SPRING I 2014
SPECIAL!
Government
Leading
Innovation
land & people I state & society I economy & business I technology & i...
COVER
Taavi Kotka
Photo by:
Tiina-Liina Uudam
Executive publisher
Positive Projects
Pärnu mnt 69, 10134 Tallinn, Estonia
t...
6 		 Where To Go This Season?
		 Life In Estonia Recommends
8		 News
10 	 Events
The two most important international even...
51 	 Portfolio –
Marko Mäetamm
From the moment he entered the Estonian arts scene, Marko Mäetamm
has amazed audiences with...
LIFE IN ESTONIA I 2014 SPRING6
I WHERE TO GO THIS SEASON
Friday, 4 July 2014
6 p.m. The first performance of the 19th danc...
SPRING 2014 I LIFE IN ESTONIA 7
L’ELISIR D’AMORE / Opera by Gaetano Donizetti /
Premiere at the Estonian National Opera on...
aUldrich
LIFE IN ESTONIA I 2014 SPRING8
The Estonian start-up Cognuse has beaten tough competition
to be included in the r...
SPRING 2014 I LIFE IN ESTONIA 9
Crossing the Estonian border from Russia, an external EU border, was
once a time-consuming...
Estonian
ICT Week
2014
LIFE IN ESTONIA I 2014 SPRING
I EVENTS
10
The main idea behind “Change, Quick!”, an international b...
The first Nordic Digital Agendas Day – dedicated to innovations and fu-
ture plans in the field of the information society...
LIFE IN ESTONIA I 2014 SPRING12
I EVENTS
eHealth & Wellness
hackathon
25-27 April / 2014 @ Tehnopol Mustamäe
Garage48 is a...
SPRING 2014 I LIFE IN ESTONIA 13
Blocking and filtering content, passing laws that oppress government
critics and delibera...
* This conference is a continuation of the annual conference organised by
EE and the International Technology Law Associat...
The FinanceEstonia International Forum 2014 will be hosted on
17-18 June in Tallinn, Estonia. It will gather international...
Estonia As A Country
Moves Into The Cloud
And Expands All Over
The World!
Taavi Kotka
Work:
•	 Government CIO since 2013
•...
Taavi Kotka, the Estonian government
CIO, talks about taking the already suc-
cessful e-state onto a totally new level.
Na...
There is another wild idea in
relation to the state in the cloud:
start issuing Estonian e-identity
to foreigners.
This id...
But the United Kingdom is also
a much larger state…
Yes, but not by four hundred times! Moreo-
ver, in the digital world t...
Estonia:
The Little Country
With A Start-Up
Mindset
Sten Tamkivi
LIFE IN ESTONIA I 2014 SPRING20
I LAND AND PEOPLE
Ben Horowitz, co-founder and a partner of the venture
capital firm Andreessen Horowitz: Being someone reasonably
well-know...
To further speed up this sort of innovation, the state tendered the build-
ing and securing of digital signature certifica...
Marek Helm, Head of the Estonian Tax and Customs Board
SPRING 2014 I LIFE IN ESTONIA 23
Estonian Tax Board 2.0 Presents:
R...
LIFE IN ESTONIA I 2014 SPRING24
I ECONOMY AND BUSINESS
What is a Real Time Economy and
what does it mean in the Estonian
c...
Tax declaration in
Estonia is online
SPRING 2014 I LIFE IN ESTONIA 25
actually justified in receiving money back.
In other...
LIFE IN ESTONIA I 2014 SPRING26
I ECONOMY AND BUSINESS
The term “legacy system” came into use in
the 1990s when it started...
SPRING 2014 I LIFE IN ESTONIA 27
Most of our world-leading e-health solu-
tions were created 10-13 years ago. The ar-
gume...
LIFE IN ESTONIA I 2014 SPRING28
I ECONOMY AND BUSINESS
“It doesn’t happen every day that twenty-five businessmen join forc...
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
Life in Estonia (Spring 2014 issue)
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Life in Estonia (Spring 2014 issue)

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Estonians are e-believers. We are proud to be pioneers and leaders in e-government. We have developed and implemented innovative solutions that improve the lives of millions, and we intend to develop more.

In Estonia we can see a version of the interconnected and computerized future that is inextricably a part of the fundamental operations of society: 25% of the electorate votes online, nearly 100% of prescriptions and tax returns are done online, as is almost all banking. Estonians have given 140 million digital signatures, and last December, Estonian and Finnish PMs signed the first international treaty digitally. Adding to this near 100% broadband coverage and countrywide Wi-Fi, Estonia is one of the most wired countries in the world.

As a country so dependent on digital solutions, the whole of ICT infrastructure must
be regarded as an “ecosystem” in which everything is interconnected. It functions as
a whole, thus it needs to be defended as a whole. The more digitized we are, the more
vulnerable we are. It is therefore crucial to understand that cyber security is not just a matter of blocking the bad things a cyber attack can do; it is one of protecting all the good things that cyber insecurity can prevent us from doing – in other words, cyber security should not be seen as an additional cost but as an enabler, guarding our entire digital way of life.

Find out more: www.businessinestonia.com

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Life in Estonia (Spring 2014 issue)

  1. 1. SPRING I 2014 SPECIAL! Government Leading Innovation land & people I state & society I economy & business I technology & innovation I culture & entertainment I tourism The e-Tiger Continues To Growl Taavi Kotka: Estonia Moves Into The Cloud Hot #EstonianMafia Start-Ups Arvo Pärt's Music Emanates Love Cleantech Innovation Estonia Aims For Real Time Economy
  2. 2. COVER Taavi Kotka Photo by: Tiina-Liina Uudam Executive publisher Positive Projects Pärnu mnt 69, 10134 Tallinn, Estonia think@positive.ee Editor Reet Grosberg reet.grosberg@ambassador.ee Translation Ingrid Hübscher Ambassador Translation Agency Language editor Richard Adang Design & Layout Positive Design Partner SPRING 2014 I LIFE IN ESTONIA 3 In Estonia we can see a version of the in- terconnected and computerized future that is inextricably a part of the funda- mental operations of society: 25% of the electorate votes online, nearly 100% of prescriptions and tax returns are done on- line, as is almost all banking. Estonians have given 140 million digital signatures, and last December, Estonian and Finnish PMs signed the first international treaty digitally. Add- ing to this near 100% broadband coverage and countrywide Wi-Fi, Estonia is one of the most wired countries in the world. As a country so dependent on digital solu- tions, the whole of ICT infrastructure must be regarded as an “ecosystem” in which everything is interconnected. It functions as a whole, thus it needs to be defended as a whole. The more digitized we are, the more vulnerable we are. It is therefore crucial to un- derstand that cyber security is not just a matter of blocking the bad things a cyber attack can do; it is one of protecting all the good things that cyber insecurity can prevent us from do- ing – in other words, cyber security should not be seen as an additional cost but as an enabler, guarding our entire digital way of life. However, even though we cannot take security issues lightly, they cannot be used as an excuse to limit freedom of expression. Freedom and security need not contradict each other: on the contrary, secure online interactions, enabled by a secure online identity, is a precondition for full internet freedom. The freedoms we value are equally valid online as well as offline. Those of us, for whom democratic values are important, want to find a balance be- tween security, privacy and free flow of informa- tion. An encouraging example is Estonia, where all residents are provided with a secure e-services system while Estonia has also been ranked as the first or one of the first in Internet freedom for sev- eral years in a row. Cooperation has been the guiding principle of our IT success. As we prepare for the new opportunities and challenges that will arise in the coming years, we recognize that cooperation with and among the Baltic Sea states and in transatlantic and inter- national forums will be crucial to our success. We are stronger and our reach is wider when we work together and combine our efforts in pursuit of our common goals. I am glad that the Estonian ICT Week 2014 will seek to demonstrate the interconnection between innovation and the culture of start-up companies, the awareness of net neutrality issues and the ca- pability to implement IT solutions within states and over state borders. Toomas Hendrik Ilves President of the Republic of Estonia Estonians are e-believers. We are proud to be pioneers and leaders in e-government. We have developed and implemented innovative solutions that improve the lives of millions, and we intend to develop more.
