Digital Transformation in Russia: Problems, Challenges and Prospects

The cluster analysis, designed to search for behavioral profiles across countries in relation to digital transformation, showed five profiles with significant differences in terms of adopting digital infrastructure (see Figure 4). Dispersion of the results is also visible within the clusters: with the exception of "Leaders" and "Laggards" - combining two and three countries, respectively, the other three clusters represent one or more countries that show a certain distance from the core.

There are several explanations for the differences between the major economies of the EU. The structure of each country can be a source of differences, since the concepts of digital transformation can be better adapted to certain types of processes to a greater extent than others. However, several other aspects can be considered as barriers to interoperability and ICT standards: lack of experts with the necessary skills and government policies that could be more effective in disseminating the right information - especially among SMEs - and ensuring the most efficient allocation of resources. These possible explanations may indicate why in Germany, China and Russia with a large economy, which pays great attention to diversified processes, it became necessary to create a national understanding of the need to develop digital infrastructure in order to maintain their competitive advantages as a country.

A better understanding of the causes of differences between countries requires further research and may be the basis for future research.

2.5 Limitations

There are several constraints that may affect or distort the findings of the previous analysis. First, the variables are not collected for the specific purpose of analyzing the adoption of digital transformation and digital infrastructure. The information that Eurostat and Rosstat is looking for is broader and concerns the status of ICT use and the digitization level of the corporate sector in each country. The main research is aimed at all types of enterprises, not only at manufacturing, which means, from the point of view of digital infrastructure in production, too much weight regarding the relevance of e-commerce and insufficient coverage of the existence of cyber-business and so on. Some of the selected variables have a much wider scope than the concept of digital transformation with which they are associated. For example, a mobile Internet connection for business use to use specialized business applications refers to enterprises that provide their employees with portable devices for use at work, including email and Internet sharing, even if they can also include access to specific applications. the company. For example, in enterprises that have an ERP software package for exchanging information between different functional areas, it is possible that some enterprises may work with modules designed for specific functional areas that do not include the manufacturing process. Finally, enterprises analyzing big data from any data source suggest the possibility of obtaining information from other sources (for example, end-users), except for production processes or supply chains. Although most of the variables relate to 2017, two of them measure a different reality, as in 2016. For some countries there is a lack of data, which does not allow for a full comparison and may eventually distort the results, given that some of the missing data have been replaced by a proxy.

Regarding the factors considered, the infrastructure and maturity of big data, they do not necessarily exhaust the aspects that can characterize the country's readiness for Digital Transformation. This limitation is inextricably linked to the trade-off between depth and width of analysis, which means that the more indicators are included, the fewer countries are available. This trade-off is particularly noticeable in such a new topic as the digital economy. Technological requirements inherent in self-sufficient production processes require special skills that can have a profound effect on employment, both on demand (as employees with skills in science, engineering, technology and mathematics are required) and on offer (since some workers with traditional skills may become redundant (Smit, et al., 2016). Another limitation that needs to be recognized is that this analysis refers to a specific year 2017. Changes in this context can occur quickly, and the results may soon become outdated.

Finally, as mentioned earlier, the study does not cover the reasons for differences between countries, as it is supported by general data.

Chapter 3. International practices

For the following analysis, the second cluster obtained in the cluster analysis will be used: Russia, China, Germany, USA, Sweden and Denmark, in order to highlight common features in defining the role and place of digitalization in global industrial production. One of them interprets the current stage of implementation of information technology achievements as an evolutionary, the other - as revolutionary. In accordance with the second, digital transformation is considered as the basis of the fourth industrial revolution, since there is a clear change in the underlying technology and there are signs of a change in the technical and economic paradigm. If the first industrial revolution in the middle of the XVIII century was based on the introduction of machine production, the second in the late XIX - early XX century - on the organization of mass production, the third in the 1960s - on automation using electronic and ICT, the fourth is characterized by the development of cyber-physical systems, meaning a unity of physical and digital reality.

