History of the Estonian digital society

"Digital society" is probably the most well-known Estonian brand, having been talked about in reputable magazines such as The New Yorker, Foreign Affairs and The Guardian. It has served as an example for several countries, from Japan to Ukraine and in different fields from healthcare to cybersecurity. However, research into its origins has been sparse. The Ministry of Economic Affairs and Communications, Information System Authority, and Ernst & Young Baltics have created a report about the history of the Estonian digital state, documenting the stories of key people involved in 1991-2016.

As we celebrate our 25th anniversary in Cybernetica, in this brief summary, we look at the report, the different periods in development, and where and how Cybernetica was also involved.

1991-1995 Transition period

During the first five years of the transition period, the importance of training information technology specialists in different institutes, mostly the Institute of Cybernetics of the Academy of Sciences of Estonia, is well remembered. Notably, the innovative research and development decisions made back then were mainly made because of the lack of financial opportunities.

The Institute of Cybernetics has had an essential role in creating Estonian IT expertise. Many developers of the Estonian digital society also worked there at some point. Ülo Jaaksoo, one of the founders and current Chairman of the Supervisory Board in Cybernetica, became a member of the Informatics Council, that advised the government about IT developments. Additionally, likely the most famous footprint by Cybernetica is the creation of the national data exchange layer X-Road.

During that time, funds were scarce and this affected research and development. Solving complicated tasks was financially unrealistic, and Estonia didn’t have enough resources to buy solutions from large corporations. Estonia's budget was limited, but as an upside, it resulted in Estonian IT companies becoming more competitive with an affordable price range. This is where the legendary public-private partnership between IT companies and the state started and is still one of the cornerstones of how the Estonian digital society was built.

In the beginning, the main focus was on developing registers and information systems to support general digitalisation. The central expectations of the development of digital society aimed to lessen bureaucracy within institutions, improve time management and improve user convenience. Digitalisation was seen as a chance to separate Estonia from the Soviet Union- physically and mentally. By using the X-Road services, today Estonians save around three million working hours annually and about five working days per year by digital signing.

1996-2001 Institutionalisation

The transition time period was followed by institutionalisation. Several routines and principles were created: the law regulating the use of databases and the foundations for information technology policies were laid. Digital society, the role of information technology in the development of the economy and the improvements of democratic society became common topics of conversation. Information technology became the core for Estonian future success. The importance of political support and coordination became more evident along with the development of new institutions and management systems.

Institutionalisation oftentimes happened organically through cooperation that was initiated because of practical needs. An example of that would be the unofficial data communication department, created by the Institute of Cybernetics of the Academy of Sciences of Estonia, in order to manage the costs of information processing that later grew into a separate unit that offered networking support to several organisations in the public sector.

One of the most important innovations that brought the digital society into political discourse was The Tiger Leap programme which launched in 1997. It aimed to build up schools’ infrastructure and provide them with access to the internet and computers. The e-state idea really took off after the “Stockholm initiative” that called for countries to develop their digital capacity, and Estonia was seen as the country with the most potential. Information society and digital revolution related questions brought a different perspective into Estonian political space as well.

2001-2010 Peak of the digital state

During the economic boom, several digital solutions were put in use, all of which have been associated with the Estonian e-state's success - the ID-card system, i-voting, the X-road and solutions that were beneficial for entrepreneurs. In 2004, Cybernetica developed new e-customs systems that ensured seamless transition when joining the European Union. The following year our researchers had another major breakthrough- the internet voting system was created. Active cooperation between the public and private sector, importance of banks and telecommunication companies, experiments with different e-democracy solutions and the focus on digital country as a service characterise that time period the most.

E-democracy was the main focus theme. Although the e-democracy projects were not as popular as fast-developing digital services, they were still crucial for future success. Most of the developments of digital solutions succeeded mainly because of political will, as it was needed to get the finances. Political will was easier to obtain during this time period because of the economic boom and IT development got more financial support from different funds from the European Union.

Research and development were of crucial importance for Estonian IT businesses. According to Arne Ansper, CTO at Cybernetica, the reputation of Estonian companies was “a small, suspicious, Eastern European country with strong links to the Soviet Union”, and it didn’t earn trust in many fields, cybersecurity being one of them. It was an era where the public and private sectors worked side by side to create solutions that were ahead of their time, such as the X - road and the first e-health developments.

2010-2016 Expansion and consolidation

In 2010, the main focus was on stronger management and on the increase of the country’s strategic role. In order to better plan and implement Estonian digital policy, several government positions were created. By that time, there were also better investment opportunities from European Union's structural funds. It was emphasised that the digital state should be more service-based - the developments that were viewed from the standpoint of service and design had to take into account the user’s experience. At that time, Cybernetica was working on SplitKey mobile identity technology that enables secure authentication and digital signing. Ultimately, this led to a better user experience because it provided an opportunity to sign documents conveniently.

For those who read Estonian, the full story is on the Information System Authority website.