IAS2 Study to support the implementation of a pan-european framework on electronic identification and trust services for electronic transactions in the internal market SMART 2012/0001 ets Market analysis Workshop 29 January 2015
ets Market Analysis Objective Overall analytical framework Data collection approach Description of the ets market Analysis of market dynamics Conclusions and recommendations 2
Objective Objective Report on the current state of play and trends regarding the European Trust Services market Assessment of market functioning, identification of challenges and recommendations Scope of study is not limited to the scope of Regulation (EU) No 910/2014) 3
Overall analytical framework: What market do we want to analyse? The analytical framework for the eidas market is divided into two parts: 1) The national markets of (regulated) eid and eauthentication 2) European Market of electronic Trust Services (ets) Supply side: ets are delivered by Trust Service Providers (TSPs), which may integrate products/services from Solution Integrators, which may in turn incorporate products/services from Technology Providers. Demand side: a distinction is made between intermediary and final users Regulator: supervision of the regulated suppliers The market analysis focusses on the interaction between the supply side and demand side of the ets market. 4
Overall analytical framework: What market do we want to analyse? 5
Data collection approach: Combination of primary and secondary sources Data from primary sources - Stakeholder consultation on market figures and a number of topical issues (by means of a survey, including some follow-up interviews) - Sharing of draft report with stakeholders and WebEx for discussion Limitations to primary data collection Low response rate (< 10%) to survey, almost no figures were provided 37 supply-side answers, 45 demand side answers Timing : study was conducted between the Commission s proposed Regulation in June 2012 and the publication of the final text in August 2014 This timing implied uncertainty (development of secondary legislation, impact on national markets by developing the internal market, future of newly introduced services such as the eseal which barely exist today ) and reluctance to express views on the development of the (cross-border) EU market. 6
Data collection approach: Combination of primary and secondary sources Data from secondary sources: desk research - Identification of research reports, most interesting recent ones include: Digital Signatures Paving the Way to a Digital Europe (Arthur D. Little 2014); The Forrester Wave TM : E-Signatures, Q2 2013 (Forrester Research 2013); The Electronic Signature Market Is Poised to Take Off (Gartner 2012). - Collection of quantitative indicators on market development No relevant figures on supply side from Eurostat since NACE codes do not allow for identifying actors in the ets market Some figures of providers on the TSL were collected and aggregated. More general indicators for the demand-side were found in benchmarking reports (DG CONNECT) and at Eurostat (services take-up) Limitations to secondary data collection Overall, very little economic information is available on the ets market (mainly technical reports are available, no market intelligence reports). 7
Description of the ets market: Main characteristics (1/2) ets Market is developing since over 15 years, but no mass market of esignatures and related eservices yet. Concept of ets market needs to be broadly interpreted, since it is: Strongly heterogeneous: the market contains a large set of services which are not substitutable given their very different technical and functional characteristics. Possible market segmentations continue to evolve while the market matures and following both technological and legal developments Rather fragmented: there is a large number of actors with very different characteristics, e.g.: Larger European actors with an international customer base (e.g. Safelayer, Opentrust, GlobalSign, GeoTrust, ) Actors with activities in specific regions (e.g. Skandinavia: Advania, Net s Dan/Nem ID, ) Actors focussing on local markets (e.g. DigiDoc, e-boks.dk, etc.) Some consolidation has however already taken place, e.g. based on initiatives such as TeleTrust s European Bridge Certificate Authority ( EBCA ). Exception to this is the market of Website Authentication which is less fragmented and more global. 8
Description of the ets market: Main characteristics (2/2) Furthermore, the range of services offered by one provider can vary a lot. Some ets providers are niche-players, focussing on one sector (e.g. MediSign GmbH, focussing on medical doctors and dentists) or one service (e.g. AuthentiDate, focussing on time stamp services). Other providers have a very differentiated offers (a one-stop shop ). E.g. D- Trust (German Bundesdruckerei), offering signature cards, SSL certificates, IDmanagement, timestamping, softtokens, PKI-related products and services and many more). In general, the market is dynamic. This is for example illustrated by the increased interest by US companies in the European ets market: End of 2013: Adobe makes Echosign more robust for the EU and announces a new datacenter in Amsterdam for coping with expected increased demand March 2014: Partnership between DocuSign (US) and Opentrust (FR) 9
Description of the ets market: Supply side - actors Two categories of ets provider: established providers and new entrants Established providers (especially in the market of esignatures): Public organisations (e.g. free esignature is made available based on the official eid in Belgium) Private organisations (e.g. SK in Estonia, Safelayer, MediSign) New entrants (diversifying their activities and developing additional business in the ets market), e.g.: European Postal service operators: e.g. Francotyp-Postalia, BPost European Internet Service Providers (ISPs), e.g. using the closed network of email accounts for setting up eregistered Delivery Services (United Internet) Security network providers: e.g. Barracuda, which took over the start-up Sing Now Software vendors: service vary from a plug-in of cloud-based SaaS services provided by expert ets providers to integrating ets in their own software. E.g. I.R.I.S. Solutions & Experts S.A., Advania, SAP A specific category of new entrants are the Start-ups, especially active in the development of new (mobile) ets. Examples are e.g. Signaturit (Spain) for signatures on mobile devices, E-Sign (UK) for QR-Code based signatures 10
Description of the ets market: Supply side - evolution and profitability Analysis based on sample of 34 qualified ets providers on the European TSL (providers with ets as core activity and sufficient data available for 2008-2012): Assuming that sample is at least to some extent representative, it can be concluded that the market is growing (average compound annual growth of 6%) and profitability is increasing. These figures seem conservative compared to other sources, e.g.: - Xerfi-Precepta (FR): expects between 2013 and 2017 12.5% growth of the digitization market - Gartner (US): growth rate of 48% between 2010-2011 for the overall market of esignature software and services and a similar market growth was expected for 2012. 11