The concept of the fourth industrial revolution has ripened under the influence of the German program of Industry 4.0 and US achievements in the the Internet of Things. Its distinguishing feature is the widespread introduction of cyber-physical systems in industrial production, which are able to independently control and optimize it. Analyzing the complex of problems associated with this phenomenon, the founder and president of the World Economic Forum, Klaus Schwab noted in his program: "The fourth industrial revolution will have a fundamental impact on the global economy, which will be so far-reaching and multifaceted in nature that it will be almost impossible do distinguish effects within it" (Shvab, 2017).

The widespread introduction of digital technologies is considered as one of the most important conditions for increasing the competitiveness of national economies of all the countries in the world. It allows to restructure the economy, reduce production costs and cost of commercial operations, increase efficiency and reduce overproduction of goods (demand predictability), improve the quality and efficiency of services, including governmental ones, introduce new technologies and technological processes, provide new opportunities for ordinary citizens to access services, develop education and leisure activities. In addition, new perspectives for work are opening up. For example, the development of electronic commerce has resulted in the creation of 10 million jobs in China (1.3% of their total number) (Digital Economy Concept 2016: 4), and the introduction of mobile applications led to the employment of about 500 thousand people in the United States for 5 years (World Bank Group, 2016).

The introduction of digital technologies directly affects the implementation of international political interactions. In particular, the direction of digital diplomacy has been developed, involving the use of new technologies for solving foreign policy tasks.

At the same time, with the development of digital economy, new challenges have emerged, such as cybercrimes, including the theft through online transactions, theft of personal data and trade secrets. The risk that ICT intelligence can be used by governmental agencies to establish control over the citizens and commercial organizations - especially in order to promote personal interests and impose products or services to consumers. In addition, contributing to the emergence of new forms of employment, digital economy simultaneously creates costs in the form of job cuts in traditional sectors, inaccessibility of institutional social protection mechanisms for individuals and freelance workers who work remotely using through the Internet, which is fraught with serious financial, social and medical problems for elder generation.

Scientific studies provide different estimates of the economic effect of digitization. World Bank experts estimate the modern contribution of the digital economy to the formation of the OECD countries' GDP at the level of 6% (European Union, 2016). According to the calculations of specialists of the Accenture consulting company, the transformation of the ten most developed countries of the world will bring them a benefit of $ 1.36 trillion (Accenture, 2018). The European Commission estimates that GDP growth within the European Union due to the implementation of the Single Digital Market Strategy will be 415 billion euros per year (Revenko, 2016).

The degree of digitalization of national economies of the world varies a lot. Their success in this area can be evaluated differently, depending on the criteria used for the analysis. In accordance with the results of a joint study of the World Economic Forum, Graduate School of Management, Johnson Cornell University and INSEAD Business School, Singapore achieved the most success in ICT implementation, while Finland, Sweden, Norway, USA, the Netherlands, Switzerland, Great Britain, Luxembourg and Japan also became part of the top ten countries list (Baller, Dutta, Lanvin, 2016). According to a study conducted by the Spanish bank BBVA, the top ten leaders include Luxembourg, Great Britain, Hong Kong, the United States, the Netherlands, Japan, Singapore, Norway, Finland and Sweden (Camara & Tuesta, 2017). Russia was ranked 41st in the first study just after Chile, Kazakhstan and Cyprus and 51st in the second, just after Slovakia, Mauritius and Colombia.

Table 4: The place of Russia in the ranking of Index of digitalization of countries, 2012-2017 y.y.

The main objectives of the Digital Economy Agenda of the US program are positioned to create a favorable environment for the activities of American companies and to ensure the leading role of the United States in developing standards and rules of the game within multilateral formats. The Ministry of Commerce is responsible for its implementation. The coordination of the four structural units involved in this process, which are under the jurisdiction of the Office (National Institute of Standards and Technology, the National Agency for Telecommunications and Information, the US Patent Office and the Office of International Trade), is carried out by the Director of Digital Economy. The expert nominated by the Digital Economy Advisory Council established in March 2016, which includes representatives from a number of US companies, civil society and academia.

The program considers development in four directions:

1. free and open Internet;

2. trust and security on the Web;

3. innovations and new technologies;

4. access and skills (Revenko, 2017).

Free and open internet.

