects.

The majority (92%) of respondents believe that the pandemic will accelerate future digital change in their businesses and almost two-thirds (65%) anticipate an increase in their IT budgets next year to support digitalisation. Financial services and life sciences are the key sectors identified by respondents in which digitalisation is expected to be most driven by the fallout from the pandemic, followed by the manufacturing, automotive and energy sectors. Only 6% of businesses have delayed their digital projects due to the pandemic.

“Despite the continuing impact of Covid-19 globally, it is encouraging that many companies across CEE are either pressing the fast forward button or planning to commit greater resources to go digital,” says Dóra Petrányi, CEE Managing Director at CMS. “We already have high-quality digital infrastructure across many CEE countries with high speed broadband, e-commerce and 4G usage. However, to be on par with other developed nations, we need to become more digitally competitive through new technologies such as 5G networks and artificial intelligence, supported by the necessary regulatory frameworks and standards.”

Eva Talmacsi, Co-Head of CEE TMT at CMS, adds: “Similarly to Western Europe, a major source of competitiveness in CEE will be 5G technology. That being said, we still need to tackle a few hurdles to unlock its full potential as European 5G standardisation is not yet complete. Although more network sharing is already happening, for instance in the Czech Republic, Poland, Romania and Hungary, we see different approaches from regulators at a national level, which needs to be addressed for a wider deployment of 5G-enabled technologies. But as and when it happens, it will have a profound impact on existing industries and our daily lives across the region.”

AI, a key instrument of change but not without concerns

As part of their push towards digital transformation, many businesses in CEE view artificial intelligence (AI) as the key instrument of change, bringing solutions that help to deliver better productivity, speed and efficiency. Slightly over half (58%) of survey respondents are already using AI solutions while a significant majority (83%) are planning AI-related investments.

The belief in AI’s full potential for businesses in each sector does not come without widespread concerns. A significant proportion (86%) are worried about potential legal liability issues while 60% are either concerned or very concerned about security risks. At present, only 4% of respondents believe that AI is over-regulated while over half (60%) would like to see more guidance and regulation on AI to be put in place.

Tomasz Koryzma, CMS partner and Head of IP in CEE, says: “AI is opening up transformational opportunities in all areas of human activity, but at the same time poses unique risks for companies, governments and society as a whole.”

Data and ethics go hand in hand  

The survey confirmed that there is no doubt that “data is king” for a diverse range of CEE-based companies. Four-fifths (80%) of businesses believe that data is extremely important, with three-quarters either currently investing in data analytics (62%), or soon planning to (12%). These businesses cite their marketing and sales and research and development departments as the main users of data analytics.

Only 1% of respondents say they do not consider ethics as being integral to how they conduct business. Safeguarding data, considering the human cost, and making decisions on brand values are ethical issues that almost all (98%) respondents agree are part of their current corporate guidelines and policies.

“Ethics is no longer a ‘tick-the-box’ exercise, but a conscious value-driven process which involves thorough thinking. There should be a right balance in corporate behaviour between complying with law and being ethical, as this is not always the same. Therefore, companies’ ethics guidelines should be revised to address the current digital challenges, including realising consequences of using certain data by the respective technology. GCs or Chief Privacy Officers should expect that ethics will become an important part of their day-to-day lives,” says Olga Belyakova, Co-Head of CEE TMT at CMS.

The ethical uniformity is partly a consequence of the General Data Protection Regulation (GDPR) which, since coming into effect across the European Union in May 2018, has helped to transform the cultural as well as legal landscape in terms of how companies store, manage and use customer data.

Clive Gringras, Head of TMT at CMS, adds: “What should GCs do? More and more members of the legal team will need to really appreciate technology, either because companies will end up competing with tech, or, cutting technology deals. Therefore, in-house teams need to recruit and retrain with tech being a core skill, not a sideline or a specialism. Everyone on the legal team has to understand technology.”  

About the survey and CMS CEE Digital Horizons report

Conducted during the pandemic months of July and August 2020, the survey by CMS focused on a range of topics in relation to digitalisation activities and priorities, which together form the strategic digital agenda of businesses. It also included questions around businesses’ investment plans as well as regulation and risk.

The survey canvassed the views of nearly 100 participants whose operations span 18 countries across the CEE region: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Kosovo, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia and Ukraine. 

In seeking the views of senior professionals in business/management, IT/IT Security and legal/compliance, a broad range of sectors were included: aviation, consumer products, energy, financial services, hotels & leisure, life sciences & healthcare, manufacturing, private equity, professional services, real estate, and TMT.

More information and results of the survey can be found in CMS’s Digital Horizons Report - A series of reports exploring CEE’s digital future.

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For further information, please contact:

Darina Gordienko, Senior Business Development Executive

E: darina.gordienko@cms-cmno.com

T: +38 044 391 3377

 
Notes to editors:

Founded in 1999, CMS is an integrated, multi-jurisdictional organisation of law firms that offers full-service legal and tax advice. With more than 70 offices in over 40 countries across the world and more than 4,800 lawyers, CMS has long-standing expertise both in advising in its local jurisdictions and across borders. From major multinationals and mid-caps to enterprising start-ups, CMS provides the technical rigour, strategic excellence and long-term partnership to keep each client ahead in its chosen markets.

The CMS member firms provide a wide range of expertise across 19 practice areas and sectors, including Corporate/M&A, Energy & Climate Change, Funds, Life Sciences & Healthcare, TMC, Tax, Banking & Finance, Commercial, Competition & EU, Dispute Resolution, Employment & Pensions, Intellectual Property and Real Estate & Construction.

For more information, please visit cms.law