The European e-Business Report The European e ... - empirica

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The European E-Business Report 2005 3.4.2 Adoption of e-business activity in the Slovak industry The European e-Business Readiness Index, constructed on the basis of data collected in a survey in 2004, ranked Slovakia lowest of all 25 EU Member States. This result reflects the historically low support of internet development in Slovakia. One of the causes might be insufficient political support, which eventually resulted in not creating the Ministry of Informatics. Instead, as a sort of compromise, the post of Commissioner for Information Society was set up. But this move might prove to be insufficient for accelerating ICT and e-business adoption among Slovak enterprises. The current situation of electronic commerce in Slovakia can be characterised by the following evidence: Demand side: vicious circle due to little incentive for consumers 40% of the Slovak population (aged 15+) uses the internet regularly. This fraction is, according to the Office of Statistics, growing dynamically. However, in 2005, only 5% of Slovaks used the internet for online shopping and just 3.1% of them had used the internet for online shopping more than once. This represents a very weak consumer power that affects the development of business-to-consumer models. This phenomenon also has negative implications on prices of products and related delivery services. As a result, the majority of companies use a website only as a supplementary distribution channel with product prices very similar to those of traditional stores. Consequently, the same prices and higher distribution costs generate weak consumer interest for online shopping, which creates a vicious circle. The problem is also caused by the small potential of the domestic market and the globalisation process that is driving Slovak companies out of the game. The publishing industry is a good example of this phenomenon. The prices of Czech books (a language very similar to Slovak) are often lower by 30%. Once the distribution logistics of Czech companies are resolved, the Slovak publishing industry will be seriously jeopardized. The same trends appear in electronics and other industries. Difficulties for electronic portals Low awareness of electronic commerce, but mainly of electronic markets, meant that some Slovak electronic portals went bankrupt (e.g., b2b.mibicon.sk). Their resulting use is very low (only 0.5%). Unfortunately, only a few larger companies are familiar with vertical markets. This may eventually cause trouble because the Slovak industry is gradually focusing on the automotive industry. For example, the world leader in automobile electronic markets, Covisint, is unknown among the majority engineering companies. Developments in e-business Fortunately, the development of internet use for business purposes is gradually changing for the better. Compared to 2004, when, according to the European e-Business Readiness Index, 71% of companies used the internet, in 2005 it is 80%. Companies use the internet mainly for communication with business partners (77%). The share of firms present on the web increased from 47% to 56%. However, the total number of orders and payments carried out through the internet is still low. According to the survey carried out within the ANPROBA project during the first half of 2005 (on the sample of 725 companies), the possibility of making orders and payments through the company website was reported in only 10% and 1.6% of the cases respectively. The highest number of companies with web-supported online payments was within small enterprises (2%), which represent a major part of traditional B2C e-shops. 85% of large companies, 80% of middle sized companies, 63% of small and 35.6% of micro companies had a web presence. If we compare the results of the European e-Business Readiness Index in 2004 with the results of the ANPROBA survey, the most significant increases are visible in the rate of adoption and the use of internet technologies for procurement, from 3% to 17%. Online sales were offered by 12% of companies in 2005. The use of the internet for screening sale offers, on the other hand, is used by 65% of companies. Despite some positive trends between 2004 187
The European E-Business Report 2005 and 2005, it is not encouraging that 61% (48% large, 56% medium, 66% small and 59% micro companies 106 ) of the respondents declared that they do not intend to implement any other e- commerce solutions into existing business systems. However, approximately 10% of the surveyed companies reported plans to invest into e-procurement solutions, and 16% into online sales within the coming year. Barriers for using ICT to support business processes were also examined. The largest barrier is represented by the high costs of acquiring ICT (24%) and costs for internet connection (17%). Significant improvement has been reported in the issue of internet security – 74% of companies do not consider internet security as a major barrier for IT implementation. In past years, this barrier ranked significantly higher and had been reported by more than 60% of companies. Online procurement activity mainly confined to national suppliers Looking at business relations from a globalisation perspective, it is interesting that 75% of companies using electronic procurement systems in Slovakia have Slovak suppliers. This indicates that the internet, as a global communication tool, may be used insufficiently. This figure is quite in contrast with the high percentage of companies seeking business offers on the internet. This might indicate strong cultural relations among Slovak companies, or low awareness of opportunities to search for better offers in other regions or countries. This was confirmed during interviews conducted with managers of several larger companies. In addition, less than 1% of companies participate in e-markets. On the other hand, 63% of companies buying online and 59% of those selling online reported significant profit increase over the last three years. Key indicators The following charts present some other indicators derived from the ANPROBA research. I.11 I.6 Exhibit 3.4-2 e-Business Use by firm size I.5 I.9 I.8 I.4 100% 80% 60% 40% 20% 0% I.7 I.3 I.2 250+ 50-249 10-49 0-9 I.10 I.1 Indicators I.1…% of enterprises, which use ICT for economic agenda. I.2…% of enterprises, which use ICT for communication with partners. I.3…% of enterprises, which use e-procurement. I.4…% of enterprises, which use online selling. I5…% of enterprises using the internet for searching. I.6…% of enterprises, which use e-banking services. I.7…% of enterprises, which have WWW presentation with the company information. I.8…% of enterprises, which have WWW presentation with product information. I.9…% of enterprises, which have website with ordering possibilities. I.10…% of enterprises, which have website with online payment possibilities. I.11…% of enterprises, which have website with multilingual support. 106 Segmentation is performed according to the e-Business W@tch methodology. 188
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