The US places special emphasis on the fact that one of the conditions for the development of the digital economy is the free exchange of information, which requires freedom of access to the Internet, cross-border movement of data and services. To prepare proposals for the implementation of this task, a permanent project team was created within the United States Internet Policy Project Group. In addition, the study was conducted on the economic indicators of cross-border information movement, which noted that in 2014 the share of ICT in the total volume of service exports was 54% (385.1 trillion dollars) (Grimn, 2016).

Another area of work in this cluster of issues is the reform of the Domain Name and IP Address Management Corporation (ICANN), involving the transfer of the functions of the Internet Address Space Administration (IANA) to the private sector. The preparation of related IANA proposals was completed in June 2016 (IANA, 2016). Another aspect of Washington's stimulation of the development of a national digital economy was the implementation of digital attachй positions to a number of US foreign trade missions that would be responsible for explanation of ICT regulatory measures and policies to the American business that has been implemented by the governments of the countries in which they work and also promote export of American digital goods and services. The US Department of Commerce regards the creation of such posts as one of its most important achievements. Finally, the agency is called upon to actively cooperate with the European Commission on the issues of infringement of the interests of American companies during the implementation of the Single Digital Market Strategy for Europe (its content will be described below).

Trust and security on the web.

A deterrent to the development of the digital economy is a widespread mistrust among many business representatives and ordinary users regarding the level of protection of personal data and commercial information. In this regard, the US Department of Commerce issued the Green Book on confidentiality (2010), took the initiative to develop a law on consumer privacy rights (2012), prepared a report on confidentiality in the context of big data (2014). In addition, in order to protect personal data in social networks, the private sector was asked to develop codes of conduct for the use of face recognition technology for commercial needs and information by mobile applications.

American experts believe that the freedom of international movement of information and the activities of American export companies are seriously hampered by differences in national approaches of individual countries to information protection in cross-border transactions. In this regard, one of its most important tasks for the United States is to achieve a higher comparability of approaches at the global level (of course, based on its standards) and thereby create conditions for increasing American exports.

Another line of work in the field of confidence building is addressing European concerns about the protection of personal data transferred to Washington. In this regard, the safe harbor framework agreements were concluded with the EU (2000) and Switzerland (2009), which were later replaced by agreements on the rules for the exchange of personal data for commercial purposes (approved by the European Commission and the Government of Switzerland, respectively, in July 2016 and in January 2017).

Finally, information security is a prerequisite for increasing confidence in the use of ICT. The solution to this problem is pursued by the strategy of trusted identification in cyberspace developed by the National Institute of Standards and Technology (NIST) (NIST, 2018). Its goal is to solve the problem of insufficient password security. Work on improving mechanisms and standards for authorization on the Internet is carried out in the format of the Ecosystem Identification Steering Group (IDESG, 2018). In addition, in 2012, NIST established the National Cybersecurity Innovation Center, which included representatives of government agencies, industry and scientists. Other measures used in the US include the Framework Program for Enhancing Cybersecurity of Critical Infrastructure (The White House, 2013), the preparation of amendments to the rules for encrypting communication channels and the Law on the Secrecy of Electronic Information Exchange, the publication of the White Paper on Copyright in the Digital Era.

Innovation and new technologies.

The most important area of ??work in the United States under this block of issues is the reform of the patent system. The Patent Office and the National Telecommunications and Information Agency (NATI, NTIA) reviewed the effect of copyright laws and published a Green Book on copyright policy, creativity and innovation in the digital economy (USPTO, 2013). On its basis, later were developed and published:

1. White Paper on modified products, first sale and damages (2016), which, in particular, contains a recommendation to provide courts with greater flexibility in dealing with cases of damages for copyright infringement (Washington DC, 2016);

2. proposition to organize a forum to improve the mechanism of notification and deletion of information created in accordance with the Law on Copyright in the Digital Era;

3. description of the role of state bodies in the development of the licensing market for works subject to copyright law, using the Internet.

Other tasks are to facilitate access of US companies to high technologies, reduce the cost of patents abroad and simplify the process of filing applications for their issuance. In this regard, the US Department of Commerce is pursuing a line on the harmonization of patent systems in different countries.