  3. 3. 6 Where To Go This Season? Life In Estonia Recommends 8 News 10 Events The two most important international events to be hosted in Tallinn are the international information and communications technology week “Estonian ICT Week 2014”, from 23-30 April and the FinanceEstonia International Forum 2014, from 17-18 June. 16 Estonia As A Country Moves Into The Cloud And Expands All Over The World! Taavi Kotka, the Estonian government CIO, talks about taking the al- ready successful e-state onto a totally new level: Estonia has an ambi- tious plan of moving the state into a data cloud spread all over the world. In addition, with the help of ICT, there can well be ten million Estonians by 2020 instead of the current one million. 20 Estonia: The Little Country With A Start-Up Mindset Sten Tamkivi, now an EIR at Andreessen Horowitz, who became known as the Chief Evangelist of Skype, tells the story of Estonia’s IT success. 23 Estonian Tax Board 2.0 Presents: Real Time Economy The famous Estonian e-Tax Board has been admired and set as an ex- ample all around the world. Where else can you submit your tax return in just a few clicks and all declarations online without spending days on end filling out paper forms? Marek Helm, Head of the Estonian Tax and Customs Board, claims that although our e-Tax Board is admired all over the world, the time is ripe for some qualitative changes. 26 What To Do With Legacy? Implement No-legacy Policy Estonia wants to introduce a no-legacy principle, which would require us to renew all the state IT systems and technologies after a certain amount of time, to keep in line with the ever-changing environment and development of technology. Aet Rahe, Head of State Information Systems Department, Ministry of Economic Affairs and Communica- tions, introduces the policy. 28 The Estonian Government Is About To Boost Seed Investments In Estonia In 2014 EstBAN is an umbrella organisation for business angels and business angel groups seeking investment opportunities in Estonia and its neigh- bouring regions with an aim to grow the quantity and quality of local seed stage investments. Signe Viimsalu, CEO of EstBAN, gives an over- view of the main goals in 2014. 30 VitalFields Helps Farmers Be More Efficient The Estonian start-up VitalFields, which offers web-based services for farm management, accurate weather and plant disease forecasting, challenges the outdated view that farmers are remote from technology and somewhat wary of it. The CEO of VitalFields, Martin Rand, says that agricultural enterprises are in fact very open to new solutions. 32 The Success Story Of ZeroTurnaround Having to date financed its rapid expansion with sales profits, Zero- Turnaround announced at the beginning of March that it has attracted six million dollars of growth capital. 34 Pipedrive – Estonian Company in Shaq O’Neal’s Investment Portfolio The Estonian company Pipedrive has developed valued customer man- agement software which provides wise and practical help to any sales- man. Recently, the Silicon Valley technology guru Vivek Ranadive and the former star basketball player Shaquille O’Neal invested in the company. 36 Estonia Can Change The World, Will It? Carl Pucci of Datel Ovela, the subsidiary of Datel AS, acknowledges Estonian ICT technologies, many of which would be an excellent fit for the global market. I CONTENT SPRING_2014 LIFE IN ESTONIA I 2014 SPRING4
  4. 4. 51 Portfolio – Marko Mäetamm From the moment he entered the Estonian arts scene, Marko Mäetamm has amazed audiences with his productivity and overflowing sense of fun, which may border on the provocative or reach painful integrity. He never tires of surprising the audience and, quite possibly, himself. 62 Sounds Emanating Love At the turn of May and June, four concerts of Arvo Pärt’s music will be performed in Washington D.C. and New York. The Estonian Philhar- monic Chamber Choir and orchestra will fly over the ocean, the recent Grammy-winner Tõnu Kaljuste will conduct and the composer himself has helped to put the programme together. What is the secret behind the music of the most well-known Estonian? Life in Estonia tries to find the answer. 68 Jazzkaar – More Than Just A Festival The biggest Estonian jazz festival – Jazzkaar - will celebrate its 25th an- niversary this year, marking an important cultural milestone. Let’s cast a look at the history of the festival. 70 Estonian Song And Dance Celebration Touches Hearts The Estonian Song and Dance Celebration is a unique event that brings together a giant choir of 25,000 people every five years for a weekend in July. More than 100,000 people enjoy the concerts and sing along with the most popular songs. This summer the theme of the Song and Dance Celebration on 4-6 July is “Touched by Time. The Time to Touch.” 73 Lottemaa Welcomes Visitors Beginning In July There is Walt Disney’s original theme park Disneyland in southern Cali- fornia in the USA, and in Paris in Europe, and Astrid Lindgren’s World in Sweden. Finland, our neighbour, has Moomin World. In July, Lotte, a cartoon character cherished by Estonian children, will spring to life in the theme park Lottemaa, built at the site of a former Soviet missile base near Pärnu.  77 Estonia In Brief 78 Practical Information For Visitors 38 Next Silicon Valleys: Small Estonia Has Big Ideas Nigel Cassidy from BBC visited Estonia for innovative start-ups and, among other things, found the Stigo scooter. He saw it, drove it, and liked it. 41 Nordic Cleantech Open The third edition of the Nordic Cleantech Open competition saw a re- cord-breaking 107 cleantech companies applying. An international jury of more than 50 influential representatives of multinational companies and venture capital firms selected the top 25. Out of the 11 impressive Estonian cleantech start-up companies which entered the competition, Cityntel and Stigo both made it to the top 25. 43 Startup Wise Guys On The Hunt For B2B Start-ups The Estonia-based start-up accelerator Startup Wise Guys is about to commence its new programme, Business Tech. For the first time, they are looking specifically for B2B start-ups only. Life in Estonia met with Mike Reiner, the co-founder and managing director of Startup Wise Guys to find out more about the guys. 46 GameFounders: We Believe In The Gaming Industry GameFounders is the first European business accelerator exclusively working with game studios. The accelerator was started in 2012 and, in the past two years, it has become a considerable player in the game industry. 47 How Do We Fix Maths Education? “I hated maths”– this is something we often hear from former school leavers. The problem is not unique to Estonia. The British educational vi- sionary Conrad Wolfram has developed a programme called Computer- Based Math, and Estonia is the first country in the world to implement this programme in schools. 49 ProgeTiger, Lego Robots And Computer-based Math Conquer Schools “We need a smarter workforce,” says Ave Lauringson, ICT skills coordina- tor at the Ministry of Economic Affairs and Communications. Life in Esto- nia asked her to give an overview of smart initiatives in Estonian schools. SPRING 2014 I LIFE IN ESTONIA 5
  5. 5. LIFE IN ESTONIA I 2014 SPRING6 I WHERE TO GO THIS SEASON Friday, 4 July 2014 6 p.m. The first performance of the 19th dance celebration Puudutus (The Touch). Tallinn, Kalev Central Stadium. Saturday 5th of July 2014 11 a.m. The second performance of the 19th dance celebration Puudutus (The Touch). 2 p.m. Procession. 8 p.m. The first concert of the 26th song celebration Aja puudutus (Touched by Time). Tallinn, Song Festival Grounds. Sunday 6th of July 2014 11 a.m. The third performance of the 19th dance celebration Puudutus (The Touch). 12 a.m. The second concert of the 26th song celebration Puudutuse aeg (The Time to Touch). Tickets are available at Piletilevi for 4 – 50 Euros. 2014.laulupidu.ee/en/ MEDEA / Ballet by Gianluca Schiavoni / Music: Igor Stravinsky, Alfred Schnittke and Dead Can Dance Libretto by Marco Gandini World premiere at the Estonian National Opera on 13 March 2014 Conductor: Vello Pähn Choreographer and Stage Director: Gianluca Schiavoni (Italy) Set Designers: Maria Rossi Franchi (Italy) and Andrea Tocchio (Italy) Costume Designer: Simona Morresi (Italy) Medea, a sensual and powerful princess of mythical Colchide (a region corresponding to present Georgia), is a seductive sorceress, who aban- dons her country and her family for her love of a strong and beautiful man called Jason. Yet he is not only interested in Medea’s love, but also in getting hold of the Golden Fleece, a symbol for power. Medea gains Jason’s love by giving him this symbol of power. Soon she gives birth to two boys. Once she realises that Jason is betraying her with the King of Corinth’s daughter, Glauce, she decides to take revenge by killing Glauce and her own children. Medea Photo:ChrisMännik
  6. 6. SPRING 2014 I LIFE IN ESTONIA 7 L’ELISIR D’AMORE / Opera by Gaetano Donizetti / Premiere at the Estonian National Opera on 15 May 2014 Conductors: Vello Pähn and Risto Joost Stage Director: Georg Malvius (Sweden) Designer: Ellen Cairns (Scotland) In leading roles: Kristel Pärtna, Kadri Kipper, Oliver Kuusik, Merūnas Vitulskis (Lithuania) “L’elisir d’amore” is one of the most frequently performed Donizetti’s operas together with “Lucia di Lammermoor” and “Don Pasquale”. It combines a touching love story and a hilarious comedy with lightness, sparkling wit and beautiful music, including the well-loved tenor aria “Una furtiva lagrima”. Its premiere in Milan in 1832 was a triumph and secured Donizetti’s place as one of the leading Italian opera composers of his day. “L’elisir d’amore” relies on the traditions of the 18th century opera buffa and offers an ear-tickling delight for all lovers of 19th cen- tury Italian bel canto. Georg Malvius has directed more that 60 plays, 70 musicals and 20 ope- ras in Sweden, Finland, Norway, Denmark, Germany, England, Holland, Italy, Luxembourg Austria, Monaco, Hungary and elsewhere. In Estonia, Malvius has staged 14 musical and drama productions. www.opera.ee May 15 at 7 pm Estonia Concert Hall May 16 at 7 pm Jõhvi Concert Hall Tickets from Eesti Kontsert, Piletimaailm and Piletilevi In cooperation with Tallinn Philharmonic Society Akiko Suwanaiviolin, Japan Tallinn Chamber Orchestra Conductor Kristiina Poska Season Closing Concert concert.ee Eesti Kontserdi suurtoetaja Ametlik autopartner hooaja peatoetaja JULY 20–27 2014 Presenting the Ukrainian National Opera! Verdi “DON CARLOS“ Lysenko “NATALKA POLTAVKA“ Bellini “NORMA“ OPRERA GALA CHILDREN GALA Artistic director of the festival: Arne Mikk saaremaaopera.eu facebook.com/saaremaaopera Vello Pähn Photo:SuiradO
