Winning in the race for e-business
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1 Winning in the race for e-business Lecture Four - Benchmarking global best practice Presentation to Sheffield University Management School MBA Students 19 February 2004 Prof. Jim Norton Independent Director Former Director Cabinet Office PIU e-commerce team
2 Issues to be covered How much business is e-business? Measuring national e-business capabiltity international benchmarking study results. A challenge: Remember the people dimension. Final thoughts.
3 How much business will be e-business? EU e-business revenues (both B2B & B2C): 2001 revenues estimated to be $86bn; 2003 revenues forecast at $382bn; and 2005 revenues forecast at $1510bn. UK e-business sales revenues: 2001 revenues were 16.82bn; and 2002 revenues were 23.3bn (up 39%); of this 23.3bn, 6.4bn was B2C (27.5%) goods at 15.4bn outpace services at 7.9bn. online sales represented 1.2% of all sales in UK businesses bought 22.9bn of goods and services in These figures all exclude the financial sector Source: Net Figures at Net Profit - March 2002 and ONS Dec 2003
4 Top Ten E-Commerce Sites in the UK - 12/02 Rank Domain Unique Audience Rank in amazon.co.uk/com* 6,718, ebay.co.uk/com* 5,066, argos.co.uk 2,562, tesco.com 2,186, kelkoo.co.uk 1,894,000 N/A 6 comet.co.uk 1,458, johnlewis.com 1,237, currys.co.uk 1,126, dixons.co.uk 904, dealtime.co.uk 847, Britons spent 949m ($1.54bn) online in December Online purchases surged by 79 per cent compared to Dec 2001 Source: Nielsen//NetRatings & IMRG Dec 02
5 Businesses trading online (%) Aust. UK Can. Ger. US Sweden Italy France Japan Source: Business in the Information Age 2001 Base: All respondents weighted by number of employees
6 Issues to be covered How much business is e-business? Measuring national e-business capability international benchmarking study results. A challenge: Remember the people dimension. Final thoughts.
7 A framework for analysis.. The UK is the leading centre for e-commerce activity within a strong Single European Market, based on openness and innovation by suppliers and customers, light touch regulation, and Government-Industry partnership Access Understanding Trust Market-led approach A competitive and innovative environment Co-ordination and focus across Government Internationally agreed tax and regulatory frameworks Monitoring and evaluation Source: PIU Report e-commerce@its.best.uk
8 Vision Access Understanding Trust Individuals... have ubiquitous, low cost, high bandwidth, fixed and mobile, access, with an always on capability. are not e-excluded. Almost all, including the disadvantaged, have affordable access. are no longer barred by limited literacy.. Business and Government. have access through broadband networks which are nearly ubiquitous throughout the UK. Individuals... are aware of the benefits that they can gain from e- commerce and feel confident that they have the skills to exploit them. are able to use routinely electronic means for Government transactions. Business and Government. use e-commerce as an integral part of strategic thinking in UK industry. have embraced the tools of e-commerce to develop skills. Individuals... can use networks for e- commerce transactions with minimal risk of being defrauded. have minimal risk of being hacked or spammed. Business and Government. are fully confident in the use of e-commerce transactions. have systems which are intrinsically secure. Can protect their IPR. Source: PIU Report
9 Impact Adopt Deploy Aware Assembling the Sophistication Index Environment People Technology Processes Based on a fusion of the three pillars and technology innovation lifecycle approaches with 54 sub-indicators. Source: UK DTI Business in the Information Age: International Benchmarking Study 2003 Page 124 www2.bah.com/dti2003
10 Defining the sophistication index The technology innovation lifecycle approach: Awareness - the ability to make an informed decision based on knowledge ; Adoption - decision making, ownership of, or access to, particular resources; Deployment - usage and optimisation of particular resources; and Impact - the outcomes realised from the adoption and deployment of particular resources. The three pillars approach: People - the leadership, skills and culture of business; Technology - online platforms and applications; Processes - buy-side, sell-side, and inside processes, which support specific business functions; and surrounding them all environment - competition, government, customers, suppliers and other influences. Source: UK DTI Business in the Information Age: International Benchmarking Study 2003 Page 125 www2.bah.com/dti2003
11 Issues to be covered How much business is e-business? Measuring national e-business capability international benchmarking study results. A challenge: Remember the people dimension. Final thoughts.
