Priority digital technologies and economic fields of application for Wallonia

The Agence du Numérique has identified the digital fields in which Wallonia tends to specialise. Find out more about the technological fields in which the Region excels and the fields of application that constitute its priorities. Analysis carried out within the context of the work being done on Wallonia’s Specialisation Strategy.

Like other regions that belong to the European Union, Wallonia needs to update its Smart Specialisation Strategy (S3) by the end of 2020. This strategy determines access to various European sources of funding and defines the guidelines for the regional economic policy for the next few years.

The Digital Wallonia strategy (2019-2024) has been enhanced thanks to cross-cutting themes (digital society, digital governance etc.) and has specified a series of priority actions. Against this backdrop, the digitalwallonia.be platform has evolved to become a tool for territorial intelligence. It is now a shared database, added to by different stakeholders and managed collectively. It offers generic, advanced and customised services. The “Digital Sector” theme has a particularly important role to play within Digital Wallonia. Its development, its capacity for innovation and its growing contribution to Wallonia’s GDP are some of the targets that were identified when the foundations of the digital strategy were first laid down. The ultimate goal is to harness the new economy’s potential for growth in the long term, for the benefit of the region and its stakeholders.

To this end, Wallonia needs a network of businesses offering high value-added digital products and services. For their part, these businesses need to be able to rely on a digital ecosystem that includes stakeholders committed to research (approved centres, universities) and support (clusters, funds, business accelerators etc.).

It is therefore very important that we clearly identify:

• Wallonia’s current strengths when it comes to digital technology, both in terms of the stakeholders and skills that are present in the region and existing or potential international opportunities;
• the fields of application in terms of the key sectors and technologies which, even if they do not yet constitute a real strength for the region at the moment, might (or should) do so in the next few years.

To do this, the Agence du Numérique relies on five main sources:

1. Its own expertise when it comes to understanding Wallonia’s digital sector and the digital transformation for businesses.
2. The main technology trends identified by consultancy firm Gartner, the world leader when it comes to digital technology (Top 10 Strategic Technology Trends for 2020, Gartner Special Report, October 2019).
3. The structure of the Walloon digital sector, for which he AdN has provided a permanent overview via the digitalwallonia.be platform. This analysis has been carried out for businesses, startups and research organisations (Digital Wallonia Platform, Agence du Numérique internal document, March 2020).
4. An analysis of the activities being carried out by stakeholders that support the digital ecosystem.
5. The priorities when it comes to technology and target sectors for competitiveness clusters.

Consultancy firm, Gartner, published its top 10 main digital trends in October 2019. They are grouped into two main areas (people-centric, smart spaces) and can be summed up as follows:

• Hyperautomation
• Multiexperience
• Digital Democratisation
• Human Augmentation
• Transparency and Traceability

• Edge Computing
• Distributed Cloud
• Autonomous Things
• Practical Blockchain
• AI Security

These different trends point us towards a few key technologies that underpin most of them. These are :

• Artificial Intelligence, Data & Analytics (trends 1, 3, 8, 9 and 10);
• Internet of Things (IoT) (trends 2, 4, 6 and 8);
• Immersive experiences (trends 2 and 4);
• Blockchain and Cybersecurity (trends 5, 9 and 10).

The ethical, legal and social aspects of digital technology are assuming greater significance when it comes to opportunities (and desirability) in terms of whether or not certain technological solutions should be developed (trends 3, 4, 5, 8 and 10). That is the whole point of the “Digital Society” theme in the Digital Wallonia 2019-2024 strategy, which incorporates precisely these aspects in the development of digital technology throughout Wallonia. Furthermore, as this theme is not strictly speaking a technological trend, and is not a strength or weakness specific to Wallonia, it will not be covered in the rest of this article.

Of course, the technology trends described above should be reassessed on a regular basis, as the digital sector evolves particularly quickly.

The digitalwallonia.be platform encompasses over 2,100 private businesses, including 400 startups and more than 100 organisations involved in research, all organised according to their products and services.