  7. 7. aUldrich LIFE IN ESTONIA I 2014 SPRING8 The Estonian start-up Cognuse has beaten tough competition to be included in the reputable US business accelerator DreamIt Health. Cognuse develops and distributes innovative evaluation and therapy solutions meant for cognitive rehabilitation patients. A total of 120 companies applied to be accepted into the DreamIt Health accelerator and only the nine strongest were selected. “With the help of DreamIt Health, Cognuse is taking significant steps closer to health insurance and medical care suppliers in its sector. It also enables us to get access to research and development institutions and larger investments which are necessary for growth,” explained Andres Mellik, one of the founders of Cognuse. Currently the main focus of the com- pany is product development and implementing business models. “We are focusing on the US, Scandinavian, Japanese and Estonian markets, and the training programme developed by us is already being used by 20 hospitals and more than 100 private patients,” added Mellik. Cognuse was founded in 2010, and in 2013 it participated in Acceler- ace Life, an accelerator of the Tallinn Tehnopol Science Park targeting health technology companies. The main activity of Cognuse is the de- velopment of training programmes for cognitive rehabilitation and the adjustment of those programmes for various devices, such as iPads and smart phones. In addition, the company has developed different appli- ances for the use of rehabilitation programmes. Cognuse products are meant for medical institutions and private patients.  Enterprise Estonia announced that the Estonian national booth and Garry Kasparov’s simultaneous chess event attracted heightened attention at the world’s largest mobile trade fair, Mobile World Congress 2014, which took place in Barcelona from 24 – 27 February. According to Martin Hirvoja, Member of the Management Board of En- terprise Estonia, the fair in Barcelona clearly demonstrated that partici- pating in large trade fairs with a national booth is beneficial for Estonian entrepreneurs in finding useful contacts, as well as for increasing aware- ness of Estonia as a country. “It is great news that Regio is the first Estonian company to win a Global Mobile Award prize, with the Reach-U solution Demograft. This respect- ed award demonstrates that Estonian exporters need such support,” added Hirvoja. Enterprise Estonia also used the fair to hold a networking event, with Garry Kasparov as its magnet. A few lucky people were chosen to play chess with the legendary chess player. Kasparov’s simultaneous chess event turned out to be one of the magnets of the entire fair and at- tracted representatives from IBM, Tata Consultancy Services, Deutsche Telekom and many others to the event. Kasparov has always had good relations with Estonians and he chose Estonia to be the first country to launch his project of teaching chess at schools. The Kasparov Chess Foundation Europe programme started in 2012 and has become very popular. Also, Kasparov announced his candidacy for the 2014 FIDE Presidential Elections in Tallinn, Estonia. “Garry Kasparov’s simultaneous chess event with leaders of companies was an innovative way to introduce Estonia to large international ICT corporations. The event organised by Enterprise Estonia significantly helped Estonia to stand out and receive positive attention. It is usually extremely difficult to stand out from others at large trade fairs, and therefore we definitely ought to organise similar events in the future,” said Andrei Korobeinik, President of the Estonian Chess Federation, who moderated the event. According to Tony Rivshin, the owner of Topconnect – one of the larg- est Estonian exporters – the special event with Kasparov was the most interesting occasion at the entire trade fair. Nearly 100,000 visitors came to Mobile World Congress this year. Par- ticipants in the joint Estonian booth included software development companies and IT service providers. Garry Kasparov helps to promote Estonia Estonian start-up develops training programmes for cognitive reha- bilitation at an American business accelerator I NEWS Andrei Korobeinik and Garry Kasparov Photos:LindaUldrich
  8. 8. SPRING 2014 I LIFE IN ESTONIA 9 Crossing the Estonian border from Russia, an external EU border, was once a time-consuming, uncertain wrangle lasting days and resulting in bribery, illegal sales of spots in queues, pollution, traffic safety issues and losses for freight carriers. The GoSwift Queue Management Service for motor vehicles allows driv- ers to book a time to cross the border, thereby creating a more efficient system, as drivers do not have to wait in long queues. Using the GoSwift system, trucks and cars can now drive to the border just before the registered border crossing time. Drivers can wait at designated waiting areas where toilets, showers, dining areas and free WIFI are available, proceeding as scheduled to cross the border easily and on time. By al- locating a specific time and date for the applicant to cross the border online, GoSwift has created minimum waiting times, cleaner surround- ings near border crossing points and considerably more movement of cars and trucks due to online efficiency. The service has been implemented on the borders of Estonia, Lithuania and Russia. The system saves Estonian road transportation companies four million euros a year. According to Hannes Plinte, CEO of GoSwift, drivers have already got used to the convenience of the online reserva- tion system for border crossing, which has been in operation for two and a half years. Nobody has to queue for long hours any more, and the average border crossing time now is one hour. In 2013, GoSwift won the World Summit Award (WSA) in the category of e-Government & Open Data. According to Ken-Marti Vaher, the Es- tonian Minister of the Interior, it took a bold and demanding client, as well as a result-oriented developer to create such a good e-solution. “It is a great honour to see the high standard of e-solutions being created by Estonia and for one of our projects to receive recognition from inter- national experts within the UN and the World Summit Award,” he said. The GoSwift Queue Management Service has been used to queue vehi- cles at the Estonian-Russian road border since 2011. In 2012 the service was launched in Russia and in the summer of 2013 was also opened in Lithuania. Besides border crossings, GoSwift can also be used at tourism sites and to manage ferry queues: basically wher- ever there are queues. Since June 2013, GoSwift service has also been used at the Tallinn TV Tower pilet.teletorn.ee, where customers can book a time to enter the tower online instead of having to queue outside. Weekdone, an Estonian start-up which aims to become the #1 app for managers to monitor and manage their teams, won the Slush Pitching Competition and raised $200k in new fundin from a group of in- vestors led by KIMA Ventures. Weekdone, launched in 2013, is an easy yet powerful tool for managers to track what’s happening in their teams and an opportunity to give immediate feedback to their employ- ees. In essence, it is a hassle-free weekly em- ployee status report, dashboard and feedback system. In November 2013, the company won the Slush Pitching Competition in Finland among 1,300 start-ups, 400 of whom had ap- plied to pitch. According to the winning pitch, the best part of this tool is that it is suitable and easy-to-use for both managers and em- ployees, making life easier for managers and teams more productive. At the end of 2013, Weekdone also closed their next investment round of $200k. It was led by Jérémie Berrebi’s and Xavier Niel’s KIMA Ventures, one of the world’s most active an- gel investors. The round also included exist- ing investors: Skype/Kazaa founding engineer and chief architect Ahti Heinla, the Rubylight venture fund, and Taavi Lepmets, a former backer of Odnoklassniki, Russia’s largest social network. The round brings the total raised by Weekdone to $290k. “I have managed and I am still managing many companies,” said Jérémie Berrebi of KIMA Ven- tures’ investment in the Estonian company. “I really think weekly reporting is the most impor- tant thing a manager needs to request from his team. It’s not always easy, but with a tool like Weekdone, it’s becoming fun for everyone.” Recently, Weekdone grew its team from three to six people and set up an office in New York City. These moves follow a recent ramp-up in sales: almost a third of Weekdone’s paying cus- tomers started their subscriptions in October. Weekdone has seen a lot of new uptake on mobile platforms, with iPhone and iPad be- ing available for some months. “We believe that the future of many communication tools is mobile, moving with you wherever you go. Both leaders and team members are giving up PCs and switching to mobiles for many tasks. We already get many more registrations from mobile devices than from web browsers and PCs,” said Kaljundi. This year Weekdone launched their real-time Buzz timeline activity feed, which is now used for internal daily communications among many users. “Weekdone is not just about manage- rial reporting, but also about employee-to-em- ployee communications and making sure your co-workers know what you are doing and are able to help you,” said Kaljundi. “Checking Buzz helps you to keep up to date on the pulse of your company.” weekdone.com GoSwift – online reservation system for border crossing Estonian Start-up Weekdone Announces $200K Investment Photo: Sami Heiskanen
  9. 9. Estonian ICT Week 2014 LIFE IN ESTONIA I 2014 SPRING I EVENTS 10 The main idea behind “Change, Quick!”, an international business trans- formation conference, is well expressed by Gartner, the world´s leading technology research company, whose Vice President, Stephen Prentice, will deliver the conference´s keynote presentation. We now live in a world where “Every budget is an IT budget. Every company is an IT company. Every business leader is becoming a digital leader.” ICT is an integral part of virtually everything that we do nowadays; it is visibly changing how people behave, think and do business. The main question for more and more entrepreneurs from all walks of life is how to make use of the opportunities provided by contemporary technology and not lag behind. This is exactly what “Change, Quick!” is about. The conference focuses on using ICT to transform business models in other sectors so that they become more efficient, and meet the needs of the changing world and increasingly tech-savvy clients. A large part of the conference day is dedicated to insightful case studies from a wide range of sectors, particularly “traditional” ones. Although at first sight it´s maybe not clear what ICT has to do with wooden floors or growing ce- real, ICT can be the key component. For example, the Estonian company Bolefloor is the world’s first industrial-scale manufacturer of hardwood flooring with naturally curved lengths that follow a tree’s natural growth. This is achieved by combining wood scanning systems, tailor-made CAD/ CAM developments, and innovative optimization algorithms. Before Bole- floor, such floors could only be produced by an extremely limited number of dedicated craftsmen. Another company, Trigon Agri, is able to control virtually everything that goes on in their vast cereal fields in Poland with- out having to physically leave Estonia: ICT allows them to work smarter and lower costs considerably. “If you want to become a big player on a global scale, it is important to see ICT as an investment not as an expense”, says Jüri Jõema, the CEO of the Estonian Association of Information Technology and Telecommunica- tions (ITL), the main organiser of the conference. “On the other hand, ICT is not something-in-itself and this is precisely why we talk about business models in this conference. You have to think about your entire business process before you make an investment.” What “Change, Quick!” aims for, therefore, is to support better decision-making and, in most cases, this doesn’t mean buying the most expensive solution available. The other highlights of the conference day include: The Gartner keynote offers participants an opportunity to benefit from the very best in terms of the world´s technology research and to find out where ICT´s influence on other sectors is likely to take us in the coming years; An on-stage development takes place throughout the day, engaging participants in a real change process: a dream team of business and tech experts, led by Yrjö Ojasaar (Solon Partners) and Marko Kokla (Virtuaalettevõte), will work on finding a solution to one company´s real business problem; More case studies offering guests both inspiration and knowledge, including the Estonian Mafia´s Startup Superstars: guests can step into Fits.me’s virtual fitting room for online retailers based on shift-shaping robots, learn how TransferWise has managed to revolutionise international money transfers and what has made Fortumo’s mobile payments a huge success in 79 countries. Joni Lehtonen, Tieto’s Vice President, will focus on state-of-the-art Indus- trial Internet based-on-use cases in Field Engineering and at the service level. The conference’s Demo Area is the place for practical demos and hands-on access to novel technologies and the newest gadgets; The Executive Evening at the Estonian National Opera will offer some seri- ous networking, kick-started by an opening discussion by special guests. The moderators of the event are Jarmo Eskelinen (Forum Virium Hel- sinki, CEO and Chair of the European Network of Living Labs) and Yrjö Ojasaar. “Change, Quick!” is co-organised by ITL and the Baltic Innova- tion Agency.  Nature in combination with leading technology Bolefloor´s unique hardwood flooring continues to impress the world. Their floors can be found in the showrooms of noted fashion designers, as well as in the residences of Apple executives in San Francisco. CHANGE, QUICK!24 April / 2014 @ Tallinn University www.ictconfestonia.com From 23-30 April, Tallinn will host the international information and communications technology week “Estonian ICT Week 2014”, held on the initiative of the Enterprise Estonia Foundation (EAS), which will focus on entrepreneurship in technology as well as topics relating to the public sector. Further- more, the week will be filled with receptions and meetings designed for guests of ICT Week, aimed at contributing to cooperation both in Estonia and worldwide. Estonian ICT Week aspires to become an annual top event in the field of ICT in the Baltic and Nordic area and hopes to attract opinion leaders in the field, entrepreneurs, risk investors, major foreign officials and representatives of international organisations. 24.04 ICT Week
