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Initiatives Targeted At Increasing The Competitiveness Of Other Economic Sectors With Ict

Jri Jema, member of the ITL
Vaho Klaamann, member of the ITL
Mait Marran, member of the Estonian Purchasing and Supply Chain Management Association Jri Riives, Federation of Estonian Engineering Industry

Since ICT permeates all important branches of economy, ITL has initiated several co-operation projects with other economic sectors. The following is a short overview of three co-operation projects: development of wood logistics in an e-environment, development of an Innovation Centre, and establishment of an ICT Demo Centre.

The Estonian Association of Information Technology and Telecommunications (ITL) is a non-profit organisation assembling ICT companies and education institutions. There are currently 42 companies and organisations with over 3,700 employees in the association. The turnover of companies belonging to ITL amounted to over 15 billion kroons (ca 937,500,000 euros) in 2007. Throughout its long history (the predecessor of the ITL Association of Computer Companies was established in 1993) the organisation has tried to contribute to the development of both its own and other economic sectors. In 2007, the share of GDP produced by companies belonging to ITL was approximately 10%. For the coming years, the organisation has formulated the following vision: to support the development of the ICT sector by directing its activities more outwards (abroad, including the EU) and seeking synergy between ICT companies and fields related to the ICT sector.

Elaboration of a development plan for the ICT sector
In order to make the development of the ICT sector more systematic, ITL has elaborated a document called Development Plan for the Estonian ICT Sector. The objective of the document is to give directions (primarily) to the sector itself and to its support structures for the next five years. The development defines focus areas for investment and competences to be developed. The strategy is a consensus-based document setting out directions and activities for the Estonian ICT sector. The document was completed in February 2009.
Conclusions of the ICT foresight report EST_IT@2018[1] carried out by the Estonian Development Fund considerably contributed to the elaboration of the development plan. In addition, outputs of the strategy will be used as an input for new projects in the framework of a recently launched cluster development programme[2].

Co-operation with other branches of economy
Since ICT permeates all important branches of economy, ITL has initiated several co-operation projects with other economic sectors. Some years ago, the association started a SWOT-analysis on cluster development and has carried out several surveys about the ICT landscape in Estonia. Since 2006, regular discussions have been held with representatives of associations and companies of other economic branches. As an outcome of these, several new opportunities have emerged for the application of ICT in the development of production processes and products of the so-called traditional industry.
The following is a short overview of three co-operation projects: development of wood logistics in an e-environment, development of an Innovation Centre, and establishment of an ICT Demo Centre.

Development of wood logistics in an e-environment
This project serves as an excellent example of how co-operation between companies and business associations can lead to innovative projects and solutions. In addition, the project proves that the realisation of a good idea takes time and needs incitement also from central or local government.
The project was launched in 2007, when the management boards of the Estonian Logistics Association (EL) and ITL came together with an aim to discuss co-operation potential. In December 2007, first joint seminar on general issues was held for the members of the two associations. In April 2008, another seminar followed in order to analyse specific co-operation possibilities. In the course of the seminar, a list of potential co-operation projects was drawn up. Members of the associations then picked out three projects and evaluated their development potential during a joint seminar in June 2008. These three projects were:

1) Electronic conveyance document in wood transport (a working title for the wood logistics project).

2) A common pot of e-services for logistics companies and their clients (an information environment providing information about logistics service providers for their customers).

3) Common coding systems or forest data systems allowing to save up to 3.8% of total costs.


Participants of the seminar decided that the project on electronic conveyance document had the strongest potential. The project is necessitated by the following facts: pursuant to the Forest Act, all transporters of wood must carry a conveyance document. There are approximately six million cubic metres of timber wood chopped annually in Estonia, requiring at least 350,000 shipments. Thus, there are 350,000 conveyance documents to be completed (so far, this has been done manually!) in three copies. Data maintained on paper needs to be manually entered in different information systems at three different places (at the sender of the timber, its transporter and its consignee). Since for the time being, there is no common system for the transmission of standardised information throughout the whole supply chain, much of the work is constantly doubled. Not only is the meaningfulness of manual and multiple completing of conveyance documents questionable in the e-era, it also means that data moves slowly and errors in data entering occur. This makes the whole data exchange clumsy and inefficient.