They are divided into 5 main categories:

• Software and software development;
• Consultancy and services;
• Hardware and IT equipment;
• Networks and telecoms;
• Advanced ICT.

The last of these (Advanced ICT) encompasses the majority of the products and services corresponding to the priority technological fields.

The comprehensive taxonomy of products and services is available at https: //www.digitalwallonia.be/fr/taxonomie-numerique (FR)**.**

The stakeholders covered by the analysis are:

• private businesses involved in the sector;
• startups involved in the sector, a subset of these businesses;
• research organisations;
• some of the digital ecosystems encompassed by Digital Wallonia due to their nature and their vitality.

The analysis of the sector shows that software development is really dominant in Wallonia (representing 58% of businesses). If we add services (45%) to this, it is clear that Wallonia’s digital businesses remain (too) present in a sector in which there is substantial competition, offshoring is easy and it is often hard to create added value.

Within this category of “Software”, 25% of businesses focus on industry-specific software, which obviously implies strong links with competitiveness clusters or specific economic sectors in particular.

However, 17% of businesses (364 in total) are in the “Advanced ICT” category. There is very encouraging progress compared with 2018 figures (+6%), which represents a real capacity for innovation in this sector. In this particular category, the IoT and sensors are clearly the most dominant technologies (40%, so +15% compared with 2018!).

The other technologies are represented almost identically, apart from Artificial Intelligence (20%), which has a bigger presence.

The comparison with startups is very interesting. It shows that, while the “Software” category is still significant, so is the “Advanced ICT” category, which covers 23% of startups (compared with just 17% of all businesses).

To sum up, for the whole of this category, which encompasses the majority of the most innovative technologies, almost 1 in 3 companies is a startup.

The IoT clearly dominates for startups. AR/VR has a slightly greater presence here than for companies as a whole.

On the digitalwallonia.be platform, the decision was made to categorise research organisation using the same criteria as businesses. This consistency is very important when it comes to “superimposing” research over business, and so being able to assess whether capacity for innovation is translated into economic activity.

The analysis shows that the “Advanced ICT” category has the greatest presence, with 78% of stakeholders (58 out of 70) involved in at least one product / service within this category. If we include research organisations that use digital technology intensively in their activities in our analysis, this proportion is 77%, mainly because digital twins and simulations, as well as AI, are crucial to the latest research in their fields (astrophysics, materials physics, transport optimisation, energy spending etc.).

It is clear that the technologies focused on the most by research centres or universities are:

• Artificial Intelligence (which is associated with Machine Learning and Image Processing) – 67% of the category;
• the Internet of Things (IoT) – 36%;
• robotics and automation – 17%;
• AR/VR – 15%;
• digital simulations and twins – 14%.

While all universities have a department that deals with AI, this is less true of research centres. The opposite is true for the IoT.

There is therefore a clear discrepancy between the structure of the digital economic sector and that of research. This confirms the need to significantly strengthen the connection between research into digital technology and the creation of businesses that might be able to capitalise on the innovation resulting from this research.

At this stage, Blockchain does not have much coverage, with just 13% of the “advanced” category, so a total of 7 research units. Similarly, cybersecurity is only dealt with by 6 research units in Wallonia.

This situation could be a cause for concern. Not only does blockchain present real potential for sectors like industry, logistics and food traceability, but also we have seen how cybersecurity represents a key to the success of the implementation of a large number of advanced digital applications in the years to come.

Paradoxically, not many spin-offs seem to be coming out of universities focusing on the IoT and AI. However, between 2018 and May 2020, half of spin-offs were nevertheless involved in the fields of the IoT and AI, but the number of these remains low.

Once again, the solution would seem to involve offering more effective encouragement to Walloon businesses (startups or otherwise) to work with universities, which could result in an “advanced layer of technology” as a unique selling point.

Digital ecosystems are defined as networks that bring together supply-side businesses (digital sector), demand-side businesses (one or more specific sectors), research organisations and partners (federations, public services, clusters etc.) around a particular business theme (Industry of the Future, digital commerce, health etc.) or a cross-cutting technology trend (Artificial Intelligence, Cybersecurity etc.). They constitute an important source of information when it comes to identifying areas of excellence and opportunity for digital Wallonia.

