EBIP Synthesis Report Overview

1
EBIP Synthesis ReportOverview

• Graham Vickery, OECD
• EBIP Workshop29-30 October 2001, Rome

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Aims of the workshop

• Explore the rapidly evolving adoption and use of
  e-commerce and the Internet
• Discuss implications of e-commerce for firm
  strategies
• Examine impacts on sectoral dynamics and market
  structure
• Draw out e-commerce policy issues
• Contribute to follow-up work

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EBIP project participation

• Launched late 1999
• OECD Working Part on the Information Economy TNO
  supported by the Netherlands Ministry of
  Economic Affairs and Telematica Instituut
• IPTS (Seville)
• National teams from the Netherlands, France,
  Canada, Italy, Korea, Mexico, Norway, (Portugal),
  Spain, Sweden, and the United Kingdom

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Method and goals

• Common analytical framework and interview
  procedure with established firms operating mainly
  in B2B e-commerce
• Firm case studies undertaken late 2000/early
  2001. Detailed responses from 179 firms
• 30 reports covering 14 sectors in 10 countries
• Cross-country Synthesis Report
• Need for policy-makers to understand the
  e-commerce environment of participants

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EBIP summary results

• E-commerce is part of a much larger business and
  economic evolution partly driven by ICTs
• Successful e-commerce applications usually part
  of broader strategies to respond to business
  challenges
• But for many firms e-commerce represents a major
  innovation in the ways of doing business

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Is e-commerce having significant impacts on
business?

• E-commerce strategies led more by commercial than
  by technological considerations. The commerce
  factor outweighs the e factor
• Many markets may be more open and efficient with
  advantages for producers and consumers
• E-commerce may provide new avenues for firms to
  create new dominant positions or perpetuate
  existing ones
• Current strategies and practices will evolve
  considerably, and monitoring e-commerce impacts
  is only beginning

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Why do firms undertake e-commerce?

• Motivations to apply e-commerce are high where
  ICT investment is already high and risk
  relatively low. Most firms want to
• Reduce costs
• Increase transaction speed and reliability
• Improve management capabilities
• Develop or improve collaboration capabilities
• Create interdependencies
• Better manage customer relations
• Create more added value

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What activities are going on-line?

• Firms cautious about putting strategic activities
  and transactions on the Web. When they do they
  protect their transactions and advantages
• Advertising catalogues, information services are
  overwhelmingly on the WWW
• Transactions (ordering, billing, payment,
  finance) are on EDI, EDI over Internet, Extranets
• Migration from EDI to Web-based systems, for
  example in ordering, only partial
• Most e-commerce innovations were still being
  planned or developed when interviewed

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What kinds of innovations are taking place due to
e-commerce?

• Product innovations are more common among firms
  with intangible assets
• Process innovations are more frequently
  implemented by large firms
• Expansion and segmentation (organisational
  innovations) are more common for firms with
  intangible assets, and small firms are involved
  in and seem to benefit from expansion strategies

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What are some quantifiable impacts?

• Vast majority of firms considered e-commerce
  facilitates the management of business
  relationships
• For almost half of firms, e-commerce tools
  reduced the cost of reaching new customers and
  suppliers
• A greater mix of direct and intermediated sales
  help customers bypass traditional intermediaries
  and facilitate new ones

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Quantifiable impacts continued

• Most firms who replied claim the level of
  employment was unaffected - composition often
  changed to include more high skilled workers
• Many firms reported positive effects on turnover
  and profitability
• E-commerce developments reinforce existing
  trends. Established incumbents and their business
  models will survive and e-commerce may not alter
  established market power. Second mover
  advantages appear important
• Very few firms saw e-commerce destabilising
  existing relations and small firms may not be
  advantaged

12
Quantifiable impacts continued

• Successful firms have coherent overall strategy
  with e-commerce and IT skills development
  embedded in this strategy
• The impacts of e-commerce within firms are
  difficult to quantify.
• - problems isolating effects coming solely from
  e-commerce
• - most firms are still in the implementation
  stage

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Some policy directions

• Firms saw three policy areas as important
• - competence factors general education,
  specific IT and e-business skills
• - cost factors, including technology
• - confidence factors including international
  clarification, enforcement and cross-border
  inter-operability of existing legal frameworks
  rather than creating new ones
• Additional OECD analysis suggests areas for
  policy action
• - skills/competences
• - infrastructure (pricing, broadband)
• - market structure/competition