  10. 10. The first Nordic Digital Agendas Day – dedicated to innovations and fu- ture plans in the field of the information society, focusing especially on e-government – will bring together government CIOs and experts from all over the Nordics. They will be sharing their main lines of activities and will introduce ambitious plans for the next 10 years. Just as Singapore and South Korea are featured at every international ICT event in Asia, the Nordics have been the main trend-setters in Eu- rope. Northern European countries are implementing more and more incredible IT solutions that completely change their citizens’ interactions with their countries, and Estonia has been showing the way to the rest of the world. Estonia is known for having the first e-government and first successful implementation of the digital signature, and Denmark for its successful e-invoicing system. At this forum, each country will introduce their crazy yet necessary ide- as that deal with real challenges of today, ideas which could prove to be valuable for others. The moderator for the event, Siim Sikkut, ICT Policy Adviser at the Government Office of Estonia, and Taavi Kotka, Estonian government CIO, provide previews of what Estonia’s message is going to be at the event: Global Information Society Institute (GISI) Strength lies in cooperation. Technological and human readiness to adopt new solutions has been the foundation for the GISI, which will launch in 2014, and which, in addition to addresses by specialists and politicians, will provide opportunities to offer scientific information and ideas in the field of information societies. Digital market across countries It’s true that success breeds success, and this is why successful and ground-breaking solutions from Estonia keep on coming. We have al- ready started cooperation with Finland in cross-border digital signatures and e-services, i.e., we’ve created an actual unified digital market. The intention is to extend this cooperation to other countries. No-legacy principle and Real Time Economy Estonia has set the goal of replacing many of the existing e-services with new and improved ones. Estonia wants to introduce a no-legacy principle, which would require the rebuilding of all state IT systems and technologies after a certain amount of time, to keep up with the ever- changing environment and development of technology. Estonians can already file their taxes in a couple of minutes through a web interface, but we intend to radically reform and automate the whole tax collection system. The Real Time Economy is a new trend in the world, with Esto- nia still leading the way. Education and healthcare Two areas of public services have particularly big plans for changes. In education, the goal is to use technology to make every class more interesting and personalised for each student. In the healthcare field, the main objective is to make services more pre- ventive, accessible and directed towards specific groups. Estonia wants to introduce remote services, such as telemedicine and care, to reduce the need for physical interaction and make it possible to use services from a distance. Another idea that is being bounced around is how to make the e- health information system a platform where a person can gather in- formation about herself with all kinds of devices, apps and solutions, enabling doctors to use this information for medical, especially preven- tive, purposes. What happens to the Internet? President Toomas Hendrik Ilves was recently appointed by The Internet Corporation for Assigned Names and Numbers to serve as the chairman for the group figuring out what Internet governance should look like in the future. Estonia’s goal is to help create and apply solutions that guar- antee a free and open Internet, including a better multi-stakeholder model. Country without territory Since most of the crucial services in Estonia can function digitally, there are talks of a new concept: a country without a territory. This means that the Estonian services landscape – especially critical public services and systems – can in emergency cases function in the cloud, without a physical territory. An ambitious idea that will be discussed at the ICT Week is the concept of e-residency. “For the rest of the world to be able to benefit from our e-solutions, we want to provide the opportunity for all foreigners to get an ID-card and Estonian e-identity in the near future,” says Kotka. In addition to the topics mentioned above, Nordic Digital Agendas Day will bring many more to the table. Which of the ideas are held in com- mon by several countries and where the best cooperation opportunities lie will be revealed at the conference. Nordic Digital Agendas Day 25 April / 2014 @ Swissôtel Tallinn Organised by the Ministry of Economic Affairs and Communications SPRING 2014 I LIFE IN ESTONIA 11 25.04 ICT Week
  11. 11. LIFE IN ESTONIA I 2014 SPRING12 I EVENTS eHealth & Wellness hackathon 25-27 April / 2014 @ Tehnopol Mustamäe Garage48 is a 48-hour event, with the goal of building technological prototypes in just two days and nights. The event is organised by the Garage48 Foundation, launched by six start-up entrepreneurs who met thanks to the Estonian Start-up Leaders Club. The idea is to give hands- on experience in how it feels to build a start-up with a team. Garage 48’s main goal is to promote entrepreneurship and inspire more people to try to create their own start-ups. The aim is to lighten the burden of turning an idea into a working prototype, and bringing it to the market for customer feedback. Founded in 2010, in Estonia, arguably the most tech-savvy country in the world, Garage48 events provide an opportunity for people with dif- ferent skills to pitch ideas, gather teams and build working tech product prototypes during a weekend. So far 33 events have taken place in 12 countries, from South Africa to Finland, with 2,500 participants, more than 800 ideas pitched and nearly 400 prototypes built. Nine teams created in those events have successfully raised venture capital while many more met their future co-founders or partners. One of the most successful Estonian start-ups born in Garage48 is VitalFields: their prod- uct vitalfield.com is the modern farmer’s best friend, in a pocket tool for farm management, and accurate weather and plant disease forecast. With the backing of 750,000 euros in a venture capital investment, the VitalFields team now is on the way to making farming more efficient globally. With the globally rising importance of technology, more and more peo- ple are daring to exchange safe jobs with guaranteed pay cheques for the roller-coaster start-up life, aiming to build corporations of their own. Garage48 aims to prove that a working prototype is a much better start for a successful business than 1000 slides. Garage48 co-founder Priit Salumaa says: “We have been doing Ga- rage48 hackathons in order to boost local start-up scenes by bringing the Silicon Valley attitude to Estonia, to Eastern Europe and to other developing markets. We wanted to show that a small team with a kick- ass attitude can achieve amazing things on a lean budget in a very short time: you can start with an idea and its first prototype without waiting for a white boat with an investor on it!” In recent years, developing new technologies has become cheaper: what previously took years and millions of euros can now be done almost for free and in a short time. “There are millions of apps out there, yet we see that there is still huge potential for ITC and hardware products that solve big challenges in particular industries, such as healthcare. Therefore, the 35th Garage48 hackathon is devoted to e-health and wellness solutions,” noted Ga- rage48 co-founder Ragnar Sass. As Estonia has positioned itself as a hub for pioneering new technologies for state-wide adoption, including e-health solutions, such events are definitely worth keeping an eye on for great ideas that might improve the world. Does walking around with head-itching ideas for a long time sound familiar to you? That is where Garage48 hackathons come in. ICT Week 25.04 26.04 27.04
  12. 12. SPRING 2014 I LIFE IN ESTONIA 13 Blocking and filtering content, passing laws that oppress government critics and deliberately making Internet or mobile access slower, are just a few scary examples of censorship on the Net. How to keep such dark scenarios from happening and how to ensure the future of a free and secure Internet will be the main topics of the Freedom Online Coalition’s high-level conference in Estonia’s capital Tallinn. In regard to Internet freedom, Estonia continues to enjoy one of the top positions in the world. According to the Freedom House Freedom on the Net report, it is in second place just after Iceland. Supporting and protecting freedom online is a stance that Estonia strives to promote worldwide and is dedicated to working closely with all partners that stand for the same values. Estonia believes that virtual freedom of expression is an inseparable part of human rights – sup- porting and promoting freedom of expression on the Internet is just as important as protecting all fundamental human rights. Unfortunately, all countries do not share this view. According to the Freedom on the Net report, 34 countries out of 60 that were evaluated experienced a decline in Internet freedom. This shows that freedom online is not a self-evident phenomenon, but rather a sphere that needs constant sup- port and maintenance. Estonia is a founding member and the current chairman of the Freedom Online Coalition – a group of governments committed to advancing Internet freedom worldwide. That is to say free expression, association, assembly, and privacy online. The only way to ensure these freedoms is to have close cooperation be- tween governments, civil society organisations and private sector. This is precisely what the coalition’s meeting in Tallinn will focus on. It is one of the year’s most relevant milestones in the discussion of Internet freedom worldwide, bringing together foreign ministers, representatives of civil so- ciety and business, as well as distinguished experts from all over the globe. The outcome of the conference will be ”Recommendations for Free- dom Online” – concrete solutions on how to keep the Internet free and secure based on the multi-stakeholder model. The 22 Freedom Online Coalition states have already shown their commitment to ensuring that the development of the Internet will stay on a free, open and undivided course. In addition, there is always room for new members, who value the same principles. For more information: www.freedomonline.ee The Freedom Online Coalition’s 4th annual high-level conference ”Free and Secure Internet for All” 28-29 April / 2014 @ Swissôtel Tallinn 28.04 29.04 ICT Week Members of the Freedom Online Coalition: the 22 member states are Austria, Canada, the Czech Republic, Costa Rica, Estonia, Finland, France, Georgia, Germany, Ghana, Ireland, Kenya, Latvia, the Republic of Maldives, Mexico, Moldova, Mongolia, the Neth- erlands, Sweden, Tunisia, the United Kingdom, the United States of America. Who will participate? More than 200 leading Internet freedom experts from all over the world, including foreign ministers, civil society representatives and top entrepreneurs. Key speakers include the President of Estonia Toomas Hendrik Ilves, Vint Cerf of Google, the foreign ministers of the Nether- lands, Sweden, Kenya and Mongolia, the Secretary General of the Council of Europe Thorbjørn Jagland, and many others.