The main ecosystems identified so far are:

• Industry 4.0: over 160 stakeholders
• E-health, Biotech and MedTech: over 140 stakeholders
• Digital technology and education (EdTech): over 100 stakeholders
• Artificial Intelligence: over 80 stakeholders
• Gaming, creative industries, entertainment: over 60 stakeholders
• Big & smart data: over 50 stakeholders
• Cybersecurity: over 40 stakeholders

We can conclude from this analysis that the most highly developed fields of application in Wallonia appear to be Industry 4.0 and health. The recreational industries and education are also well represented. It is however worth pointing out that the nature of the “education” ecosystem is slightly different from the others: it is more of an ecosystem based on an interest (encompassing stakeholders who are interested in the subject) than a technology or application ecosystem in the strictest sense of the terms. In addition, it is not very well developed in terms of research (see above). With this in mind, the 3rd ecosystem identified by Digital Wallonia in order of importance, is Artificial Intelligence.

The AdN has identified around a hundred public and private stakeholders who are involved to a greater or lesser and on a more or less regular basis in supporting digital transformation in Wallonia in general, and in businesses more specifically.

The analysis of these stakeholders looks at both the priority technological areas and the nature of their activities. At this point, the AdN has divided the stakeholders up according to their position in a value chain:

1. Research
2. Awareness raising
3. Development
4. Funding
5. Training
6. Internationalisation

The stakeholders have also been broken down according to whether or not digital technology is their main focus. Ultimately, apart from research organisations (covered in chapter 3 of this article), more than 50% of these stakeholders have no in-house digital expertise connected to the technological themes.

In the specific case of incubators/financial backers, none (apart from the private fund, The Faktory, for the IoT and ID2MOVE for drones) seems to specialise in a particular technology.

The WSL, with the WELL, has launched a project dedicated to e-health, and Leansquare has developed an ecosystem connected to Music-Tech and is interested in logistics applications. But these organisations rely more on general digital business expertise, rather than really targeted technological expertise.

As far as digital skills centres are concerned (Technifutur, Technofutur, Technocité and Technobel), although a few focus on cybersecurity, none of them is currently offering courses leading to qualifications in advanced digital technologies. It is more important than ever that we consolidate training options to reflect the digital priorities that have been identified for the years to come. Training resulting in qualifications in the fields of the IoT, AI and cybersecurity, but also for example in AR/VR, need to be organised as quickly as possible.

It is worth pointing out that within the context of the Digitalwallonia4ai Programme, four skills centres have been tasked with establishing AI training leading to qualifications within the next few months.

This analysis essentially covers the demand for B2B applications designed to offer international development for Walloon businesses involved in sectors regarded as priorities. It does not look directly at B2C demand, nor at international demand, the detailed study of which would go beyond the scope of this document. These two elements will be put into perspective in section 5.3.

In terms of target sectors, it appears that clusters of course focus on promoting B2B commercial relationships, as the size of the Walloon market means that, apart from on rare occasions connected to exploiting niche markets, it is not possible to establish a position on a B2C market.

Stakeholders therefore specified the following priority targets:

• manufacturing industries 13 times;
• construction, health and sustainable development, 5 times each. It is worth noting that these sectors represent significant potential for jobs for Europe as a whole and for Wallonia in particular, against a backdrop of an ageing population and a growing awareness of the impact of economic activities on the environment;
• transport and logistics, distribution and the public sector – especially through the prism of Smart Cities (4 mentions each);
• agriculture (3 mentions).

Unsurprisingly, ICT, media and similar sectors are not priority targets for Wallonia’s clusters, with one exception: the Twist Cluster, which is very active in the field of digital applications for the creative industries.

Ultimately, the biggest confirmation is the clear focus of clusters on “B2B”. This observation also matches the results of the 2017 barometer of Walloon digital startups carried out by the AdN, which shows that 2 out of 3 startups focus on B2B.

