From Contributing Editor Mary-Anne Goldsworthy
cec@gbus.cc.monash.edu.au
http://www-mugc.cc.monash.edu.au/cec/index.html
Mary-Anne Goldsworthy is Executive Officer of the Centre for Electronic
Commerce at Monash University, Gippsland Campus, Churchill, VIC 3842.
The CEC is a national independent consulting, training and research centre for electronic commerce services to assist industry and government, and specifically SMEs (small to medium enterprises).
The CEC was commissioned by the Australian Department of Industry, Science and Tourism (DIST) to conduct a consultancy to examine and provide advice on electronic commerce programs for small to medium sized enterprises (SMEs).
Small and medium enterprises (SMEs) play a major role in the Australian economy, making up 96% of all enterprises in the private non agricultural sector and account for more than 56% of private sector employment. As a whole they currently contribute most of the private sector employment growth in Australia.
This report combines a summary of recent extensive research already performed by a number of organisations in the last 12 months, together with interviews held with major SME representative bodies, to present an up-to-date picture of SME involvement in Electronic Commerce in Australia. It examines key elements, impediments and initiatives underway, general trends and future scenarios of electronic commerce for SMEs, and extracts essential themes.
Recommendations for a number of specific programs which Government and other agencies and associations may undertake is the specific focus of the report. These programs may assist SMEs in coming to terms with electronic commerce more quickly and accelerate adoption and implementation of relevant electronic commerce technologies for business benefit.
The full report can be viewed at the Centre for Electronic Commerce web site.
Broadly, the objectives of the program were to: · encourage SMEs to integrate electronic-based technologies in their business activities and · help avoid uncoordinated developments of underlying technologies which could cause incompatibilities and exacerbate SME problems of integration with the global market.
Governments, both Federal and State have been involved in EDI, electronic messaging, telecommunications networks and other EC technologies over recent years and see the exploitation of these tools as a means to develop a more efficient business environment in Australia and globally.
Governments are the nation's largest buyers of goods and services, and they recognise the importance of creating opportunities for SMEs. They are generally committed to ensuring that SMEs have access to the Government marketplace, recognising the important place SMEs occupy in the economy in generating employment and introducing innovation.
DIST is seeking ways to further assist SMEs to address their business, education and training, and technology awareness needs in the adoption of electronic commerce.
Issues and concerns of SMEs were collated from an examination of studies, reports, and surveys pertaining to SMEs in Australia and overseas, and interviews were conducted with senior representatives of organisations with a specific interest in SME issues. Additionally, a number of organisations considered key in formulating the recommendations included in this report were included in the interview process.
Electronic Commerce is not high on the agenda of successful and innovative small businesses in Australia, nor is it considered to be an important contributor to their success, at the present time. "There is a need to identify a real benefit before using Electronic Commerce" (Interview Comment)
Whilst SMEs are aware of increased use of technology for business, they are predominantly concerned with more immediate and fundamental issues like staying in business `this week', endeavouring to make a profit, coping with regulatory and taxation matters and thwarting competition.
SMEs do not perceive that Electronic Commerce can substantially assist them with these primary concerns past the utilisation of simple fax technology which most consider to be an essential business tool.
The level of appreciation of SMEs today, on the potential for electronic commerce to provide competitive advantage, encourage and support export opportunities, is still relatively low.
Inertia associated with change
Entrenched business attitudes and resistance to change, together with limited level of dedicated resources to implement and manage the change process, affect the speedy uptake of EC for SMEs.
No recognised business need
SMEs are predominantly focused on economic survival and, unless major trading partners are insisting upon electronic communications, there is limited motivation to introduce technology for its own sake
Technology phobia
Many SME proprietors and staff believe EC may increase the complexity of their business systems rather than facilitate positive change. Decisions relating to selection of hardware and software, for what they perceive to be an immature business process, further exacerbates the delay in widespread adoption of electronic commerce amongst SMEs.
Lack of availability of simple to operate, cost effective EC enabled software
Turnkey solutions are missing. SMEs generally do not have the skills, understanding or resources to investigate the myriad of alternatives for EC.