  13. 13. * This conference is a continuation of the annual conference organised by EE and the International Technology Law Association, held for the first time in 2008. LIFE IN ESTONIA I 2014 SPRING14 Latitude59 conference “Welcome the Light!“ 28-29 April / 2014 @ MEKTORY latitude59.ee I EVENTS The Latitude59 conference, in its seventh year*, brings together in- novators, entrepreneurs, venture capital partners, angel investors and those who support the global expansion of innovative companies origi- nating in countries three hundred kilometres either side of Latitude 59, to understand and address the challenges of expansion into global mar- kets. The speakers and panellists are all leaders in their respective fields, with long experience and insight into the chasm facing young compa- nies, which must look beyond their local markets if they are to fulfil their dreams and ambitions of providing sustainable solutions to busi- ness “pain points” and consumer demands. There will also be demo rooms for Cleantech, IOT (Internet of Things), gaming and an authentic sauna by Startupsauna. The Latitude59 conference is held at the new Innovation and Busi- ness Centre Mektory (founded in 2013), which is a part of the Tallinn Tech University campus: a perfect place for meet-ups. Mektory was cre- ated for scientists, students and entrepreneurs to solve practical product development problems and generate new innovative ideas. Meet the people The two days of Latitude59 consist of a number of panel discussions featuring the challenges of start-up growth & going global, term sheets & valuations, talent acquisition strategies, finding follow- on investors and preparing for Exits, and discussions on how ac- celerators and angel investors have supported the rapid globalisation of the start-up community by removing the barriers to entry and providing access to capital to start-ups not located in Silicon Valley. The speakers include Vint Cerf, Vice President of Google, one of the “Fa- thers of the Internet” California), Tim Draper, Founder & MD at Draper Fisher Jurvetson & Founder of Draper University (Silicon Valley), Micke Paqvalén, Founder and Operational Chairman at Kiosked (Finland), Da- vid Bizer, Partner at Talent Fountain, ex-Google & ex-Netscape recruiter (Paris), Taavet Hinrikus, Co-founder of TransferWise (London), Deborah Magid, IBM Venture Capital Group (Silicon Valley), and many others. We expect around 300 participants, with a strong focus on invited ven- ture capital and angel investors, as well as accelerator managers from Europe and the USA. Pitch Contest Silicon Valley style A highlight is the Latitude59 pitch contest, Silicon Valley style, powered by the accelerator Startup WiseGuys, introducing the most promising start-ups in the Nordic and Baltic region. Twenty preselected start-ups get dedicated workshops with VCs, a free demo stand and can win 5,000 EUR cash from one of the pillars of the Estonian start-up scene, Skype, plus 5,000 EUR worth of services from the ReedSmith Law Firm. In recent history, the Latitude59 pitch contest has boosted such start- ups as Fabulonia and VitalFields. Baltic-Nordic start-up ecosystem It has become a tradition that the investors and start-up community of the Nordic Region get together in Tallinn in spring for Latitude59, and every autumn they meet again in Helsinki during Slush. “The strength of the Baltic-Nordic start-up ecosystem lies not in single countries, but in co-operation. United we are strong. Most top Estonian start-ups visit the Slush conference, as Weekdone did when we won the pitching competition. It’s a unique learning experience to hang out with the best from the whole region. There are always plenty of Finnish start- ups and investors at Latitude59, and this year we hope to see even more of them in Estonia,” said Jüri Kaljundi, the co-founder of Weekdone and the Garage48 Foundation. The go-to place for the Nordic and Baltic start-up scene in the spring! 28.04 29.04 ICT Week
  14. 14. The FinanceEstonia International Forum 2014 will be hosted on 17-18 June in Tallinn, Estonia. It will gather international senior financial decision makers for a dialogue on flexible and efficient finance support systems and tools, and the Nordic finance land- scape as a source of exciting new opportunities. The event elaborates on the Estonian financial environment and pre- sents aspects that lead to higher efficiency in Fund Administration, Treasury and Shared Services, and in International Private Banking. Companies showcase their best practices and guests get a chance to meet and greet top level executives from business and politics. Besides offering business contacts, the programme assists in getting acquainted with Tallinn and Estonia. The audience of the forum consists of senior level decision makers, who consider outsourcing financial functions or fund administration make investment or wealth management decisions (including private equity) are looking for VC and Angel investment opportunities are interested in understanding other business opportunities in Estonia, as altogether nearly 300 participants will gather in Tallinn. FinanceEstonia is a public-private cluster initiative formed in July 2011 with the aim of establishing Estonia as a vibrant and innovative location for financial services. FinanceEstonia’s key activities encompass ensuring an attractive and competitive environment, as well as creating and of- fering opportunities for our members. The forum will be organised in a joint effort with EstVCA and EstBAN. The first day of the forum introduces the latest news in Estonian and European economics and finance. Fund Administration, Treasury and Shared Services, FinTech and Private Banking will be covered in lively, detailed discussions with experts and practitioners. Among the speakers and panellists, high-level European financial institution representatives, and Estonian and European business leaders who have experience in Estonia will be present. The FinanceEstonia International Forum Gala Dinner will take place be- tween the forum days on 17 June. Last year’s dinner was considered a great success by the attendees. The location, programme and dining all supported new business relationships. The Gala Dinner will be memorable in terms of entertainment and business opportunities. The second day encompasses best-practice presenta- tions by Estonian and international leading vendors in finance. It provides excellent opportunities for busi- ness match-making and networking. Additional information about the forum can be found at www.financeestonia.eu Finance Estonia SPRING 2014 I LIFE IN ESTONIA 15
  15. 15. Estonia As A Country Moves Into The Cloud And Expands All Over The World! Taavi Kotka Work: • Government CIO since 2013 • AS Webmedia (now Nortal) Partner and CEO (2005-2012): the largest software development company in the Baltic region • Angel investor or founder in many start-up companies: ZeroTurnaround, Plumbr, etc.   Education: • software engineer, University of Tartu   Honors: • 2009 – 2013 President of the Estonian Association of Information Technology and Telecommunications (ITL): ITL unites all major ICT players in the Estonian market • 2011 Entrepreneur of the Year in Estonia By Toivo Tänavsuu Photos by TIINA-LIINA UUDAM and HELE-MAI ALAMAA 16 LIFE IN ESTONIA I 2014 SPRING I COVER STORY
  16. 16. Taavi Kotka, the Estonian government CIO, talks about taking the already suc- cessful e-state onto a totally new level. Namely, Estonia has an ambitious plan of moving the state into a data cloud spread all over the world, which will, in a sense, make occupying the country pointless. In addition, with the help of ICT, there can well be ten million Es- tonians by 2020 instead of the current one million. What is the essence of the cloud initiative? The development of the e-government in Estonia has reached a point where sever- al vital registries of the state only exist in digital form without any paper copies. For example, the Land Register has become a database of critical importance and the Es- tonian state cannot afford to lose it or have its data tampered. In order to mitigate risks and ensure the pres- ervation and integrity of data, relying on data centres located in Estonia is not sufficient. That is why we have maintained copies of Estonian registries at our embassies abroad for years. However, embassies are not really meant for preserving large volumes of data and running applications. In addition, Estonian legislation, similar to that in other countries, establishes that data vital for the functioning of the state is to be maintained exclusively in the Estonian territory. With this in mind, we developed the concept of the “Data Embassy”, whose principal idea is that, in addition to its network of physical em- bassies, Estonia needs to develop a network of data embassies. In simple terms, data embas- sies would be server rooms in the territories of friendly partner states. So, in addition to the physical embassy, would Estonia open a Data Embassy in Germany, for example? Germany could be joined by other countries: Canada, Australia, Sweden, Holland etc. We would, in fact, sign a bilateral agreement with a friendly state that would allocate to Estonia a special physical or virtual room in the gov- ernment cloud of that country, in some data centre. In this room, the same rules would ap- ply as in real embassies, meaning that the spe- cific space would be the territory of Estonia, with Estonian legislation in force. The part- nering state would provide us with electricity, cooling and an Internet connection, but other- wise it would respect the diplomatic immunity of the embassy. What would be stored in such data embassies? As the network of data embassies involves a cyber security aspect, we plan to move all data and information systems critical for the functioning of the state to such private clouds. As a result, there would be an addi- tional global dimension to the government cloud currently physically located in Estonia, dispersing data and information systems all over the world. In principle, such a cloud should contain every- thing necessary to run a state: from the Popu- lation Register, Land Register and Business Register to e-government, e-health, judicial systems and so on. What would be the impact of such a system? Above all, there would be improved cyber se- curity. Should Estonia become a target of a massive cyber attack, it would be much more difficult to “switch us off” as a state than, for example, Georgia in August 2008. The state would be able to provide e-services from Ger- many, Sweden or Holland. But let’s aim higher! Estonia could become the first country in the world completely in a cloud! In other words, the state together with its citizens and services do not have to be tied to a specific territory. Estonians could live in Finland or London, be deported to Siberia or whatever: we could still elect our parliament, collect taxes etc. Businesses would continue to operate, docu- ments would be exchanged, addresses could continually be changed in registers and new citizens would be born. We could even send our athletes to the Olympics, even if they did their trial competitions in some other country. This may sound like abstract bragging, but we would actually be able to ensure the function- ing of the state from the cloud! What does that mean in the light of events in the Crimea? The capacity to support the existence of our state from the cloud would lead to a situa- tion where—considering the recent events in Crimea—it would be much more complicated (i.e. expensive) to occupy Estonia. There would be no point in conquering the country with tanks, as the state would continue to function from the cloud. In addition, considering that Estonians have been voting over the Internet for nearly ten years, it would be impossible to organise a fake referendum. People would be able to legitimately express their free will, us- ing tested solutions. This means that in order to occupy the state, all of our data embas- sies all over the world would also have to be occupied. Can we say that investments in the army, cannons and tanks would become pointless? No, Estonia should definitely maintain its ca- pacity for physical and virtual defence and keep fulfilling its tasks as a NATO member state. Be- ing able to function from the cloud would just offer us an additional security guarantee. How was the idea of Cloud Estonia born? The need for a data embassy was born about a year ago. The follow-up idea of a country with- out a territory, i.e. a state functioning from the cloud, was born in the process of drafting the Estonian Digital Society Strategy 2020. President Toomas Hendrik Ilves read the draft of the strategy and said it lacked ambition. I then added this revolutionary idea to the doc- ument’s foreword and asked: “Is it ambitious enough now, Mr. President?” What kind of reaction has the cloud idea provoked? At first it usually creates the wow effect. In the context of cyber security, the topic of virtual embassies is a hot one. Our approach is often considered too futuristic, because even Inter- net elections, so ordinary for Estonians, are regarded as too revolutionary in many other countries. Silicon Valley has also dreamt of a similar cloud state. SPRING 2014 I LIFE IN ESTONIA 17