Most of the technologies mentioned match the priority technologies identified by the Agence du Numérique on the basis of Gartner’s 10 main trends. To sum up, on the basis of information received from those who run the clusters, technologies can be broken down into 4 groups:

• Big/Smart Data. Analytics and artificial intelligence. Machine learning. Customisation.
• Smart production. (Co-)Robotics. Additive manufacturing. 3D printing. Machine to machine.
• Internet of Things (IOT). Smart business-specific applications.
• Virtual and augmented reality. Image processing. Augmented operators.

Alongside these 4 main groups, other more specific themes are also mentioned, including cryptography and geolocation.

All of the clusters mention digital technologies, and it is worth noting that 50% of projects submitted by clusters in 2018 and 2019 relate to the development of a digital solution in response to a specific “business” problem. If we include projects with a digital dimension as enabling technologies (Assessment of the scientific policy of Wallonia and the Wallonia-Brussels Federation, CESE reports, Internal analysis of cluster projects - SPW), this proportion goes up to 80%.

It is therefore essential that we continue to consolidate the measures first taken at the end of 2018 to encourage the incorporation of a digital vision in the work of the clusters. As a reminder, it was defined as a priority for Digital Wallonia 2 that digital technology would be put right at the heart of the work done by competitiveness clusters, which means being:

• Digital “by default”: projects should systematically incorporate the use of digital technology.
• Digital “by design”: digital technology should act as a game changer in projects.

Both the analysis carried out by Gartner and the study of the main digital ecosystems in Wallonia point towards priority fields of application, which can be summed up as follows:

The applications of AI (including Smart Data), the IoT and AR/VR for industry, health and the recreational sector.

Added to these sectors, which express a high level of demand in terms of digital technology, are these industries (both international and regional demand):

• construction (including Smart Building and Smart Cities);
• transport (mobility) and logistics;
• education and training.

Two other sectors are of particular interest to the Region, and efforts should be made to develop these in the years to come:

• the ecological transition of the economy and the optimisation of energy spending (to respond to the associated targets and commitments, including the recent Green Deal);
• agriculture (smart farming and short circuits), to respond to the growing demands of both the Walloon and international markets.

A more in-depth study in the light of the main trends of international markets when it comes to digital technology will be available in a later version of this article.

By bringing together the results of the different analyses (Supply/Research/Demand), 2 strong technological areas and 2 priority fields of application are emerging. Some are already well-organised into regional ecosystems and their development could have a significant impact on Wallonia’s economic growth.

As far as research is concerned, it would be a good idea to activate regional levers to consolidate research in these areas, working closely with businesses, taking inspiration for example from the Flemish model (IMEC).

Internet of Things

The IoT is one of Wallonia’s strengths when it comes to digital technology, both for private companies and for the region’s research capabilities. The IoT actually underpins no fewer than 5 key trends identified by Gartner, and offers potential for access to huge worldwide markets in many fields of application: industry, Smart Building and Smart Cities, surveillance and security, domotics, various embedded systems etc.

We should also point out that the IoT is a crucial element when it comes to developing the circular economy in Wallonia, as it makes it possible to monitor and trace products and materials, as well as mapping out resources, (see http://economiecirculaire.wallonie.be/ in particular).

Artificial Intelligence

Artificial Intelligence is undeniably the flagship digital technology, which will preside over the economic development of economies of the future. It presents countless opportunities and fields of application, too numerous to list here. Wallonia boasts significant advantages in this field, particularly when it comes to research. This is mainly concentrated in universities (almost 200 researchers are totally or partially dedicated to this area), and covers a range of fields including voice and image recognition, decision making, market research etc.

However, it is taking a long time for these research capabilities to be translated into applications and commercial success. Once again, it is worth insisting on the need for cooperation between research centres and businesses (especially startups) in order to make the most of Wallonia’s skills in this field. Training opportunities also need to be developed, both at universities and in terms of professional training. Some initiatives have recently been launched in this area by universities and the Forem, and these need to be consolidated.