Lack of a critical mass of electronic commerce and communications partners
Because there does not appear to be a proliferation of electronic trading partners, nor well-publicised case studies in Australia of successful EDI or EC implementations amongst SMEs, there is not yet a `critical mass' motivation.
Immaturity of telecommunications and IT infrastructure.
SMEs believe that the existing telecommunications and IT infrastructure is not mature or complete as there are constant changes taking place and improvements being made. They are also concerned that current technology will be quickly superseded.
There are no real technical issues perceived by SMEs, relating to simplified forms of EC (such as Email), however there are greater challenges when there is a need to integrate EC technology into existing computer applications (such as standards-based EDI).
SMEs do not necessarily have the in-house expertise for system integration, and many would need to seek outsourced advice and assistance.
Technology transfer is typically a slow and sensitive process which undergoes several phases before penetration and full utilisation of even a mature technology. The process is even more complicated if there is a need to transfer immature technology which SMEs perceive EC to be.
The primary business issues affecting the introduction of EC are related to priorities of the business i.e. whether there is a good business reason to be involved and whether the involvement can be cost/justified in either the short or long term.
The capital cost of a PC and modem is not really an issue for SMEs, nor is the cost of gaining access to the Internet for on-line EC activities including Email, access to information on bulletin boards, WWW pages, etc. This is supported by the data from surveys relating to the current proportion of SMEs currently with computers.
The majority of SMEs currently are using computers in their business with an increasing number installing modems (the basic configuration required for Internet access).
However the extent of any reengineering of processes required directly affects the capability of SMEs to take full advantage of EC technologies.
IT Infrastructure
SMEs need cost effective access to an efficient and reliable IT infrastructure free of any bias because of their smaller size when compared to larger organisations.
Standards
Implementation of the various standards utilised for electronic commerce technologies must be consistent across industry groups and national boundaries in the same manner that exists for the telephone network around the world.
The standards setting process needs to be supported by both the Government and private sectors to ensure that, over time, future standards development is appropriate for use across industry sectors and national boundaries.
Government has a role to fulfil in ensuring that global standards are applied consistently in their own implementation of EC technologies.
Universal rules for EC implementations
There needs to be a universal implementation of electronic commerce policy between departments and agencies and between different levels of government in Australia as well as with the private sector.
Availability of `Shrink-wrapped' EC software
SMEs seek `plug and play' EC software and associated services which require a minimum of installation, training and maintenance.
Their expectation is that cost effective EC software interfaces will be available to integrate with existing software applications without the need to duplicate effort by first printing out EC communications for attention and action or re-keying data into other computer applications.
These EC software interfaces need to demystify the technical complication that currently exists when attempting to integrate EC into existing applications and ideally provided by software suppliers as part of the standard software upgrade process at minimal cost to the SME.
Legislative and legal issues
Legislative and legal issues associated with electronic commerce need to be addressed by government and where necessary appropriate legislation enacted.
The availability of universal and low cost access to the Internet and World Wide Web, using non proprietary technology, is widely seen in Australia and overseas as providing the basis for development of major global business opportunities and enabling the widespread implementation of cost-effective EC for SMEs.
There has been a dramatic growth in the use of the Internet by both Governments and the private sector both in Australia and overseas as a means of providing access to information and transacting business electronically.
This growth is destined to continue, underpinned by the low cost of the Internet when compared to other electronic networks, and its availability 24 hours a day, 7 days a week.
Based on non-proprietary technology, the Internet provides SMEs with the ability to communicate electronically on a global basis with the same ease that larger organisations communicate internally using their internal local area networks. It also enables on-line access by SMEs to information databases and for transacting business with both customers and suppliers without any geographic restriction.
Access to the Internet by SMEs gives Governments the means whereby they may involve SMEs in their electronic initiatives in the most cost effective manner using a communications infrastructure that enables SMEs to pursue global business opportunities.
There are a number of influential factors potentially affecting the successful outcome of any program: · the level of understanding of EC by SMEs, which at this time is relatively low, · the perception of business need for EC is a fundamental prerequisite, · key issues, impediments and concerns must not be ignored, · cross-industry and government co-ordination of EC implementation must be encouraged, · the impact of the Internet should not be underestimated in its significance for SMEs and EC.