  17. 17. There is another wild idea in relation to the state in the cloud: start issuing Estonian e-identity to foreigners. This idea came about when we were looking at how to allow foreigners working in Estonia on a temporary basis – for example university professors and entrepreneurs – to benefit from our digital society. In order to use Estonian e- services, such as digital prescription, e-bank- ing, digital signature etc., one needs digital identity. Thus, we need to issue non-resident ID cards and mobile-IDs to those working or studying here temporarily. At a certain point, we realised that the need for such a card is much wider. For example, the card could be used by businessmen who do not reside in Estonia but who want to be in- volved in daily business development as board members. E-identities together with digital sig- natures would make this possible. So you can be from New Zealand, but do business in Europe without ever leaving home? Precisely. You just need to get a non-resident ID-card. In only 18 minutes over the Internet, you can start a company in Estonia, open a bank account and sign all necessary docu- ments with a digital signature. In less than a day, you have the capability of doing business not just in Estonia, but in the whole European Union. And you can do all that without leaving your home. “An operational company with a bank account in the European Union in less than a day” is a much-needed service for many EU citizens, as well as people from other countries. The non-resident ID-card is not the key issue. There are more and more private businesses all over the world offering e-identity services. Estonia’s goal is, after all, to make its e-services accessible to other countries. People having Es- tonian e-identity would become “satellite citi- zens”, who would develop some connection with Estonia through those processes. In addi- tion, having 10 million satellite citizens on top of our 1.3 million permanent residents would also serve as an additional security guarantee. In reality we will not reach such numbers, but dreaming is important. Virtual residence also confirms the viability of our “state without ter- ritory” concept. What other innovations await the Estonian e-state? I am personally most interested in the Real Time Economy. Estonia is the most effective tax collector in the whole world. This means that per euro collected we spend much less in tax collection in comparison to other states. We have developed a fully automated system of tax declarations and refunds. But there is still room for improvement. The handling of taxes, e.g. declaring and refunding taxes, has delays and those delays, in fact, “hold up money”. In the worst cases, businesses receive their overpaid VAT back in two months, and citizens receive their income tax returns once a year. These periods could be shortened significantly. The goal is to reach a situation in which the economy, including taxes, and recalculations thereof, function in real time. We are very close to this in Estonia, and if we succeed in strengthening the tax control systems, we will be able to take another step closer to our aim. The tax system is not the only field where such improvements in systems and services are happening, right? Indeed. For the next seven years, substantial resources have been allocated for ICT invest- ments. The aim is not only to create new solu- tions, but to improve the functioning of the existing system. Many systems, including es- pecially the ones that are more than a decade old, need to be re-engineered, since work pro- cesses, legislation and especially technology change significantly. Voice recognition, touch- screen technology, cyber-security, big data etc. – a decade ago we lived in another world and there is no point in remaining stuck there. ICT systems need to be modernised on a regular basis. Thus, we have established a rule that no vital information system in the Estonian public sector can be more than 13 years old. We call this the no-legacy policy. Isn’t the no-legacy policy too expensive? This is a very good question. It turns out that the opposite is true. Our research and com- parison with Scandinavian countries prove that the continuous renewal and updating of systems will be cheaper in the end than main- taining legacy. In addition, there has been a revolution in the production and management of software and the start-up culture has proven to the world that huge ICT enterprises have been nourished for no reason for decades. ICT is not as compli- cated and costly as some believe. The UK government’s ICT budget is 16 billion pounds. The Estonian Government ICT budget is about 40 million pounds: 400 times smaller. LIFE IN ESTONIA I 2014 SPRING18 ESTONIAN DATA EMBASSIES I COVER STORY
  18. 18. But the United Kingdom is also a much larger state… Yes, but not by four hundred times! Moreo- ver, in the digital world the size of states does not matter: the services that countries have to provide to their citizens are similar in big and small countries alike. Hospitals, banks, the police: these are the same services. The differ- ences are only in scale, but in the cloud age this is no longer an issue. In praise of the UK, it has to be said that they have a great CTO, who has significantly man- aged to cut ICT costs and continues to do good work. What is the main lesson that the rest of the world can learn from Estonia? I would like it to be the no-legacy policy. I wish that those coming to learn from our experi- ence would get rid of their outdated systems and pseudo-fears and start from scratch. Un- fortunately this is just a dream. Many people visit to learn from us and see how we do things. Over 350 government- level delegations come here to learn about our e-government annually. Hence the e-Estonia showroom (ICT Demo Center) has a special role in telling e-stories. This also points to a significant problem. Un- til now we have focussed on developing new solutions and approaches without having car- ried out any research or impact analyses. What are the real benefits of a whole society using digital signatures? How do e-elections change people’s understanding of elections and voting procedures? Improving evidence-based policy- making is another funding priority for us in the coming years. This will be done in cooperation with the world’s leading universities. In addition, we have started negotiations with Finland and the UK on the joint development of basic ICT infrastructure: for example, e-elec- tions, e-identity and the middleware X-road. In some situations, it makes more sense to put our brains and money together with other states in order to together develop the corner- stones of state ICT. So, the Estonian e-tiger is not dead and continues to growl? It’s very much alive. The economic crisis dem- onstrated clearly that ICT can make public ad- ministration, as well as the functioning of the whole society, more cost-effective and user- friendly. Furthermore, the image of Estonia as an e-country continues to be an inseparable part of Estonia’s identity, and our president, who has a background in programming, con- tinues to change the world through ICT. Finding motivation is easy. Everything we do today, and everything we do not manage to complete, will affect future generations. I have three children myself. SPRING 2014 I LIFE IN ESTONIA 19
  19. 19. Estonia: The Little Country With A Start-Up Mindset Sten Tamkivi LIFE IN ESTONIA I 2014 SPRING20 I LAND AND PEOPLE
  20. 20. Ben Horowitz, co-founder and a partner of the venture capital firm Andreessen Horowitz: Being someone reasonably well-known in technology, I have been getting a lot of questions lately about healthcare.gov. People want to know why it cost between two and four times as much money to create a broken website as to build the original iPhone. This is an excellent question. However, in my experience, understanding why a project went wrong tends to be far less valuable than understanding why a project went right. So, rather than explaining why paying anywhere between $300M and $600M to build the first iteration of healthcare.gov was a bad idea, I would like to focus attention on a model for software-enabled government that works. In doing so, perhaps this will be a step toward a better under- standing of how technology might make the US government better and not worse. Early in my career as a venture capitalist, we invested in a company called Skype and I went on the board. One of the many interesting as- pects of Skype was that it was based in Estonia, a small country with a difficult history. Over the centuries, Estonia had been invaded and taken over many times by many countries, including Denmark, Sweden, Ger- many, and most recently the Soviet Union. Now independent, but well aware of their history, the Estonian people were humble, pragmatic, proud of their freedom, but dubious of overly optimistic forecasts. In some ways, they had the ideal culture for technology adoption: hope- ful, yet appropriately sceptical. Supported by this culture, Estonia built the technology platform to serve its citizens that everyone wishes we had here. Estonia developed an in- frastructure that enabled its government to serve its people so well that Estonians would like to see more, not fewer, government technology projects. To explain how they did it, I’ve asked one of our Entrepreneurs in Residence, the Estonian Sten Tamkivi, to tell the story. Sten Tamkivi, EIR at Andreessen Horowitz: Estonia might not show up on the US radar very often. It is a tiny country in north-eastern Europe, just next to Finland. It has the territory of the Netherlands, but only a tenth of the population: 1.3 million inhabitants, comparable to Hawaii. Estonia belongs to the European Union, Eurozone and NATO. A friend from India recently quipped: “what is there to govern?” What makes this tiny country interesting as a governance benchmark is not just that the people can elect their parliament online or get their tax returns in two days. It is also that this level of service for citizens did not start with their government building a few web sites. Instead, Estonians started by redesigning their entire information infrastructure from the ground up, with openness, privacy, security and future-proofing in mind. As the first building block of e-government, you need to be able to tell your citizens apart. Sounds obvious, but sometimes referring to a person by a social security number, then by a taxpayer number and at other times by something else doesn’t cut it. Estonia uses a very simple, unique ID methodology across all systems, from paper passport to bank records to access to any government office or hospital. A citizen with personal ID code 37501011234 is a male born in the 20th century (3), on January 1st of year 1975, as baby #123 of that day. The number ends with a computational checksum to easily detect typos. For these identified citizens to transact with each other, Estonia passed the Digital Signatures Act back in 2000. The state standardized through a national Public-key Infrastructure (PKI), which binds citizen identities to their cryptographic keys, and now it doesn’t matter if some Tiit and Toivo (to use common Estonian names) sign a contract between them in electronic form with certificates, or with plain ink on paper. A signature is a signature in the eyes of the law. As a quirky side-effect, that foundational law also forced all decen- tralized government systems to become digital “by market demand”. Namely, no part of the Estonian government can turn down a citizen’s digitally signed request and ask for a paper copy. As citizens opt for con- venience, bureaucrats see a higher inflow of digital forms and are self- motivated to invest in systems that will help them manage the process. Yet a social worker in a small village can still provide the same service with no big investment by handling the small number of digitally signed email attachments the office receives. For future-proofing, the law did not lock in the technical nuances of digital signatures. In fact, the implementation has changed over time. Initially, Estonia equipped all traditional ID cards issued to all citizens for identification and domestic travel inside the EU with microchips. The chip carries two certificates: one for full legal signatures and one for authenticating on any trusting web site or service (used widely, from government services to Internet banks). As every person over 15 is required to have one, there are now over 1.2M cards active, close to 100% penetration of the population. As mobile use in Estonia rapidly approached the current 144% (#3 in Europe), the digital signatures adapted too. Instead of using smartcard readers with their computers, users can now get Mobile ID enabled SIM cards from their telecom operators. Without installing any addition- al hardware or software, they can access systems and give signatures by just typing PIN codes into their mobile phones. As of this writing, between ID cards and mobile phones, 1.3M Estonians have authenticated 230M times and given 140M legally binding signa- tures. Besides the now daily usage for commercial contracts and bank transactions, the most high profile use case has been for elections: since be- coming the first country in the world to allow e-voting for local elections in 2005, the system has been used for both Estonian and European Parlia- ment Elections, and in 2011 accounted for 24% of all votes. (Interestingly, the citizens voted from 105 countries in total, where they just happened to be physically at the time - like my own vote submitted from California). Follow the leader is a title, theme, task Now you know, you don’t have to ask - Rakim, “Follow the Leader” SPRING 2014 I LIFE IN ESTONIA 21
  21. 21. To further speed up this sort of innovation, the state tendered the build- ing and securing of digital signature certificate systems to private parties, namely a consortium led by local banks and telcos. And that’s not where the public-private partnerships end: the way the data interchange in the country works is that both public & private players can access the same data exchange bus (dubbed X-Road), enabling truly integrated e-services. A prime example is the income tax declarations Estonians “fill in”. In- verted commas are appropriate, because when an average Estonian opens the form for submission once a year, it usually looks more like a review wizard: “next -> next -> next -> submit”. This is because data has been moving throughout the year: when employers report employ- ment taxes every month, all the data entries are already linked into a particular person’s tax records too. Non-profit reported charitable dona- tions are recorded as deductions for the giver the same way. Tax deduc- tions on mortgages come directly from data interchange with commer- cial banks. And so forth. Not only is the income tax rate in the country a flat 21%, after submitting this pre-populated form citizens actually get any overpayment deposited into their bank accounts (digitally trans- ferred, of course) on the second day! This liquid movement of data between systems relies on a fundamental principle to protect the privacy of citizens: without any question, it is al- ways the citizen who owns their data. People have the right to control access to their data. For example, in the case of fully digital health re- cords and prescriptions, people can granularly assign access rights to the general practitioners and specialized doctors of their choosing. And in scenarios where the rule of law can’t allow them to block the state from seeing their information, as with Estonian e-policemen using their real time terminals in police cars or offices, they at least get a record of who accessed their data and when. If an honest citizen finds any official checking on their stuff without valid reason, they can file an inquiry and get them fired. Having everything online does generate security risks on not just the personal, but also on the systematic and national levels. Estonia was the target of the Cyberwar of 2007, when well-coordinated botnet attacks following some political street riots targeted government, media and finance sites and effectively cut the country off from the Internet abroad for several hours. But, as a result, Estonia has since become the home of the NATO Cyber Defence Center, and Estonian President Toomas Hendrik Ilves has risen internationally to be one of the most vocal advocates for cyber security among the world’s heads of states. Even more interestingly, there is a