“The world has realised the significance of system security and data protection, and they must be treated seriously. Systems should be built to be secure by design and constantly upgraded.”
The Estonian IT landscape thrives with ingenuity. Presently, our small nation has birthed ten unicorns, who, in a short span of time, have garnered exorbitant amounts of funding, propelling their rapid growth. Alongside them stands another comprehensive and globally renowned development company, for whom a mere decade is not considered lengthy - Cybernetica, the trailblazer of the Estonian e-state. The company sets itself apart in various ways, starting with our extensive history dating back to the 1960s, culminating in in-house research. It is safe to affirm that not a single soul in Estonia remains untouched by Cybernetica's work, as we are the creators of X-tee, the cornerstone of Estonian national e-services, and the bedrock of ID card technology, internet voting, Smart-ID technologies, as well as tax and customs information systems. Furthermore, the technologies pioneered by Cybernetica are utilised to monitor the Estonian state border.
Narrowing the efforts has resulted in synergy
Cybernetica's mission is to forge future-proof technologies for secure digital societies. In pursuit of this mission, our primary concentration today encompasses five areas of operation: tax and customs information systems, digital identity technologies, data exchange technologies, surveillance systems and marine radio communication, and cybersecurity services. In addition to these business pursuits, we feature an autonomous research institute, primarily engaged in fundamental and applied research in information security. As a result of our research and development endeavors, Cybernetica has birthed novel technologies such as SplitKey, employed in Smart-ID, and the privacy protection technology known as Sharemind.
It is certainly atypical for a single company to operate in such diverse fields simultaneously – ranging from software development to research and development, from system integration to product development. The roots of many of Cybernetica's areas of expertise can be traced back to the days of the Institute of Cybernetics of the Academy of Sciences, when the company held a distinctive position in the Estonian market. Oliver Väärtnõu, CEO of Cybernetica, remarks, "The country was essentially constructed from the ground up. Since Cybernetica possessed strong competencies in information security, cryptography, and information technology, we were able to tackle complex subjects that were of great significance to the Estonian state. For instance, X-tee, Estonian maritime radio communications and border surveillance systems, electronic identity and internet voting, and maritime navigation, among others."
Throughout the years, the company has solidified its value proposition and discovered greater synergies among the areas inherited from its earlier days. As an illustration, Väärtnõu mentions the field of marine navigation systems, which encompassed the production of various hardware components as well as complete solutions such as sea buoys and lighthouses. This business line was eventually sold to the Canadian publicly listed company Carmanah Technologies. "Competing in this industry proved exceedingly challenging for us, and we were unable to find substantial synergies within the company. The global market underwent consolidation," he recalls. Another example highlighted by Väärtnõu is the sale of air traffic control to the Australian company Adacel Technologies. Undertaking an aviation venture from Estonia, a small nation where such a journey had not been embarked upon previously, appeared overly arduous for Cybernetica, particularly considering the entirety of the company's profile and the repercussions of the Covid-19 pandemic crisis.
E-government: a turnkey solution
According to Väärtnõu, Cybernetica endeavors to advance a more cohesive value proposition in the realm of e-government technologies. "One of our objectives is to bundle the technologies required for digitalisation in a country. Currently, we are concentrating on two technologies: digital identity and secure data exchange - two solutions that have proven indispensable in Estonia as foundational technologies for achieving digital society preparedness," he asserts. Concerning digital identity, Cybernetica offers its proprietary SplitKey technology, which also underpins Smart-ID, alongside the Unified eXchange Platform (UXP) as a platform for data exchange. "It must be noted that these technologies cannot be directly transferred to another country in their entirety - we provide technology adaptation according to the country's conditions, consultations, implementation, and ongoing support in utilising these technologies. In the future, our aspiration is to offer a comprehensive cybersecurity package in addition to these two technologies," Väärtnõu explains.
"Cybernetica consistently collaborates with partners - for instance, we frequently cooperate with the E-Governance Academy from Estonia, with whom we have jointly worked in Ukraine. One of our recent projects is based in Tunisia," reveals Väärtnõu. During the development of Tunisia's digitisation strategy, it was determined that the Estonian model should serve as a prime example. Presently, a project financed by the European Bank for Reconstruction and Development (EBRD) has commenced in Tunisia in partnership with the local branch of PriceWaterhouseCoopers (PwC). In the initial phase, the UXP interoperability platform will be implemented, with the goal of offering integrated e-services to citizens and businesses. Tunisia has expressed particular interest in Cybernetica's digital identity technologies. "Cybernetica's border and maritime surveillance systems, as well as tax and customs information systems, can also be regarded as vital components of e-government, albeit more specific verticals that develop somewhat independently from the central components," he adds.
Steady growth in various sectors
Presently, Väärtnõu identifies significant growth potential in the defence industry. "On February 24th of last year, the geopolitical landscape of the world underwent a major upheaval. The transformations transpiring in the European defence industry are exceptional - essentially, a new industry is being forged, or the scale of an 'old' industry is being multiplied," he comments. Leveraging their extensive experience in cybersecurity and secure software development, Cybernetica is already involved in pan-European defence projects such as European Cyber Situational Awareness (ECYSAP) and Secure Digital Military Mobility System (SDMMS). The latter focuses on establishing a central IT platform that digitises the processes necessary for troop movement between European member states. Cybernetica leads the consortium comprising of 11 other European companies involved in the project. "Our narrative in the defence industry is undoubtedly fortified by our longstanding partnership with DARPA (Defense Advanced Research Projects Agency, USA), with whom we have collaborated across four different programs since 2011. Our focus within the defence industry encompasses general digitisation, cybersecurity, as well as the development of command and control (C2), and surveillance systems," reveals Oliver Väärtnõu.