As a next step, the Estonian Forest Industries Association (EMTL) submitted, in the framework of the call for applications organised within the Structural Funds mechanism by the Estonian Informatics Centre in August 2008, an application in order to receive funding for a project entitled Development of wood logistics in an e-environment. The objective of the project is to digitise timber trade related information, standardise data structures, and improve and accelerate information exchange between different parties. This would considerably increase the efficiency of handling conveyance documents.

The pre-application was satisfied in October 2008, after which EMTL established a lead group and a working group for the project. In addition to the timber industry, the groups bring together representatives from the Ministry of Environment and transport companies, proving thus wide support to the implementation of the project.

By the end of January 2009, the initial task of the project was elaborated and procurement for the purchasing of software, hardware and testing of the solution was carried out. The final application will be submitted to the Estonian Informatics Centre in April 2009 and, upon its approval, the project will be implemented. The estimated time of implementation is 12 months, meaning that the solution will be available for use by autumn 2010.

The outcome of the project an electronic conveyance document will be the joining link between the information systems of the seller, the transporter and the customer. It will no longer be necessary to enter data manually at three places. The information system will affect all business processes of companies related to timber trade and will increase the efficiency of their work. All enterprises and organisations that form a part of the supply chain of the forest and timber industry, but also several state institutions vested with the responsibility of monitoring deals related to the purchase and sale of timber, will benefit directly from the system.

Considering the second part of 2007 as the time, when the project idea was generated, and the second half of 2010 as the time, when the project will be completed, it can be said that the duration of a wide-scale project aimed at increasing the efficiency of a specific branch of economy is approximately three years. This should be taken account in the elaboration of state-level funding schemes.

EMTL actively explores also other ways for increasing the efficiency of its sector. In September 2008, an application was submitted to the Fund for Wise Decisions[3] for carrying out a survey on macroeconomic aspects of timber transport. The general aim of the project is to increase international competitiveness of the forest and timber industry. The immediate goal of the project is to carry out a survey identifying the best possibilities for the optimisation of timber transport through improved use of transport and road networks. The survey explores ways to reduce timber-related transport and increase road safety.

The pre-application for this project, too, was satisfied and the State Chancellery advised EMTL to involve the Ministry of Economic Affairs and Communications as a partner. The final application was submitted by 26 January 2009.

Establishment of an Innovation Centre
The Federation of Estonian Engineering Industry and ITL plan to establish an Innovation Centre. For the time being, a joint protocol on development activities has been signed by the Ministry of Economic Affairs and Communications, Tallinn Technopol and the Association of Mechatronics.
Interest in such an undertaking by businesses has been analysed and deemed considerable, since enterprises regard the Innovation Centre as a necessary and promising output. Negotiations on the organisation of practical co-operation network are ongoing. The following is an overview of the idea behind the Innovation Centre.
Ensuring long-term competitiveness of Estonian entrepreneurship presumes transition to knowledge-based economy. Cost advantage that, besides our stable macroeconomic framework, has been one of the major strengths of the Estonian economic environment, is clearly no longer sustainable. Thus, enterprises that so far have relied primarily on cheap production input, need to start creating higher added value, if they want to survive and be competitive in the future. In addition, the state as a whole needs to contribute to the implementation of technologies and promotion of Estonia as a technologically advanced country.
Supporting such developments requires, however, strategies that would support the development and competitiveness of businesses and the growth of productivity. These will be the cornerstones for achieving international competitiveness of Estonian entrepreneurship. Keywords in this context include entering new markets of high-technology products, promotion of internationalisation and ensuring critical mass for the successful creation of knowledge-based society.
With competent employees and top-level equipment, the Innovation Centre will provide businesses with first class support, allowing thus to considerably improve the image of the Estonian manufacturing industry, increase the competitiveness of enterprises, and raise the level of innovation in the society as a whole.
In essence, the Innovation Centre will serve as a practical, theoretical and strategic support for production. It will be located close to production and will form a kernel of a cluster to be developed. Innovations and novel profitable processes occurring as an outcome of the synergy between the different parts of the cluster will give boost to high-technology product development.
The Innovation Centre will increase integration between companies of different fields (ICT, electronics and engineering, etc), research and education institutions and state support structures. The goals of the centre will be the following:

- to enter high-technology fields, such as space technology, aeronautics, military production;

- to lay ground for the production of mechatronics products in Estonia (robotics, equipment and mechanisms for process automatisation, sensor technology, IT solutions);

- to increase the technological capability of enterprises and the competitiveness of their production resources through the execution of orders in co-operation with the Innovation Centre;

- to reinforce processes related to product development, production planning and management, and strengthen production automatisation in enterprises;

- to ensure the capability of high-precision production in Estonia by guaranteeing respective certification service on the basis of an accredited measuring laboratory in the Innovation Centre.