flip-side to the fully digitized nature of the Republic of Estonia: taken to the max, having the bureaucratic machinery of a country humming in the cloud increases the cost of any potential physical assault on the state. Imagine if a physical invasion of this piece of Nordic land by anyone could not stop the government from operating, but booted up a backup replica of the digital state, hosted in some other friendly European territory. A democratic government would be quickly re-elected, important decisions made, documents is- sued, business & property records maintained, births and deaths regis- tered and even taxes would flow for those citizens who still had access to the Internet. This may sound futuristic, but this is exactly the kind of world Estonia’s energetic CIO Taavi Kotka not only dreams about but is actually beginning to implement, on the e-foundations the country has already established. Estonia is a start-up country — not just as a life stage, but as a mindset The circumstances of the Estonian story are special in many ways. The country restored its independence after 50 unfortunate years of Soviet occupation in 1991, having missed a lot of the technological legacy the Western world had built up from the ‘60s to the ‘80s, such as cheque books and mainframe computers, and jumped right into the mid-nine- ties bandwagon of TCP-IP enabled web apps. During this social reset, Estonians also decided to throw their former communist leaders over- board and elected new leadership, with ministers in their late twenties from whom the world could expect disruptive thinking. But then again, all this was 20 years ago. Estonia has by many macro- economic and political notions become more of “a boring European state,” stable and predictable, although somewhat faster growing in an attempt to close the gap with Old Europe from the time they were behind the Iron Curtain. Twenty years, but you can still think of Estonia as a start-up country, not just as a life stage, but as a mindset. And this is what the United States, along with many other countries struggling to develop the Internet and get their increasingly more mo- bile citizens on it, could learn from Estonia: the mindset. The willingness to ask fundamental questions and get the key infrastructure right, and to continuously re-invent them. States can either build healthcare insur- ance brokerage sites for innovation, or really look at what key compo- nents need to exist for any service to be built: signatures, transactions, legal frameworks etc. Ultimately, the states that create pleasant environments will be those where mobile citizens flock to live their lives. And by many measures, tiny Estonia in 2014 is no worse positioned to be the destination than New England was in 1814. LIFE IN ESTONIA I 2014 SPRING22 I LAND AND PEOPLE
  22. 22. Marek Helm, Head of the Estonian Tax and Customs Board SPRING 2014 I LIFE IN ESTONIA 23 Estonian Tax Board 2.0 Presents: Real Time EconomyThe famous Estonian e-Tax Board has been admired and set as an example all around the world. Where else can you submit your tax return in just a few clicks? Where else can entrepreneurs sub- mit all declarations online without spending days on end filling out paper forms? Marek Helm, Head of the Estonian Tax and Customs Board, claims that although our e-Tax Board is admired all over the world, the time is ripe for some qualitative changes. By Holger Roonemaa / Photos by Albert Truuväärt
  23. 23. LIFE IN ESTONIA I 2014 SPRING24 I ECONOMY AND BUSINESS What is a Real Time Economy and what does it mean in the Estonian context? We and our counterparts have not defined it completely. Hence, the specific definition of the term is still floating, in a good sense. The way my colleagues and I see it, and how we re- fer to it in our conversations with enthusiasts, it denotes real-time information exchange in a significantly higher quantity than we expe- rience today. Despite the fact that currently 95-100% of tax declarations are filled in elec- tronically, it is still not a Real Time Economy (RTE). RTE means not only more comfortable and faster services, but totally new services from the point of view of the state and en- trepreneurs, which would increase economic competitiveness. New services help to man- age cash-flow faster, and help companies and private individuals make quicker and better decisions. Specifically, in terms of our field of activity, col- lecting taxes, RTE means implementing elec- tronic controls. I do not mean moving PDF files and tables, but data acquisition, and cross and automatic controls. For example, if we look at value-added tax returns, the current logic is linked with the submission dates of decla- rations and the submission dates of returns. Those dates are fixed. We could get rid of this principle and say that if a company meets cer- tain preconditions the state and the company could make decisions immediately. Conditions allowing for faster information exchange could create motivation for law-abiding activity. This could enliven the economy, and increase cash- flow, data quality and economic safety. Inter- actions with suspicious companies would de- crease or be noticed much more quickly. This would also mean that ab- solutely all entrepreneurs could work on equal conditions. It would be more complicated to cheat, wouldn’t it? The way I see it, people would have more mo- tivation to be honest. At the moment, the RTE concept does not work and we offer the same service for very many entrepreneurs: the same deadlines for submitting declarations and for returns. But if we implement the RTE concept, companies will have a real motivation to be honest, as honesty will be observable in real- time and automatically detected. In this way, we can offer certain advantages. Like what? It is our “problem” in Estonia that most dec- larations are already electronic and we don’t have the opportunity to develop them further. Some people say that the appendix contain- ing data of transactions in the value-added tax return would be quickly supported by busi- nesses if the Tax Board paid back the value- added tax faster. But we already do that: 95% of all returns go on the prepayment accounts of companies within three days and from there to banks. If today we paid this back within a month, as prescribed by law, and said that with the automated control of the value-added tax we would start to do it within three days, this automatic control system would exist already! We have had the E-Tax Board for a while and people submit declara- tions digitally. Is the implementa- tion of RTE the next logical step? Definitely. According to statistics, we are the most effective tax collector among all OECD states. We took a giant step in 2005-2008, when most declarations became electronic. There was no similar leap between 2008- 2014. We are still in first place but, in terms of efficiency or costs, there hasn’t been much change. RTE would certainly decrease the share of the shadow economy. If we bring some of the money in the shadow economy into the “real” economy, it would significantly improve the revenue and expenditure relation- ship. The assumption underlying our new ap- proach is that our organisation will not grow. Some say that we should just employ more inspectors, but this would not be right! In that way, we would just have more people doing things the same old way, but what we really need is to do things differently and, in the longer term, probably with fewer people. Let’s talk more specifically about the RTE projects of the Tax and Customs Board. One of the bigger ones involves declaring VAT and providing data for the Tax Board on transactions exceeding 1,000 euros. This is not liked by busi- nesses. What is the status of this project? We are ready to start. When the parliament approves the draft act and the president pro- claims the act, we can start on development. We foresee six months for development work. We have submitted a very strong concept and it does actually have support among many en- trepreneurs. Just a few weeks ago, the differ- ent parliamentary fractions discussed this issue and one prominent representative of entrepre- neurs said that it is a much-needed act which should be implemented. What would it involve for entrepreneurs? Businesses have to consider that, if there are invoices on their books which exceed 1,000 euros as single invoices or the sum of invoices for a transaction partner, they need to submit the registry code of the partner, the sum of the transaction and the share of VAT of that transaction as a separate appendix to the Tax and Customs Board. The duty itself looks like this: when the VAT declaration is submitted on the 20th day of the month, there is an elec- tronic appendix which is filled in on the basis of data in the accounting system. In other words, we receive data on the transaction partner, the sum of the transaction and the share of VAT in this sum. We receive no infor- mation about the contents of the goods, unit price or amount. Companies add this data to their declarations and the new information system of the Tax and Customs Board will receive and compare this information. Our systems compare the transactions declared by buyers with the declarations made by sellers. The system will cross-check the data and de- tect any discrepancies. Unlike the current situation, where we receive the VAT declaration without transaction data (just three figures in fact), we will be able to contact companies straight away and ask why the data does not add up. Currently, we start by asking for information, then we receive the data in some weeks and only then can we check it thoroughly. The new situation will allow us to receive data automatically and we can decide immediately which companies to check. Yet there has been resistance to this idea by Estonian entrepreneurs. I can understand that. After all, the Tax and Customs Board will be controlling more. We receive 35,000-40,000 VAT claims monthly, and we pay 95-100 million euros in VAT back each month to companies on the ba- sis of minimal controls. Under the new sys- tem, we would have an overview of who is
  24. 24. Tax declaration in Estonia is online SPRING 2014 I LIFE IN ESTONIA 25 actually justified in receiving money back. In other words, if a company sells goods, it needs to consider that the buyer will submit information on the transaction to the Tax and Customs Board, having the right to deduct in- put value-added tax. Hence, there is no way to not account for the sales of the goods in the company’s turnover. When a buyer wants to receive value-added tax from the purchase of goods and provides us with the data of the seller, but the seller is not aware of the trans- action, we will see immediately that there is a problem with this specific transaction and that it needs to be checked. Currently, companies often ask for money back without transactions ever having taken place, and we are only able to check 3% of claims for refunds. The resistance from companies results from the fact that, instead of the ability to check 3% today, we will be able to check 100%. I to- tally understand their concerns because trans- ferring onto the new system will entail one-off costs, including for those who are totally law- abiding tax-payers. According to your calculations, the VAT gap is currently 200 million euros per year. How much of this sum could you recover by implementing the new system? It is difficult to accurately predict it, but we have calculated that the state could receive at least 30 million additional euros each year. The gap will never be totally eliminated, but we could significantly improve the culture of the VAT environment. Our current checking logic dates back to 2003. We cannot continue like this; although almost 100% of tax decla- rations today are electronic, we are still doing the actual checking on paper. Another new idea of yours is the project of employment registration. What is that? From July onwards, the duty to register em- ployees before they start to work will come into effect. Currently, companies have to reg- ister new employees within seven days at the Health Insurance Board, but from July it has to be done either at the e-Tax Board, via a text message or in our call centre, before the em- ployee starts working. For example, you are about to start working for a building company. Your supervisor will send the Tax and Customs Board a text message and it will immediately be registered that you are working. If on the first day you pick up a rake and there is a Tax Board inspection ten minutes later, we already know that you are officially working. Within the last few years, we have carried out regular checks during which it often turns out that every third builder is “working for the first day” and the company has not managed to register them yet. This is a typical kind of fraud. There is also a social side to it. At the moment, when an employee goes to work, he is una- ware of whether he is officially registered or not. From July, the employee will be able to check this on the e-Tax Board and see whether s/he has social insurance. For employers, this means sending data once; they will not have to send separate bits of information to the Health Insurance, Work Inspection, Unemploy- ment Office, Police and Border Guard. Is it really true that during your checks every third builder is working “for the first day”? We cannot generalise, but we often discover that during our inspections. For example, we went to check the construction of a health spa last week and every third employee was not registered at all. From July, it will also be the case that when an employee is no longer em- ployed, we will see within two months that s/ he is not marked on any income or social tax declarations and we will then contact the em- ployer and delete the employee from our reg- ister and inform the Health Insurance Board, who, in turn, will delete the entry from their register. Today there are many people regis- tered as insured by the Health Insurance Board but they have not worked for a long time. In future, the data exchange between the Tax and Customs Board and the Health Insurance Board will take place automatically, and peo- ple themselves will be interested in monitoring whether they are registered as working or not. Currently they might find out at their GP that they have no health insurance at all. We haven’t talked about how these innovations would change economic predictions. Would RTE make it possible to understand every day or every minute what is happening in the economy? We do not know the complete impact it will have. It is obvious that RTE will enable us to react to change more quickly, and to assess the current situation more accurately. It could help raise the growth in added value of companies. This will be more and more visible from our data. Prevention is always cheaper and more effective than dealing with consequences.