In addition to the defence industry, digital identity related matters are increasingly captivating for Cybernetica. "Every country requires a digital identity when undergoing digitalisation. While numerous players exist in the market, a single universally applicable standard has not emerged. This is perhaps why the EU is revamping the digital identity landscape by revising the eIDAS regulation and exploring the concept of digital identity wallets," continues Väärtnõu. He indicates that steps are already being taken towards becoming a provider of new digital identity solutions in the EU market. The patented SplitKey technology has garnered global interest, and we are exploring how it can be effectively utilised in a wallet solution. Recent cooperation with European Cybersecurity Agency (ENISA) on digital identity matters further enhances their credibility. "We are also proud of our digital identity projects in the Middle East, in collaboration with PwC and EY in Europe. With the latter, we are jointly conducting a market analysis of EU wallets."
Aside from the aforementioned areas, cybersecurity remains a paramount topic. According to Väärtnõu, this field is continuously evolving worldwide. "We constantly redefine our value proposition to offer customers new or updated services. Additionally, we are involved in developing new technological capabilities in the realm of cybersecurity, primarily to enhance situational awareness and automate activities and processes, including the application of machine learning in this domain. We collaborate with the Estonian Ministry of Defence, the European Defence Research Foundation (EDF), and the European Space Agency (ESA) in developing these capabilities. Undoubtedly, we will continue to pursue organic growth in other areas related to software development, including tax and customs information systems and surveillance systems. We are also steadily exploring opportunities in the energy and healthcare sectors."
A mission focused on science shapes the vision
Despite the presence of startups and unicorns, Cybernetica takes pride in its role as an established player in the field of complex solutions. "It feels good! I am very proud of Cybernetica's footprint in Estonia, and we take this responsibility seriously. Our goal is to help Estonia be internationally competitive while maintaining its uniqueness and innovation. It's rare to find companies that have contributed, and continue to contribute, to the development of digital society in such diverse ways," expresses Väärtnõu. "In a company with a long history like ours, employees have the opportunity to be part of projects that are built from scratch, from scientific research to its practical application in our society."
In recent years, Cybernetica's international focus has grown significantly. "We have exported our technologies to over 35 different countries, and we are determined to expand our presence even further. Our world map is quite diverse – our references span from Japan to Malaysia, from Malaysia to Namibia, and from Namibia to Morocco, Greenland, the Bahamas, and the USA," concludes Väärtnõu.
Shall Cybernetica expand its offices? "We'll see what the future holds," he remarks. "If our growth continues at this pace, that time will come sooner or later. We are already approaching the limits of expansion in Estonia. Labor is scarce here and not always available at the most competitive prices. However, the approach we take in internationalisation is crucial for us," he continues.
What is Cybernetica's long-term vision? According to Väärtnõu, the company has achieved stable growth thanks to a conservative strategy that involves judicious risk-taking. "Our plan is to continue growing and enter new fields sustainably, such as aforementioned energy and healthcare. Additionally, we aim to bring more licensable products to the market based on our research and development. Currently, the greatest potential lies in cybersecurity, as well as digital identity and surveillance systems."
Moreover, for Cybernetica, an essential common aspect among these technologies is data and data protection. The advent of large-scale language, image, and sound models (such as GPT) is transforming the way we communicate and work, sparking debates about data control and protection. Controlled data processing, particularly the implementation of privacy technologies, supports both human rights and trade secrets, while fostering the development of new applications.
Väärtnõu confirms that Cybernetica will continue its fundamental research and development work, contributing to the science and education ecosystem of the Estonian e-state. "We publicly publish our research results, support master's and doctoral studies, and deliver lectures at universities. It is crucial to conduct world-class research in information security here in Estonia and to maintain Estonia's position within high-level networks. Investing in research and knowledge creation is deeply embedded in Cybernetica's DNA since the days of the Institute of Cybernetics."
"We believe that the e-government solutions we have created will remain with our customers for decades. X-tee, for example, has been operating in Estonia for 22 years! Future-proofing our systems is essential. The world has realised the significance of system security and data protection, and they must be treated seriously. Systems should be built to be secure by design and constantly upgraded. We believe that this approach builds trust, customer satisfaction, and user acceptance," argues Väärtnõu. As an example of a long-term contribution, he highlights that Estonian citizens have been able to participate in internet voting for over ten years. The system has undergone continuous upgrades to ensure its security against new threats. In 2023, for the first time, there were more e-votes than paper votes. Väärtnõu attributes this achievement primarily to the ongoing development and research conducted at Cybernetica.
"Ten years is not a long time for Cybernetica," emphasises Oliver Väärtnõu, indicating that the company is committed to its long-term vision and the continuous advancement of its solutions.