In the context of this block of questions, attention is paid to ensuring public access to US government agencies "open information", in particular, facilitating its search through the introduction of big data processing technologies. The Advisory Council for Commercial Information (2014) was established to develop recommendations in this area, and the Commercial Information Service (2015) was established for the development of relevant programs and web services.

Another task - ensuring the interoperability of intelligent networks and platforms - is achieved by introducing new standards and software. This goal is pursued by the Roadmap on Intelligent Network Interoperability Standards (2009) (Greer, 2014). The value of its implementation has increased with the development of the Internet of Things and the industrial Internet, to which a great attention is paid in the USA. The Trade & Commerce Department is making efforts to stimulate the market for Internet of Things devices, in particular through the use of appropriate technologies. The Green Book (2017) has been published, which contains proposals for the development of this sector (Washington DC, 2017). To implement such initiatives as the development of open access standards and the achievement of functional interoperability of platforms and devices, the Industrial Internet Consortium (2014) has been established together with The Industrial Internet Service to develop a strategy for the establishment of the industrial Internet.

The topic of cloud computing in the United States is discussed in terms of security, mobility and compatibility requirements. For this purpose, a Roadmap of technologies and standards for cloud computing has been developed, an inventory of existing standards has been conducted (NIST, 2017). Work is underway on the subject of cyber-physical systems. In this regard, a working group was created (2014), a draft Framework Document on Cyber-Physical Systems (2015) was developed (CPSPWG, 2015).

Access and professional skills.

The development of the digital economy is impossible without the availability of appropriate infrastructure, sufficient number of specialists in the field of digital technologies, including the Internet literacy of the population as a whole. As a result, a Broadband Technology Capability Program was developed in the United States, providing the installation of high-speed communication networks and the training of specialists for their service. On its implementation has already been spent over $ 4 billion allocated in the framework of the Act on the restoration and reinvestment in the US economy in 2009.

In addition to this funding, a State Initiative was implemented for broadband communications development, in which around $ 300 million was allocated to collect information for the compilation of the National Map of broadband networks (Mansfield, 2018). In 2015, the Council of Broadband Networks Opportunities was created and then prepared proposals in this area for a period of the next 2 years. In the same year, the BroadbandUSA program was launched to assist in the construction of high-speed Internet access infrastructure at the local level and to increase ICT literacy.

Since mobile and terrestrial wireless broadband communications use a limited set of radio frequencies, work is underway in the United States to allocate 500 MHz for this purpose. A proposal for the allocation of the bands 1695-1710 MHz and 1755-1850 MHz. For 5G mobile networks, it is proposed to use frequencies above 24 GHz. There are several government programs in place in the United States to train qualified professionals and increase general computer literacy, for example, the National Cyber Education Initiative.

3.3 China

The digital economy in Germany first appeared in 2010, when the European Commission (EC) adopted the Digital Agenda for Europe, which was the first of seven initiatives within the Europe 2020 strategy.

At the EU level, five main goals (headline goals) have been set for EU members to translate into national targets:

1. the employment rate: the employment rate of the population in the age group of 20-64 years should reach 75%;

2. the funding of research and development: the level of investment in research and development should reach 3% of GDP;

3. the goals in the field of climate change and energy: goals should be achieved 20-20-20: i.e. greenhouse gas emissions will decrease by 20% as compared to 1990, the energy efficiency of GDP will increase by 20% and the share of renewable energy sources will be reduced to 20%;

4. the field of education: a decrease in the proportion of people curtailing education before receiving advanced education to 10% and lower, as well as an increase in the proportion of people with higher education at the age of 30-34 years to at least 40%;

5. the area of poverty: reducing the number of people on the verge of poverty by 20 million people).

Based on the experience gained in the implementation of this document, in May 2015, the "Strategy of a single digital market for Europe" (European Commission, 2015) was adopted, which included many sections of the previous Agenda. In addition, the countries of the integration association are implementing their own national programs.

The creation of a single digital market (ECR) is carried out in three directions. The first one, "Facilitating consumer and business access to goods and services via the Internet within the entire European Union," includes the following initiatives.

