The European e-Business Report 2004 - Berlecon Research GmbH

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The European E-Business Report 2004Executive SummaryElectronic business is gradually coming of age. The business implications of information andcommunication technologies (ICT) were commonly over-hyped during the boom-phase of the Interneteconomy, but possibly under-hyped during the subsequent bust-phase. Having experienced theextremes, it appears that the time has come for a clearer, more realistic perspective and assessment.With the growing maturity and diffusion of ICT based applications, a new challenge emerges for firms.Doing business electronically, once an option for innovation and strategic positioning, is about tobecome a "must" to stay in business. However, the underlying concepts are still changing fast, whichtranslates into a constant "adopt and adapt" for many firms. This report shows empirical evidence ofpractices and business implications in 10 sectors of the EU economy in 2003/04.The statistics – trends in 2003/04ICT infrastructure: Migration towardsbroadband Internet connections continues.More than a quarter of firms* hadbroadband in late 2003Increase in B2B online trading: Almosthalf of all firms* buy supplies online. Manyof those, however, say that onlinepurchases are less than 5% of total.B2C electronic commerce gains momentumin specific markets. The current boommarket is e-tourism, where about a third offirms declare they sell their services online.Business process integration is still thebig issue, but related software suites arenot yet widely diffused. ERP systems areused by about one in five medium-sizedfirms and one in three large ones.W@tch out: potential challenges aheadE-procurement and e-sourcing: Win-winor zero-sum game? Saving procurementcosts is an opportunity for buyers, butequally puts pressure on suppliers.Efficiency gains (for both sides) competewith pressure on margins.Unequal gains from e-business due tohigh fixed costs: Although e-businesssolutions are gradually being adaptedtowards the needs of SMEs, large firms arestill in a better position to benefit.Economies of scope are evident.Vanishing advantage? As many applicationsbecome a commonplace, ICT areincreasingly a "must" for companies, butpossibly no longer an opportunity for theindividual firm to gain strategic advantage.*in % of employmentSectorThe relevance of ICT and e-business in 10 sectors in 2003/04(Note: Condensed presentation based on quantitative statistics, desk research and case studies)FunctionInternetconnectivityUse of e-standardsERP / SCM9Sourcing &procurementMarketingand salesOverallsignificanceTextile Chemical Electronics Transport equipm. Craft' & trade Retail Tourism ICT services Business services Health = low relevance / diffusion; = average relevance / diffusion; = above average relevance /diffusion = high relevance / diffusion; = in some sub-sectors onlySource: e-Business W@tch (2004) – based on analysis from the respective Sector Studies
The European E-Business Report 2004Sectoral e-business profiles: manufacturing and services are differentICT have different functions for enterprises depending on the nature of their business activity. Itdepends, for example, on whether firms are dealing with large numbers of consumers or mainly withsmaller numbers of other businesses, on the kinds of goods or services they produce, and on thespecifics of the industry value chain. 6For firms from manufacturing sectors, increasing the efficiency of supply chain processes has beena key objective for many e-business projects in 2003/04. Moreover, large manufacturers have set upor use sophisticated e-procurement platforms to cut down on procurement costs. Services are evenless homogeneous than manufacturing sectors. Retail companies, for instance, focus on procurementand logistics related opportunities. Tourism, on the other hand, is experiencing the power of theInternet as a new channel for marketing and sales, with significant impacts on the value chain.Exhibit 1.1-1:The e-Business Index for 10 sectors(eEurope 2005 benchmarking indicator 7 )A) ICTInfrastructureB) E-BusinessActivityTextile 47 23Chemical 82 54Electronics 91 74Transport 98 91Craft & trade 29 24Retail 50 53Tourism 59 64ICT srv. 100 100Business srv. 75 51Health 38 29E-Business Index (2003/04)(Benchmark)ICT srv.TransportElectronicsChemicalBusiness srv.TourismRetailTextileHealthCraft0 20 40 60 80 100273835516561718510095Source: e-Business W@tch (2004)Among the 10 sectors studied by the e-BusinessW@tch in 2003/04, the most intensive use of ICTand e-business is made by companies from theICT services sector (which includes telecommunicationsand computer related services), manufacturersof transport equipment and of electronicsand electrical machinery. There is a caveat withrespect to the automotive industries, though, as itis mainly the large players that drive e-business inthis sector. Many of the small firms are much lessadvanced in their ICT use.The chemical industries and firms offering businessrelated services are also rather intensive e-business users. Again, there are differencesbetween large and small companies and by subsector.Knowledge-intensive and operationalbusiness service companies, for example, havedifferent profiles regarding the role of ICT.Tourism and retail are "e-specific" sectors whichuse ICT for very specific purposes. Tourism is theleader in e-commerce with one third of all companiesselling services online. In the retail sector,different business models have emerged, mainlycombining traditional channels with online. Pureonline retailers are the exception and are concentratedin a few niche markets that lend themselvesto e-commerce.The textile industries (among the manufacturingsectors) and the health & social services sectorare among the late adopters of e-business.Although this is partly explained by the dominanceof SMEs in these sectors, there is still untappedpotential. The health sector, one of the largest ineconomic terms, is believed to have substantialcost saving potentials through e-business.67Evidence on the differences in e-business impacts for manufacturing and services is presented in thecontribution from Tony Clayton and Peter Goodridge, UK Office for National Statistics (see Chapter 3).Cf. Methodological Annex, Specific Notes, No. 110
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