Strategies for encouraging SMEs to embrace electronic commerce technologies for their business activities in a co-ordinated way, should include:
EC Programs designed for SMEs should recognise the following:
1. Establish an "Electronic Commerce Conversion Board"
There is scope for a targeted and focused national agenda that transcends both political and competitive boundaries that can raise the importance of the exploitation of Electronic Commerce technologies for SMEs and business generally. Currently in Australia there are many electronic commerce-related activities which are predominantly uncoordinated in both the government and private sectors of the economy. A national focus to transcend both the public and private sector would be best addressed using a process similar to that adopted in Australia when decimal currency and metrication were introduced.
2. Appoint Industry Training Partners
Government should adopt a leadership role in the education process by commissioning an industry development project to develop and distribute the initial educational material content in conjunction with SME representative organisations and existing training and educational institutions.
Industry training partners should then be appointed to include Industry Associations which represent SMEs and other interested professional associations and educational institutions.
3. Explore the feasibility of establishing "Electronic Commerce Resource Centres"
SMEs need to be able to consult multi-disciplinary, supplier independent centres, either privately or publicly supported which can provide services at a level of cost that can be justified.
4. Initiate a World-Wide competition for an EC logo that could be used to identify EC technologies that meet global specifications and identify accredited providers of EC advice and services
SMEs need to be confident that EC technology hardware and software is suitable and reliable and that providers of associated products and services are qualified to provide those products and services. The best method to achieve this is to establish an accreditation process which can be identified by reference to a specific logo or registered mark issued by an appropriate authorising body.
The Government's role in this process would be to act as an independent arbitrator in assessing the accreditation criteria for a private organisation to manage and control.
5. Encourage "Prepackaged EC Technology Solutions"
One of the simplest and cheapest form of electronic commerce for SMEs to implement, apart from simply installing a fax machine, is Email over the Internet.
The Internet also provides access to the WWW where SMEs can cost effectively market their goods and services and access information relevant to their business.
Government could stimulate the early adoption of EC by SMEs by determining a recommended software/hardware package configuration that would be suitable for use by SMEs to be part of electronic commerce initiatives of Government as well as provide general access to the Internet and WWW.
6. Provide assistance funding to projects that would encourage SMEs to be involved in "consumer electronic commerce on the Internet".
The Internet provides universal and global connectivity and also provides new opportunities for SMEs to market themselves on a world-wide basis, sell goods and services to consumers (including other SMEs) and as such provides a cost effective introduction to electronic commerce.
7. Use Rotary as a vehicle for Information Dissemination
Rotary International can deliver an organisation with 42,000 members in Australia of which 60% are SMEs.
Rotary has a world-wide membership of 1.3 million business people and is considered to be an ideal organisation to assist in disseminating the electronic commerce message to SMEs in a non threatening environment in a manner that could assist to raise funds for Rotary and assist them to pursue their charitable objectives.
8. Establish Annual Australian EC Awards
The establishment of Australian Annual EC Awards would provide the opportunity to:
9. Use Accountants as SME EC Channels
Accountants are significantly involved currently with SMEs providing accounting and other advice.
The Accounting professional bodies have already included in their organisational structure a specific interest in SMEs issues as many of their own members are SMEs in their own right.
With the experience gained over recent years by Accountants in electronic commerce with the Australian Tax Office for the electronic lodgement of taxation returns, and with their professional reputation as trusted advisers, Accountants would be an appropriate channel to encourage the adoption and implementation of Electronic Commerce by SMEs.
10. Other Suggested Initiatives
It would be helpful if government initiatives could be introduced to:
Using the Internet for electronic commerce will perhaps have the greatest impact for SMEs because of its low cost, universal access on a global basis and the fact that it is based on non proprietary standards.
The time is now ripe for the exploitation of electronic commerce for SMEs, particularly following the selection of the strategic partner for the Commonwealth Electronic Commerce Service (CECS).
In the first instance SMEs need to be introduced to electronic commerce with simple Email and access to the WWW for business information and the marketing of their goods and services, supported with appropriate education and training.
Other forms of electronic commerce (including EDI) could be implemented over the Internet according to the justified business needs of both the Government and private sectors.
Ms Jo-anne Fisher
Executive Director, Centre for Electronic Commerce