  25. 25. LIFE IN ESTONIA I 2014 SPRING26 I ECONOMY AND BUSINESS The term “legacy system” came into use in the 1990s when it started to denote comput- ers (technology) and software which were out of date. Later on, the definition was narrowed down and stood for all systems which were not dependent on the Internet. Today this more explicit meaning has been rejected and the “pet-name” legacy continues to refer to all IT solutions which are out-of-date in terms of content and/or technology, but which con- tinue to be used on a daily basis. On the Estonian IT landscape, legacy is a rel- atively new concept. The country began to invest in IT only after Estonia had regained independence and, therefore, we were able to start from scratch. There were no earlier information systems from 1960-1980, the “legacy” period. Starting from scratch al- lowed us to use the newest technologies, to learn from best practices in the world and to develop information systems specifically targeted to individual needs. It was clearly much cheaper (more efficient) to learn from the mistakes made by others than to make our own. Today the Estonian IT landscape is at a cross- roads. According to an e-health report by the OECD, Estonia has the best e-health solutions in the world: all our hospitals use information systems which interact and exchange data with each other and across hospitals; a common digital image bank has been created; health insurance systems have been developed; ef- fective communication with the National Health Insurance Fund has been ensured, etc. The IT systems of all doctors, pharmacies and the Estonian Health Insurance Fund function as a whole and, in order to receive a prescrip- tion, one just has to call one’s GP, take along one’s ID card and go buy the medication at any pharmacy. It took half a year for the society to give up paper prescriptions and take up digital ones. Today, 98% of prescriptions are issued digitally and nobody would change the system back: it just makes sense, considering how easy and user friendly the service is. Despite this, the recent National Audit Office’s report pointed out a number of shortcomings in the Estonian e-health solution. One could sum- marise the audit with the following idea: “Con- sidering the technologies available today, it is possible (and imperative) to offer citizens even better services.” So, on one hand, based on the OECD report, everything seems fine and most countries can only dream of reaching the same level of healthcare solutions that Estonia has. But on the other hand, there is internal pressure to still considerably improve these services. This is where the dilemma comes in. It is not a question of resting on our laurels or improving existing services: surely we have to improve the quality of services. But the real question has to do with legacy. Is it enough to make small im- provements in existing systems or should we just bulldoze the solutions which have been called the best in the world and start over? The latter (using heavy machinery) seems radi- cal but, once we analyse the pros and cons, it does not seem such a bad idea after all. What To Do With Legacy? Implement No-legacy PolicyBy Aet Rahe / Head of State Information Systems Department, Ministry of Economic Affairs and Communications.
  26. 26. SPRING 2014 I LIFE IN ESTONIA 27 Most of our world-leading e-health solu- tions were created 10-13 years ago. The ar- guments for radically changing the solutions are the following: Development of new technologies. Doctors could be more effective in their work, if they could use not only the keyboards, but also benefit from touch-screens, speech rec- ognition, teleworking, telemedicine etc. New user habits. Along with the intro- duction of new technologies, the user habits and skills have changed. The tools used by doctors in their work should evolve in a similar fashion as the tools used in everyday life and they should pro- vide a similar user experience. New work processes. All organisations develop and grow in ten years. To maintain progress, fundamental changes are often needed instead of minor improvements. Changed environment, including legis- lation, both on the national and EU levels. For example, cross-border medical services have been possible in Europe since last year, but most Estonian health information sys- tems continue to be in Estonian and have therefore no export potential. Cyber security. Guaranteeing cyber secu- rity is much more of a challenge today than it was ten years ago. Development of Open Data, Big Data, e- identity, digital signatures etc. technolo- gies, has an impact on how information sys- tems are built, how data is stored and tagged etc., which influences what parts of systems should be custom built and which parts should not. For example, with new technolo- gies, new standardized and reusable compo- nents and solutions are being developed, so we don’t need to re-invent the wheel in every information system. Maintenance of legacy systems is costly, as demonstrated clearly by the Swedish and Finnish experiences. For instance, in Finland there are still around 5,000 Cobol program- mers. This is one of the oldest programming languages in the world and, throughout the years, continuous development of systems has resulted in an expensive spaghetti archi- tecture that is very difficult to maintain. OECD 2012 eHealth Availability & Use indicator by country The world is in constant flux and, in order to offer the best services to customers, it is neces- sary to keep up with the changes. The points listed above speak volumes and Estonia’s pri- vate sector practice to date demonstrates that every now and then one needs to wipe off and rebuild. In the long run, this will be cheaper and more efficient than trying to maintain legacy. As a result, a new umbrella term has been tak- en into use by Estonian ICT policy makers: the no-legacy policy. According to this idea, the Estonian public sector should not have any important information systems in use which are over 13 years old. This means that at least in every thirteen years the most im- portant information systems should be rebuilt from scratch or significantly re-engineered. Why thirteen years? Estonia’s experience has proven that the quality lifespan of a large na- tional information system is approximately 10 years. Considering that the planning, develop- ment and implementation of a new solution is about a three-year process, we reached the number 13. Because the public sector has a monopoly on the provision of public services to citizens, it risks falling into the comfort zone. If customers do not like the food in a restaurant, or experi- ence bad service in a hotel, they can always choose not to return and can find alternative service providers. However, in the case of pub- lic services there is rarely an alternative. Thus, from time to time, impetus is needed to make civil servants generate new ideas and ap- proaches. The no-legacy policy with its obliga- tion to renew, will provide a great opportunity in this regard. Rebuilding the system makes it possible to learn from previous mistakes and, as a result, to create better solutions. This public sector approach is also important for the private sector, as companies providing hardware and software services need to keep up with the latest technologies and develop- ments in order to stay competitive in internal and export markets. In conclusion, if you want to continuously de- velop e-government solutions and keep it ef- ficient: Do not deal with legacy, kill it! Estonia (7) Finland (25) Sweden (24) Denmark (10) Luxembourg (3) Iceland (7) Netherlands (20) Spain (112) Croatia (7) Hungary (42) Norway (4) Austria (35) Belgium (43) Portugal (34) Czech Rep. (34) Slovakia (32) France (269) Italy (182) Germany (168) UK (51) Malta (1) Romania (78) Greece (59) Latvia (15) Slovenia (6) Ireland (19) Bulgaria (59) Cyprus (9) Poland (146) Lithuania (32) Benchmarking Information and Communication Technologies in Health System Joint EC-OECD WORKSHOP Brussels, Aprill 18-19, 2013 Input Decision Exchange Tele 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7
  27. 27. LIFE IN ESTONIA I 2014 SPRING28 I ECONOMY AND BUSINESS “It doesn’t happen every day that twenty-five businessmen join forces and establish an NGO in order to develop an early stage ecosystem for Estonian start-ups and seed investors,” Signe Viimsalu, CEO of EstBAN (Estonian Business Angels Network), explains how the associa- tion was born. “In other countries, the initiator or founder has usu- ally been the state, a public entity or some arm of such an entity. In Estonia, it was the serial entrepreneur Ivar Siimar who said ‘let’s do it ourselves.’ Super!” EstBAN is an umbrella organisation for business angels and business angel groups seeking investment opportunities in Estonia and its neigh- bouring regions with an aim to grow the quantity and quality of local seed stage investments. The year 2013, the first year of activity, was incredibly successful for EstBAN. Firstly, the goals set at the outset were surpassed. The number of members of EstBAN has grown from 25 to 59. Secondly, the business angels have invested over 4.6 million euros in 66 companies. The initial goals foresaw support to 10 start-ups and one million euros in total. Thirdly, two-thirds of EstBAN members found suitable investment opportunities in start-ups in the first year of activ- ity. Another significant number is 56,112 euros, which is the average investment of EstBAN per deal in 2013. A retrospective of the first year can be found at www.estban.ee/about/2013-review. It is quality not quantity that matters Signe Viimsalu explains that it was a conscious decision not to publicise the statistics on the average investment per member. The reason is that this figure is very high in comparison with the members of similar as- sociations in other countries. “It is understandable that the best practice of angel investments is still developing in Estonia. There are not that many business angels in Estonia, the investment need is enormous and invested sums per deal are high for seed investors in order to have a real impact on start-ups,” explains Viimsalu. The Chairman of the Manage- ment Board of EstBAN, Ivar Siimar, states that the sums invested show a real interest by members in angel investing. The main goals of EstBAN in 2014 are to increase collaboration with business angels in neighbouring countries in order to have more cross- border syndication and to initiate a co-investment scheme with the Es- tonian government. Another aim is to increase the number of business angels to 80 and to have about 30 investments in the amount of four million euros by the end of the year, without leverage from the Estonian government. With a co-investment scheme the numbers will be differ- ent. Both Siimar and Viimsalu confirm that EstBAN’s priority is to finalise negotiations with the Estonian government to launch a co- investment scheme as soon as possible, but what really matters is the quality of investment projects in the pipeline, not the quantity. The Estonian Government Is About To Boost Seed Investments In Estonia In 2014 By Ann-Marii Nergi

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