Kein Folientitel

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SMEs "go digital" - but how far do they have to
go? Hannes Selhofer
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Agenda

• The e-Business W_at_tch
• Facts figures
• ICT infrastructure
• General attitude
• Activities
• E-business integration
• Impact
• Summary challenges

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The European e-Business Market Watch

• An observatory
• commissioned by the EC, DG Enterprise, in January
  2002
• monitoring the economic impact of electronic
  business
• sector perspective as primary focus
• Coverage
• 15 sectors of the EU economy
• 7 manufacturing sectors
• 8 service sectors
• 15 EU Member States
• Timing
• first phase until June 2003
• likely to be continued for at least one more year

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Resources made availableby the e-Business Watch

• Publications
• e-Business Sector Impact Studies
• Newsletters (summaries of impact studies)
• The European e-Business Report 2002 (forthcoming)
• The Pocket Book of e-Business Indicators
  (forthcoming)
• e-Business Database (survey results)
• Enterprise survey 2002
• 9264 enterprises interviewed in June / July 2002
• Indicators on e-readiness, activities, impact
• Breakdown by business activity (15 sectors)
• Breakdown by company size classes
• http//www.ebusiness-watch.org

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Infrastructure SMEs are connected to the net
Data enterprise weighted ( of enterprises).
Computation base all enterprises. Includes EU4
(D, F, I, UK). Source e-Business Watch. Survey
2002

• Nearly all SMEs use computers and are connected
  to the internet. Only for about 10 of the
  smallest firms, internet access seems to be
  irrelevant.
• Have they closed the gap to large enterprises in
  terms of basic connectivity?

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InfrastructureQuality of internet access
Data enterprise weighted ( of enterprises).
Computation base enterprises with internet
access (N8479). Includes EU-15. Source
e-Business Watch. Survey 2002

• More than a quarter of the small enterprises with
  internet access connects with analogue dial up
  modems.
• Will narrow band internet connectivity be
  sufficient to for e-business purposes of SMEs?
• If not, is upgrading to broadband connectivity a
  problem?

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Infrastructure Differences in diffusion of
network applications example intranet

• Less than 30 of employees in small companies
  work in a firm with an intranet.
• But For small firms, an intranet is less useful
  than for larger companies.
• Do they really need one?

Data employment weighted (enterprises comprising
of employees) Computation base all
enterprises. EU4 includes D, F, I, UK. Source
e-Business Watch. Survey 2002
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Infrastructure Economies of scale

• Economies of scale force the smallest
  enter-prises to invest relatively more human
  capital in their (still) poorer IT
  infrastructure, compared to the largest
  enter-prises.

Computation base all enterprises. Includes EU4
(D, F, I, UK). Source e-Business Watch. Survey
2002
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InfrastructureThe IT skills gap it still
exists
Data employment weighted (enterprises comprising
of employees). Computation base all
enterprises. EU4 includes D, F, I, UK. Source
e-Business Watch. Survey 2002

• EITO (2001) demand for 14.5 million ICT and
  e-business professionals in Western Europe
  supply of only 12.7 million
• Situation has changed after crash of new markets
• But still shortage of specialists who combine
  entrepreneurial and engineering skills
  ("e-business professionals")

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The attitude How important is e-business already
today for your enterprise?

• SMEs feel that e-business is just as important
  for them today as it is for large enterprises.

51,8
62,4
55,5
49,1
Data employment weighted (enterprises comprising
of employees) Computation base all
enterprises. EU4 includes D, F, I, UK. Source
e-Business Watch. Survey 2002
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Activities e-commerce
Data employment weighted (enterprises comprising
of employees) Computation base all
enterprises. EU4 includes D, F, I, UK. Source
e-Business Watch. Survey 2002

• Adoption of e-commerce activities among SMEs have
  gained momentum. For instance, even among small
  firms, more than half have a website and more
  than a third say they procure online.
• But How sophisticated and successful are these
  activities?
• Does "having a website" tell us much about how it
  is used?

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Simple processing of online ordersInformation
about order by e-mail

• However, the typical way of "handling" online
  orders in SMEs is not yet very advanced
• The standard process is that the order generates
  an e-mail.
• In many cases, the e-chain of processing the
  order ends at that stage.

Data employment weighted (enterprises comprising
of employees) Computation base enterprises
selling online. EU4 includes D, F, I, UK. Source
e-Business Watch. Survey 2002
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Sophisticated processing of online orders
Integration with back-end system

• Only a minority of SMEs report that online orders
  are integrated with their back-end system.
• Larger enterprises are more advance in this
  respect.

Data employment weighted (enterprises comprising
of employees) Computation base enterprises
selling online. EU4 includes D, F, I, UK. Source
e-Business Watch. Survey 2002
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e-Integration Do online orders "trigger business
processes"?