Description of the ets market: Demand side indicators EU Statistics on ets are not / no longer (*) available, therefore we used some proxies for measuring the importance an evolution of ets in Europe The availability of egovernment Services (Source: Eurostat) On average, around 40% of cross-border egovernment services are available on-line, against around 70% of the egovernment services at the Member State level. (*) Statistics on esignatures were collected by Eurostat between 2007-2010. 12
Description of the ets market: Demand side indicators The take-up of egovernment Services (Source: Eurostat) 120 100 80 60 40 20 0 Enterprises using Internet for offering goods or services in public authorities' electronic procurement systems (etendering) - 2011 Enterprises using Internet for offering goods or services in public authorities' electronic procurement systems (etendering) - 2013 Enterprises using Internet for returning filled in forms electronically - 2011 Enterprises using Internet for returning filled in forms electronically - 2013 Take-up of egovernment service by enterprises is rather high and further increasing, public procurement seems to be lagging behind (but depends on the overall proportion of enterprises offering goods and services to public authorities). 13
Description of the ets market: Demand side indicators Take-up of einvoices in a standard structure suitable for automatic processing (Source: Eurostat) The picture in the EU is quite diverse: most EU MS experienced a substantial growth; some other however (BE, EE, EL, CY, LT, NL) seem to experience a saturation. 14
Analysis of market dynamics: Supply-side: Barriers for development of ets Pre-defined possible barrier Cost of eid/ets infrastructure Diversity of standards Stakeholder viewpoint (max. 37 responses) 2 out of 3 is in favour of infrastructure sharing for increasing the cost-efficiency of delivering ets; 1 out of 2 believes this could be based on PPP. Cost savings would make it easier to launch projects, also for SMEs. Respondents tend to agree that the diversity of standards: - Reduces the interoperability between services (54%) - Reduces the cost-effectiveness of service delivery (48%) - Reduces the accessibility to the ets market (43%) Lack of regulatory framework for Value Added Services Overall, the existence of 28 different frameworks is clearly hindering cross-border electronic transactions. National examples are given of use cases that required for boosting the market (e.g. Belgium: since April 2014, it is mandatory for notaries to register electronically, as such also ensuring RoI; Iceland: electronic registration of owner ship documents by the owner) 15
Analysis of market dynamics: Supply-side: Barriers for development of ets Pre-defined possible barrier Sub-optimal alignment of EU intervention to business best practices Stakeholder viewpoint (max. 37 responses) Areas for EU public invention that were pointed out: - Technical standards - Homogeneous model for certification in all MS - Contribution to educating the market (awareness raising) Suggested approaches: - Facilitating of collaboration between MS - Definition of standards with industry involvement and demand side representatives - A Permanent Committee for regular contact with market actors. Crippling of innovation, caused by regulatory intervention Only 11% pointed out that the EU regulatory framework do not or not sufficiently allow for innovative ets 16
Analysis of market dynamics Demand-side: drivers for adoption of ets Pre-defined driver for adoption User convenience Stakeholder viewpoint (max. 20 responses) Strongly confirmed as a driver for adoption Most important dissuasive aspects: (1) need to install software; (2) need to convince the contracting party; (3) need to use specific devices instead of existing (mobile) devices. The level of convenience is- especially for digital signatures - confirmed as the decisive factor in the choice of solution (cf. Study AD. Little) Importance of preservation No pronounced agreement that the lack of availability of reliable preservation services should be dealt with for increasing the take-up of ets. Efficiency gains and cost savings Strongly confirmed as a driver for adoption. Some respondents see a particular role for the public sector in giving visibility to the advantages of ets by setting up large scale and high-visibility projects. 17
Analysis of market dynamics Demand-side: drivers for adoption of ets Pre-defined driver for adoption End-user value of applications Diversifying business models Raising awareness Stakeholder viewpoint (max. 20 responses) More than half of the respondents confirmed that the end-user value of ets could be increased by: - The availability of ets via on-line application stores - The creation of new applications - The adding of applications to existing services - The integration of ets into social media Free access to a platform that allows using a range of free and paying services is preferred over : - Free but limited access (in time or scope) with the option to pay for additional services - Paying access to a platform that allows using some services for free The following ways for raising awareness of the potential of ets are considered to be effective: - A European and/or national media campaign - Including awareness raising in student s curriculum - Organising information/training sessions at local communities; - Imposing the usage of certain public application by businesses 18
Conclusions and recommendations Market study was made while a number of previous recommendations are being implemented (e.g. need for improved interoperability, introduction of mutual recognition), but before their effect can become visible. At this moment, we can only assume a further growth and development of the ets market. The precise contribution of Regulation No 910/2014 will require further future assessment. Overall, there is currently only very little market intelligence available on ets. Some reasons: the ets market is difficult to delimitate (very heterogeneous, evolving market segmentations); For many large providers, ets is only a small part of their activities so no particular reporting on ets is available; It is very challenging to compile an up-to-date comprehensive inventory of start-ups. Recommendations for a future improved market monitoring Set-up of some kind of a market observatory for the supply side. Inclusion of ets indicators in the Community statistics on the information society (Regulation 1006/2009) see examples of indicators in our report Special Eurobarometer - ecommunications Household Survey; focussing on ets, measuring also the impact of the introduction of the e-mark U Trust, etc. The full report will be available at : http://www.iasproject.eu/ 19