The main components of the cluster development are presented in the diagram below.

Development of an ICT Demo Centre
The need to promote co-operation between Estonian ICT companies has been discussed at various forums and workshops for years, but so far without any real actions. During the last couple of years, however, a circle of more active ICT entrepreneurs have come together and, thus, a number of significant projects have been initiated. The ICT Demo Centre is the first specific co-operation project between Estonian ICT companies that aims at joint marketing and product development of ICT solutions that have been developed and implemented in Estonia.
So far, Estonia has lacked a place, where it could demonstrate software and hardware developed by different ICT companies functioning not as single solutions but as an integrated e-environment. Product or service presentations are frequently limited to serving as theoretic demonstrations either on paper or on the computer screen. They do not often offer customers the possibility to try out the solution themselves and see whether what has been promised really functions in reality; to learn, whether the solution is compatible with others; and to find out, what user skills are needed for its implementation.

The objectives of the Demo Centre are the following:

1. by showcasing functioning integrated ICT solutions, to introduce IT usage possibilities for companies;

2. to introduce the already existing eState solutions and possibilities of integrating them for state agencies;

3. to introduce Estonian eState solutions both for Estonian and foreign companies;

4. to develop co-operation between ICT enterprises in the field of product development and joint marketing, increasing thereby the export capacity of the Estonian ICT sector as a whole;

5. to establish necessary infrastructure and technological platform for the creation of the Estonian ICT test and development centre, where different ICT solutions could be elaborated, productised and tested.


The Demo Centre was built as a mini model of the society, where one can familiarize himself with ICT solutions used in different environments. There are solutions for businesses, home users, education institutions, the state, as well as for places without Internet connection and Wi-Fi area.

All companies, whose products or services can make our daily lives simpler, more convenient and inspiring, are invited to join the centre. However, all these companies have to accept the following principles:

Integration all participants are willing to integrate their solutions and systems with other solutions represented in the Demo Centre.

Unity no-one except the developer of a particular solution is entitled to take solutions and products installed in the centre out of it. The Demo Centre is not a library, where one can borrow books in order to take them home!

Common use all members of the Demo Centre can use its facilities for the organisation of presentations and demonstrations of their products and solutions for their customers.

Joint contribution all members participate in covering the expenses related to presenting and interfacing their solutions and services with other solutions in the Demo Centre.

Openness the Demo Centre is open for all companies developing ICT solutions, acknowledging its functioning principles.

Positive atmosphere the Demo Centre is not a place to dispraise the solutions of competitors, but an environment, where smooth co-operation and integration possibilities of different IT solutions are demonstrated.


In order to ensure sustainability of the Demo Centre, it is vital to pursue co-operation with the public sector and research and education institutions. Private sector efforts are not sufficient for the successful productization, marketing and export of eState solutions. First and foremost, enterprises expect the state to solve intellectual property issues of some eState solutions, promote Estonia as a successful eState through its international communication channels and to support the growth of the sectors export capacity through investment in R&D, technology education and the implementation of ICT solutions in other branches of economy.

For the marketing of the Demo Centre as well as for the exchange of ideas and coordination of activities, an appropriate e-environment will be created. Furthermore, use will be made of lemiste City advertising channels, targeted campaigns and joint marketing of enterprises. For the marketing of eState solutions, communication channels and contacts of the state and the city of Tallinn will be used.

The Demo Centre is expected to evolve into an innovation environment attracting high-level politicians and delegations, investors and foreign businesses in search for co-operation partners, but also international developers of new technologies needing to carry out proof-of-concept tests and to receive feedback from test customers.

As a conclusion, companies, business associations, the Ministry of Economic Affairs and Communications, Enterprise Estonia, as well as the Estonian Informatics Centre deserve recognition for having contributed to this joint activity. The year 2009 promises to become an interesting innovation and co-operation year the outcomes of which will be available to us already in 2010 and which will help up to survive complicated times more easily.

[2] The programme was launched and is operated by the Estonian business support organisation Enterprise Estonia.
[3] The fund is operated by the State Chancellery.

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