The recent European law on artificial intelligence (AI) comes into forcediscusses the European AI strategy, its feasibility and costs for businesses, especially small and medium-sized enterprises (SMEs) and startups, as well as how the strategy will be implemented to promote innovation without hindering it. Intellera’s consolidated expertise in the field shows that a holistic approach that takes into account long-term sustainability, effective implementation and future technological developments is necessary for Europe to remain at the forefront of the digital race and regulatory innovation.
Giovanna Galasso is a partner at Intellera Consulting.
Sara Mancini is a Senior Manager at Intellera Consulting.
Pablo Ivankovich is a Senior Partner at Intellera Consulting.
The European vision for AI is twofold: to strengthen the European ecosystem of AI excellence and to foster trustworthy adoption that preserves the fundamental rights of all. These two directives stimulate investments and regulatory initiatives such as the AI Act. The latter is at the heart of Europe’s strategy to differentiate its market from other regions, by stimulating the emergence of new approaches to research and industrial development of reliable AI solutions, without hindering innovation. The aim is to increase trust in AI solutions, thus accelerating their adoption. In parallel, the objective is to influence R&D through safeguards that facilitate the discovery of innovative and safer solutions.
While a clear regulatory framework is necessary, the economic impacts of its compliance cannot be denied, particularly with regard to the European SME ecosystem. According to Eurostat, By 2023, AI adoption in European SMEs was around 10%. This shows that while innovation is an important part of our daily lives and activities, there is still a long way to go in terms of AI adoption in industrial sectors. At the same time, it provides an opportunity to facilitate the introduction of compliant-by-design AI solutions, effectively reducing compliance costs.
What does it mean to be compliant? In a nutshell, it means
- ensure regular and centralized monitoring of existing AI solutions;
- monitor their risk level;
- collaborate and establish new and improved governance mechanisms with suppliers;
- adjust and integrate a number of roles and processes, ranging from risk management to AI solution development to data governance; and, last but not least;
- adopt specific technological solutions to support the new AI governance process.
At Intellera, we have been working in this field for years. Already in 2022, we conducted a study building on the “Study to support an impact assessment of regulatory requirements for artificial intelligence in Europe” (IARR), where we modelled the total costs on a generic SME active in the technology sector to estimate compliance costs. LWe found that such an SME would have to bear costs of between 2.7 and 1% of its turnover to comply with the AI law.. More recently, we developed a two-year action plan for a medium-sized Italian company in the public services sector to implement the necessary measures to comply with the AI law requirements in a timely manner. We estimated that approximately 5 full-time equivalents (FTEs) per year would be required across the organization, also taking into account an AI governance framework and best practices. Notably, external and technological development costs, such as the acquisition of an AI governance tool, were not included in the estimate.
To ease the compliance burden, SMEs and innovators can access a number of European and national initiatives designed to increase AI adoption and reduce compliance costs. Among the most relevant:
- THE European digital innovation hubs (EDIH), more than 220 in Europe, including around 180 specialised in AI. EDIH are the result of combined European and national funding programmes, with the aim of supporting SMEs, start-ups and public bodies in their digital transformation journey, ensuring that 90% of companies have a basic level of digital know-how and are expected to integrate regulatory compliance services.
- Testing and experimental facilities (TEF), also co-funded by the European Commission and Member States to the tune of around €60 million each, providing physical and virtual spaces to test AI solutions in real-world environments, thereby testing the innovation to ensure it is safe and robust for their own specific verticals.
- The TEFs will also contribute to the implementation of the AI law by supporting National regulatory sandboxes on AIRegulatory sandboxes on AI must be set up within 2 years, with the aim of helping SMEs and startups to experiment, ensuring compliance with existing regulations and in particular ensuring solutions comply with the AI law.
In addition to this, other European Commission initiatives on AI include: AI PactTHE AI Innovation Package, Data spaces, EDIC (European Digital Infrastructure Consortium), the On-demand AI platformAnd AI Factorieswhile encouraging the European standardisation process which operationalises the regulatory framework.
Given these initiatives, if the adoption rate of AI in companies remains low, how effective are they really? Our experience allows us to offer some insights:
- European companies will most often be users of AI rather than developers. Therefore, initiatives must adapt their services to the needs and realities of companies, promoting the transfer of technologies from European solutions to the market.
- To facilitate access, Europe needs to simplify its offer, highlighting differences and potential synergies between initiatives, thus fostering collaboration and sharing of resources, knowledge and best practices. To achieve this, effective governance and coordination between the European and Member State levels are essential.
- Likewise, coordinated and targeted communication campaigns to increase awareness and access to services are fundamental, while establishing mechanisms to monitor the effectiveness and dissemination of services available to SMEs and startups.
- Finally, it is necessary to ensure the medium and long term sustainability of these initiatives beyond European and national funding, possibly exploring private partnership or self-sufficiency mechanisms, guaranteeing the continuity of the knowledge base built.
To conclude, it is fundamental to consider the big picture. Today, artificial intelligence is at the center of these debates because it is the technology that has experienced exponential growth and evolution in recent years. However, it can be expected that in the future, other technologies such as quantum computing or advanced neuroscience techniques will follow a similar path. It is therefore of the utmost importance to define a “future-proof” approach, that is, flexible and efficient for the new and emerging innovations of tomorrow.
