Michael Tyrimos: The need for digital transformation and what Cyprus should do
07:02 - 08 February 2024
Digital transformation and technological evolution have established themselves as essential and vital factors for businesses and states and not just as complementary elements of their strategy, the Managing Director of Capacitor Partners, Michael Tyrimos has underlined.
In an interview with InBusinessNews, in the context of "IN Business Forecasting 2024," Tyrimos expressed an assessment that the field of digital transformation technologies and services will continue to grow in 2024.
According to the expert, there may be a slowdown in business spending on digital transformation and technology in Cyprus due to the economic situation in 2024, but he does not expect negative growth.
Regarding the public sector, the Managing Director of Capacitor Partners describes the need for digitisation as urgent and of primary importance. As he underlines, Cyprus must learn from the mistakes of the past and follow the example of other countries that have succeeded in digital transformation.
Regarding Capacitor Partners, which is already taking the first steps to enter markets outside of Europe, Michael Tyrimos states that its plan for 2024 is to expand abroad and introduce a new dynamic to its services through cutting-edge technologies that will enhance the ability to evaluate the way its customers operate.
How do you see the economic environment shaping up in 2024, in light of inflationary pressures, high interest rates and unpredictable ever-changing geopolitical developments?
The ongoing geopolitical tension in our region, especially the Israeli-Palestinian conflict, the Houthi attacks, and the strained relationship between America and Iran, which does not seem to be abating, have brought significant inflationary pressures, instability and the steep rise in the Economic Policy Uncertainty Index.
In particular, the situation of Cyprus is even more difficult as shipping and tourism are important economic pillars and its trade depends mainly on maritime transport.
The European Central Bank's decision not to cut interest rates sends a clear and expected message. It reflects a strategic response to the current economic climate.
Despite the initial forecast for the reduction of inflation in the Eurozone to 2.7% within 2024, we are still far from the ECB's 2% target. There are certainly fears of further escalation amid the developments I mentioned above.
Against these parameters, I expect businesses and consumers to remain cautious and limit their spending for at least the first half of the year.
What do you consider to be the biggest and most difficult challenges that the Cypriot economy will have to face?
The Cypriot economy, in addition to external pressures, is faced with multiple internal challenges. To begin with, turmoil in internal governance, increased Turkish activity in the buffer zone and management of the migration issue create significant uncertainty.
Secondly, the lagging digitisation of the public sector hinders development. Problems with the digital justice project aren't the only issue - any system can have problems getting started and I'm sure they will be fixed.
The real problem is that in many cases we rely on poor infrastructure, and key elements on which the digital transformation can be based are missing, such as the electronic identity documentation and the electronic seal which are still outstanding. As a result, businesses and citizens are heavily dependent on paper for their dealings with government.
Thirdly, finding suitable staff is a major challenge. Cyprus is experiencing a shortage of workers in sectors such as hospitality, construction and IT. This has a direct impact on the efficiency and operation of companies, as well as the intention of technology companies to use Cyprus as their headquarters since they mostly have to import talent.
Finally, inelastic prices in specific sectors, such as the purchase and rental of real estate, fueled by foreign investment, negatively affect the quality of life of a part of the local population, since in specific cases it creates distortions in the local market, increasing the cost of living for the average citizen.
Would you say that, taking into account the latest upgrades, the Cyprus economy is now well on its way to growth?
The recent upgrade is certainly encouraging, but it shouldn't lead to complacency. Our economy faces numerous challenges that require attention.
It is essential to develop and implement a sustainable, long-term economic policy that will enhance the stability and growth of our country.
Strategic investments in key sectors, ensuring the digital transition and strengthening the international image of Cyprus are a priority for attracting foreign investment and increasing economic competitiveness.
Technology and digital transformation
What do you think will be the course of the sector in which you operate in 2024?
The digital transformation technologies and services sector will continue to grow in 2024. Based on analyst estimates, global digital transformation spending worldwide is expected to reach $3.4 trillion annually by 2026.
In Cyprus, there may be a slowdown in business spending on digital transformation and technology due to the economic situation in 2024, but I do not expect negative growth.
Digital transformation and technological evolution have become established as essential and vital factors for businesses and states, and not just as complementary elements of their strategy.
Evidence of this trend is clear According to CySTAT, the Information and Communications (ICT) sector in Cyprus recorded an average annual growth rate of 15% over the last decade, outstripping all other sectors of the economy.
Also, in 2022, the sector contributed 2.33 billion euros to the country's Net Value Added, reflecting a 277% increase compared to the last decade.
Cybersecurity is a top priority
What are the biggest industry trends and changes you anticipate in 2024?