12 Overall sophistication index scores Source: UK DTI Business in the Information Age: International Benchmarking Study 2003 Page 126 www2.bah.com/dti2003
13 Sophistication index - numerical results 2003 The absolute score differences between nations are generally quite close, in most cases within ten percentage points. Overall the leading nations are Ireland, Canada and the USA. Source: UK DTI Business in the Information Age: International Benchmarking Study 2003 Page 127 www2.bah.com/dti2003
14 Year on year sophistication index change Source: UK DTI Business in the Information Age: International Benchmarking Study 2003 Page 133 www2.bah.com/dti2003
15 UK ICT sophistication index Source: UK DTI Business in the Information Age: International Benchmarking Study 2003 Page 25 www2.bah.com/dti2003
16 Doing the basics very well Ireland tops the league table People - Irish businesses are most confident that their IT skills are meeting the needs of business and their staff have very positive attitudes to new technologies. 81% believe that their IT skills mostly or completely meet business needs; Technology & Adoption - the key to Ireland s high score is the high level of basic connectivity among businesses: there is almost total saturation of Internet and e- mail access. Connectivity amongst small and micro businesses is amongst the highest measured. Those business that do not have basic connectivity show the intention to get connected. Ireland s high connectivity score comes despite very low levels of broadband penetration. Process & Deployment - the strength of Irish business lies in the less advanced forms of ICT deployment: information provision to customers is high, ranking in the top three across most categories, and there has been a huge drive in e- commerce in the last year with online ordering and facilitating rising by up to fifteen percentage points. Despite limited levels of customer and supplier systems integration, Irish businesses have one of the highest rates of linking ordering systems to other internal systems, particularly invoicing and marketing Source: UK DTI Business in the Information Age: International Benchmarking Study 2003 Page 128 www2.bah.com/dti2003
17 Canada is joint second overall Its strengths are environment, adoption and process Environment - Canada has widespread broadband infrastructure (72% of Internet using businesses have access) and a high penetration of access devices. This has been largely driven and supported by ICT education initiatives such as Student Connections and E-biz Enable. Adoption - Canadian businesses have one of the highest rates of broadband access. They have seen the second fastest growth in very high speed connections (over 10 Mbits/sec). They have the highest adoption rates of intranets, extranets and wireless LANs. Process - Canadian businesses strong position in basic deployment (information provision and e-commerce) has been achieved through strong growth across all indicators. Businesses have one of the highest rates of ICT technology use in production, driven partly by a high proportion of production driven sectors. Canada s strongest area is in the integration of businesses systems with those of their customers (24% - 1st) and suppliers (23% - 2nd). This follows recent focus within the economy on supply chain integration and CRM systems. They have by far the highest proportion of ordering systems linked to internal systems (53%), with particularly high growth seen in invoicing and production linkages. Source: UK DTI Business in the Information Age: International Benchmarking Study 2003 Page 129 www2.bah.com/dti2003
18 along with the USA Its strengths are across the board, without any specific leadership: Environment - The USA is cited as having the most effective government support programmes. A relatively high proportion (22%) of USA businesses interact with government via . People - US businesses are amongst the most meticulous in measuring the benefits of technology, a sign of advanced ICT development because of the comparative difficulty of calculating the benefits of ICTs. Confidence levels are high that current IT skills are sufficiently meeting needs. Technology - Whilst basic methods of connectivity are stabilising mid-table, businesses in the USA tend to have a higher take up of mobile technologies and other more advanced methods of connectivity. 75% of US businesses with Internet access have broadband access. Process - Despite a relatively low proportion of businesses allowing customers to order online, online procurement by businesses has continued to grow and the USA remains near the top of the table (63% - 2nd place). US businesses have consistently high levels of online information provision for customers (74% provide information about goods and services online). Source: UK DTI Business in the Information Age: International Benchmarking Study 2003 Page 130 www2.bah.com/dti2003
19 Issues to be covered How much business is e-business? Measuring national e-business capability international benchmarking study results. A challenge: Remember the people dimension. Final thoughts.
20 Technology of course makes an excellent servant but a poor master As an engineer and director my strong concern is with the process by which increasingly rapid change in technological capability diffuses out into society and the economy Source: Jim Norton, COGS Network Meeting, University of Sheffield, 20/01/03
21 The people dimension part one Networked information systems can be either (or both!) a benefit and a curse Major scope to improve quality and lower cost in product manufacture and service delivery But poor track record in building systems which align people, systems and processes. Potential for SMEs to level the playing field with large companies Immense potential in sharing knowledge across divisional boundaries But in the UK SMEs continue to be loathe to adopt e-business seriously. But how to overcome the knowledge is power barriers and reward knowledge sharing? Source: Jim Norton, COGS Network Meeting, University of Sheffield, 20/01/03
22 The people dimension part two Networked information systems can be either (or both!) a benefit and a curse Potential for enhanced information flow and more responsive management exploiting But widespread poor practice leading to information overload and excessive hours worked. Opportunity to codify explicit knowledge into attractive expert systems Potential to tailor private and public sector services to individual consumers But increasing premium on tacit knowledge strengthens clusters. But major absence of the trust required to permit the holding and use of personal data. Source: Jim Norton, COGS Network Meeting, University of Sheffield, 20/01/03
23 Structural change proves challenging Organisational change has been slower than I expected.. Some very successful pioneers - e.g. Oracle (trial financial balance each day).. Much scope for more virtual organisations and for portfolio working; greater empowerment of individuals. Great scope for e- Government initiatives to improve accessibility But an enormous number of failed ERP and e-crm system implementations But little sign of serious implementation (or new support structures such as Guilds) But very low take up of e- Government services, particularly in the UK Source: Jim Norton, COGS Network Meeting, University of Sheffield, 20/01/03
24 Issues to be covered How much business is e-business? Measuring national e-business capability international benchmarking study results. A challenge: Remember the people dimension. Final thoughts.
25 Some final thoughts. E-business has not gone away! The excess of gloom on the downside was just as wrong as the earlier excess of hype. Normal Darwinian processes have removed from the market those who had wacky business plans and little common sense E-business is now being integrated into traditional business, bringing major cost savings, service enhancements and new business opportunities. Remember that, in e-business, people and processes are much more of a challenge than technology
26 And remember the law of unintended consequences.
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