• A quarter of small firms, a third of medium-sized
  and about half of all large firms report that
  online orders trigger business processes.

Data employment weighted (enterprises comprising
of employees) Computation base enterprises
selling online. EU4 includes D, F, I, UK. Source
e-Business Watch. Survey 2002
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Diffusion of e-business solutions aiming at
integrating the "e"
Data employment weighted (enterprises comprising
of employees). Computation base all
enterprises. EU4 includes D, F, I, UK. Source
e-Business Watch. Survey 2002

• Customer Relationship Management (CRM) and
  Enterprise Resource Planning systems are mainly
  used by large enterprises
• Even smaller modules of these solutions are
  hardly affordable for many smaller firms.
• Is it a problem? For which SMEs exactly (sector,
  size)?

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SMEs are not all the sameCRM usage by business
activity (i)
The usage of CRM systems by small enterprises
differs considerably by business activity. It is
obviously more relevant for companies from some
sectors than for others.
0-49 employees
Data weighted by no. of enterprises (" of
enterprises") Computation base all enterprises
in the EU4 (D, F, I, UK), N5917. Source
e-Business Watch. Survey 2002
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SMEs are not all the sameCRM usage by business
activity (ii)
Differences in the adoption pattern of CRM
solutions are even more pronounced among medium
sized enterprises. In some sectors, diffusion is
less than 5, in others close to 20 or even
above.
50-249 employees
Data weighted by no. of enterprises (" of
enterprises") Computation base all enterprises
in the EU4 (D, F, I, UK), N5917. Source
e-Business Watch. Survey 2002
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Different dynamics of adoptionCRM usage by
region (iii)
The adoption of CRM solutions among SMEs also
differs by country (and possibly by regions
within countries).
Data weighted by no. of enterprises (" of
enterprises") Computation base all enterprises
in the EU4 (D, F, I, UK), N5917. Source
e-Business Watch. Survey 2002
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Activities Collaborative business processes

• Large enterprises are faster in their adoption of
  online technologies for external and internal
  business processes other than e-commerce.

Data employment weighted (enterprises comprising
of employees) Computation base all
enterprises. EU4 includes D, F, I, UK. Source
e-Business Watch. Survey 2002
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Activities Internal business processes

• For instance, large firms are four times as
  likely as small ones to use network applications
  for tracking working hours and production time.

Data employment weighted (enterprises comprising
of employees) Computation base all
enterprises. EU4 includes D, F, I, UK. Source
e-Business Watch. Survey 2002
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Impact of e-business Similar perceptions

• SMEs and large firms have similar perceptions of
  the impact of e-business
• Areas where large firms are (slightly) more
  satisfied with the impact
• of selling / procuring online
• on the efficiency of internal business processes
• on procurement costs
• of e-business in general
• on customer relationship
• on relationship to suppliers

higher percentages of companies which report
impacts to be "very positive" or "fairly positive"
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SMEs seem to be fairly satisfied with e-business
should policy 'overrule'?
of enterprises saying that they are "very /
fairly satisfied / disappointed". Computation
base EU-15, enterprises practising e-business (N
4365) Source e-Business Watch. Survey 2002
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The main message

• SMEs have taken the first step to go digital . .
  .
• They feel it constitutes a part of their business
• They are connected to the internet
• They have their websites
• They sell and procure online
• and they seem to be satisfied with e-business
• . . . but They struggle with digitally
  integrating their business processes
• The "e" part of their business processes tends to
  be a front-end / customer faced activity
• More advanced e-business solutions are mainly
  used by large enterprises
• This could have economic implications in the long
  run

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To be discussed important challenges for SMEs
with respect to e-business

• The managerial challenge
• to understand the mechanisms and impacts of
  e-business
• to take the right e-business decisions at the
  right time
• The e-skills challenge
• to find IT and e-business professionals in the
  labour market
• to ensure a high level of e-skills in their
  companies
• The technology challenge
• to have access to affordable e-business solutions
• to ensure SME friendly technical standards
• The networking challenge
• to develop new forms of co-operation
• to become a part of the networking economy

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Outlook "Who will benefit most from e-business?"
of enterprises saying that . Computation base
all enterprises. EU15 (N9264) Source e-Business
Watch. Survey 2002

• SMEs (and especially the smallest firms) believe
  that large enterprises are more likely to benefit
  from electronic business in the future.
• However, on the whole, a majority of companies
  believes that small and large firms will benefit
  equally.

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http//www.ebusiness-watch.org
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The European e-Business W_at_tch
In co-operation of
On behalf of the
European Commission DG Enterprise E-business, ICT
industries and services
Supported by
e-Business W_at_tch c/o empirica GmbH Oxfordstr.
2 D-53111 Bonn
www.ebusiness-watch.org info_at_ebusiness-watch.org