1. Facilitate cross-border e-commerce. The task set by the European Commission is to develop rules that would be trusted by business and consumers. To this end, the rules for concluding contracts and consumer protection when buying any product (physical or electronic), changes are made to the Regulations on cooperation in the field of consumer protection.

2. More efficient and affordable postal delivery. European Commission conducted a study on the reasons for the high cost of parcel delivery from abroad, which hinders the development of cross-border e-commerce and is trying to develop measures to improve the transparency of the postal services.

3. Termination of unjustified blocking points on a geographical basis, which means denying users access to sites on the territory of other member states of the integration association and redirecting them to sites in the host country. The European Commission is preparing changes to EU legislation to end the practice of unreasonable blocking.

4. Improving access to digital content and improving the legal framework for copyright protection.

This problem occurs when citizens move to another country. In addition, scientists have difficulty accessing material that is subject to copyright laws. The European Commission promised to create an effective system of control over copyright infringement by reducing the burden of paying VAT. Due to the absence of a single tax rate in the EU for cross-border supply of physical goods, companies have to register and pay for it in each member state, which negatively affects the development of electronic commerce. To solve this problem, the goods purchased via the Internet abroad are subject to the mechanism of unified electronic registration and payment of VAT, a single taxation threshold is established for start-up companies, exemptions for paying this tax are canceled when importing small quantities of goods from non-EU countries (Revenko, 2016).

Work in the direction of "Creating an enabling environment for the development of digital Networks and Services" also covers a wide range of issues:

1. Bringing the rules in the field of telecommunications in accordance with the stated objectives. The European Commission believes that the development of mobile communications is necessary to redistribute radio frequencies. In particular, to completely free up the frequencies of 700 MHz and 800 MHz that are most suitable for the provision of telecommunication services and the deployment of 4G mobile networks. The regulator also encourages the creation of high-speed communication networks, especially in inaccessible areas, educational institutions and research centers. To this end, the Universal Services Directive is amended. To create harmonized rules of network neutrality, a package of documents of the single telecommunications market is adopted. On June 15, 2017, roaming charges within the EU borders were canceled.

2. Revision of the regulatory framework in the field of media services. This task is associated with the emergence of new content distribution technologies and business models. The European Commission amends the Audiovisual Media Services Directive and maintains a catalog of films of European film and television studios for use in video-on-demand platforms.

3. Compliance with the regulatory framework platforms and proxy servers, the fight against illegal content on the Internet. In the EU, they are concerned about the collection of information about users by individual platforms and its use for commercial purposes to the detriment of other market participants, as well as the presence of a large amount of illegal content on the Internet. To solve this problem, national practices are being harmonized.

4. Increased confidence and security in the process of providing digital services and working with personal data. Due to the growth of cyber threats, in particular the number of crimes using digital technologies, changes are being made to the Directive on the processing of personal data and the protection of privacy in the electronic communications sector (previously, most of its articles were applicable only to traditional telecommunications companies). A public-private cybersecurity partnership has also been initiated.

In the framework of the direction "Promoting the Maximum Growth of Digital Economy" main activities are designed to contribute to:

1. creation of an information economy. It is planned to promote the growth of investment in the development of the Internet of things, big data and cloud computing. The European Commission also supports the creation of a pan-European cloud resource, free movement of information, removal of restrictions on the place of its storage and processing;

2. increase competitiveness through interoperability interoperability and standardization. To this end, the normative document of 2010, regulating the interoperability of networks, data warehouses and devices, is updated, the Transitional Action Plan on standardization of ICT is updated. The pan-European catalog includes national catalogs of information and communication standards and specifications for interoperability;

3. e-society providing equal opportunities for all. Taking into account increasing demand for information technology professionals. The European Commission supports the efforts of EU Member States to prepare staffing, modernization of the public administration system, achievement of cross-border platform performance. Priority is given to improving public services through the Internet and improving the quality of services provided, including through the introduction of the principle of one-timeness. The possibility of creating an electronic safe at the EU level is being studied. There is a complete transition to e-procurement within the EU.

The interoperability of legal entities is also ensured, European and national portals on the subject of a single digital gateway are being combined, a full transition to compatible electronic signatures is being accelerated.