According to the data of the Digital Cyprus Survey 2023, conducted by our company, Capacitor Partners, CITEA and IMR, and in which 500 companies from Cyprus participated, cyber security emerged as a top priority for 2024.
The impressive figure of 97% of enterprises underlines the high importance of cyber security in the digital transformation process.
In addition, businesses are focusing on training their staff, with 76% recognising that the most important challenge in their transition to the digital age is the digital skills of their employees.
The strengthening of skills (upskilling and reskilling) is becoming of primary importance for the smooth transition to the digital age.
Finally, the transition to cloud technologies is constantly gaining ground, with an overwhelming percentage of 92% of businesses treating it positively. Also, the use of customer relationship management (CRM) systems is finding increasing acceptance, with 61% of businesses declaring their adoption, a significant increase from 47% in 2022.
The example of Estonia
What are the most important problems that are plaguing your sector today and the resolution of which you consider to be a priority in view of the new year?
When it comes to the public sector, the urgent need for digitisation is seen as paramount. Digitisation of the electronic signature and electronic seal, as mentioned above, must be a priority. Electronic certification for citizens and businesses is the foundation for the development of further digital services, enabling full digital execution of transactions.
In addition, Cyprus must leave behind the prejudices that prevent the transition to cloud technologies, revising views on security issues. The country needs a unified state technology infrastructure like that of Estonia, which has successfully implemented a central DXL (data exchange layer) that acts as a digital hub between the private and public sectors, and which is available in open source.
Finally, a cultural change is necessary. The country must invest and prepare for the future, and not simply react to developments. Cyber-attacks and other crises should not be the catalyst for taking cybersecurity measures or adopting digital technologies.
At the same time, addressing issues such as telecommuting, digital readiness, and the adoption of digital solutions in the business sector should not be done only as a reaction to unexpected events, such as a pandemic.
In summary, an active approach, strategic investment in digital technologies, and the development of a proactive digital culture are important factors for a sustainable future. Cyprus must learn from past mistakes and follow examples from other countries that have succeeded in digital transformation.
Increased funding for digital transformation is essential
If you could ask the Government to take specific measures or formulate policies to support/strengthen your sector, what would they be?
Increasing funding for digital transformation projects, but also speeding up their evaluation process is essential. It is impractical for businesses to remain waiting for a year for funding results to be announced, as this delays the competitiveness and development of Cypriot business.
In addition, the multiple proposals and national action plans that have been presented since the establishment of the Deputy Ministry of Innovation or even before, for cloud first policy, blockchain, AI, and so on must be effectively implemented. The value of these plans lies in their practical application and not just in their theoretical formulation.
Finally, public tenders for digitisation should focus more on quality and less on cost.
Emphasising quality, rather than lowest price, will allow the private sector to participate more actively and ensure the acquisition of more reliable and advanced technological solutions, which will contribute to long-term cost savings for the state through reduced maintenance, repair and replacements.
Capacitor Partners ' plan for 2024
What are your organisation's plans/strategy for 2024? Should we expect your further consolidation in the market? Can you tell us about any of your plans in particular?
Today, Capacitor Partners has a portfolio of corporate clients from five different countries and 10 industry sectors, including manufacturing, stock markets, retail and energy.
We offer digital transformation services, operations restructuring, product management, and research services in user experience, customer acquisition, market entry and product analysis.
Our plan for 2024 is to expand abroad and introduce new dynamics to our services through cutting-edge technologies that will enhance the ability to evaluate how our customers operate.
We are already taking the first steps to enter markets outside of Europe. At the same time, we have launched a new service, where, by using our own data structures and artificial intelligence, we can assess the prospects, problems, possibilities and weaknesses of an organisation within just one day and create based on them narrowed risk scenarios and strategy.
The impact of AI on the labour market
What role does technology, such as artificial intelligence, play and what changes is it expected to bring about in your field?
Technology is a horizontal growth and transformation factor in any industry. Artificial intelligence in particular is developing and being adopted at a rapid pace. For example, models like GPT 3 and 4 infiltrated our lives for good in just one year.
Studies by bodies such as Oxford Economics and the World Economic Forum point to the far-reaching impact of artificial intelligence on the labour market. It is predicted that in the next decade, 90% of professions will be affected in some way by artificial intelligence, while by 2030 new specialties such as Algorithm Bias Auditor, Data Detective, and Human-Machine Teaming Manager are expected to be created.
Businesses and governments must respond to these developments. Digital transformation is not simply the installation of a new system, or the use of a new technology. It is the continuous evolution of a team, a department, or an organisation in terms of technology, know-how and culture, to keep up with the speed of developments of the 4th industrial revolution and the digital age.