The DigitalWallonia4AI Programme needs to become a major tool in the Region’s economic development strategy. We should also remember that AI is an absolute priority for the European Union within the context of the DEP Programme (Digital Europe Policy – Horizon Europe).

Emerging technologies that need to be promoted

It is not enough to concentrate solely on existing technologies. When it comes to other advanced technologies, there are significant development opportunities for the priority sectors in the Walloon economy, sectors that in particular have the investment capabilities and the knock-on effects that are essential for having a comprehensive impact on Wallonia’s economy. On the whole, these correspond to the clusters.

This is particularly the case for:

• immersive technologies (AR/VR), connected for example to industry, the media and, to a lesser extent, gaming (apart from serious or marketing gaming, which already has a good foundation of skills and stakeholders in Wallonia).
• additive manufacturing, which is a major asset for Wallonia’s “Industry 4.0” ecosystem, identified by the AdN.
• digital twins and simulation, which are already finding interesting fields of application in industry and construction, but still need to be developed in terms of private provision (as research is fairly well represented).
• blockchain and cybersecurity in general, for example when it comes to managing logistics, smart production or traceability for health and agriculture. But equally, if not more so, in terms of the physical and virtual security of connected objects that Walloon stakeholders bring to the market…

At this level, we need to insist on the need to develop a Walloon cybersecurity ecosystem quickly that is both coherent and specialist (for example, in AI and the IoT), failing which Walloon businesses will have to rely heavily on foreign suppliers to guarantee the security of both their own operations and the products and services that they sell.

All of these technologies constitute a cornerstone of Wallonia’s economic development and the Region’s competitiveness on the international stage if it wants to bring back the manufacturing of certain products to Wallonia, develop new opportunities for adding value and so create (or recreate) jobs.

Industry 4.0

The target set by Europe involves the manufacturing industry contributing 20% to GDP. In Wallonia, this contribution is 14%. Industry 4.0 offers an opportunity to aim towards the European target, and digital technology needs to be seen as something that offers new resources and tools to help businesses continue to operate within our region, grow and boost their competitiveness.

For Belgium, contrary to popular belief, the sector’s federation, Agoria, identified an 8% rise in employment and combined investment of 561 million Euros between 2012 and 2016 among 12 businesses that had won a “Factories of the Future” award.

In addition, Wallonia’s digital sector could benefit significantly from industrial investment in this field.

From the perspective of the Walloon digital sector, the challenge is its capacity to meet the transformation needs of manufacturing companies in order to:

• give industrial businesses the chance to use services and products supplied by local companies that can adapt to demand and react faster because of their location;
• reduce the industrial sector’s dependency on foreign subcontractors, which can potentially be more expensive and less flexible;
• help the digital sector benefit from the industrial sector’s capacity for investment, research and innovation, as this could have knock-on effects;
• promote communication between the industrial sector and the startup ecosystem to help speed up the process of bringing innovative solutions to the market;
• develop cutting-edge expertise when it comes to technologies that are not as mature in the industrial sector (AR/VR, blockchain etc.) in order to establish Wallonia as a leader in certain markets.

The health sector

There are many digital applications for the health sector and demand is booming, both locally and internationally. The ageing of the population, but also the need to tackle unexpected health situations more effectively – as demonstrated by the recent Coronavirus crisis – are the main driving forces for this evolution.

We should remember that e-health covers fields as varied and technologically advanced as telehealth, electronic medical records, 3D-printed prosthetics, intelligent textiles, MedTech, tracking etc.

Given this demand, as well as the importance of “life” technologies and biopharma for Wallonia, and drawing on a well-established ecosystem (see above), it seems that e-health digital applications should be priority areas for future development.

Other fields of application

Just like for technology priorities, existing strengths should not conceal future opportunities. A number of other fields of application deserve particular attention from Walloon authorities in order to develop the growth and competitiveness of the digital sector, whether they represent a strategic sector for the Region, or to respond to a growing/changing demand.

The main such areas include:

• construction (including Smart Building and Smart Cities);
• transport (mobility) and logistics;
• greening the economy and optimising energy spending;
• the creative and recreational industries;
• Smart Farming;
• education and trai