ICT and e-Business Impact Studies – 2009 - empirica

Table of contentsFo r e w o r d 3K e y f i n d i n g s 4E-Bu s i n e s s m o d e l s 5E n a b l i n g r o l e o f ICT f o r i n n o v a t i o n 6S e c t o r s t u d y e n e r g y s u p p l y 8ICT a n d g r e e n h o u s e g a s e m i s s i o n s 12ICT-r e l a t e d industr ial p o l i c y 14E-Sk i l l s d e m a n d d e v e l o p m e n t s 16M e t h o d o l o g i c a l n o t e s 18Ad v i s o r y Bo a r d 19S e c t o r s t u d y g l a s s , c e r a m i c s , c e m e n t 10The Sectoral e-Business WatchThe Sectoral e-Business Watch (SeBW) studies the adoption, implications and impact of electronic business practices in different sectors ofthe economy. It continues activities of the preceding “e-Business W@tch” which was launched by the European Commission, DG Enterpriseand Industry, in late 2001, to support policy in the fields of ICT and e-business. The SeBW is based on a Framework Contract and Specific Contractbetween DG Enterprise and Industry and empirica GmbH.In ICT-related fields, DG Enterprise and Industry has a twin mission: to enhance the competitiveness of the ICT sector, and to make the efficient uptakeof ICT easier in European enterprises in general. The SeBW helps in achieving these goals by supporting informed policy decision-making.Cornerstones of SeBW research include enterprise surveys, case studies, expert interviews and econometric analyses. The resulting data enablethe study team to analyse drivers and impacts of ICT adoption. In 2009, the SeBW is conducting five sectoral and thematic studies. This brochurepresents some of the results. The full sector studies, and further resources such as Table Reports with detailed survey results, can be downloadedfrom the programme’s website (www.ebusiness-watch.org).Contact informationFor further information and to request copies of this brochure, please contact:European Commission Enterpriseand Industry Directorate-GeneralUnit D4 “ICT for Competitiveness and Innovation”1040 Brussels, Belgiume-Mail: entr-innov-ict-ebiz@ec.europa.euThe Sectoral e-Business Watchc/o empirica GmbHOxfordstr. 2, 53111 Bonn, GermanyWeb: www.ebusiness-watch.orge-Mail: info@ebusiness-watch.orgDisclaimerNeither the European Commission nor any person acting on behalf ofthe Commission is responsible for the use which might be made of thefollowing information. The views expressed are those of the authorsand do not necessarily reflect those of the European Commission.Nothing in this brochure implies or expresses a warranty of any kind.Results and recommendations should be used only as guidelines aspart of an overall strategy.© European Communities, 2009. Reproduction is authorised providedthe source is acknowledged.ImprintThis brochure has been prepared by empirica Gesellschaft fürKommunikations- und Technologieforschung mbH on behalf of theEuropean Commission, Enterprise and Industry Directorate General.It is a publication of the Sectoral e-Business Watch programme, whichis managed by empirica GmbH and implemented in cooperation withDIW econ, IDC EMEA, Ipsos and GOPA-Cartermill, based on a servicecontract with the European Commission.Editors: Stefan Lilischkis, Hannes Selhofer (empirica); Peter O’DonnellDesign and layout: GOPA-CartermillPrinted in BelgiumPage 2

F O R E W O R DTackling the economic crisis and climate changeWhile cutting costs is a key motivation for e-business activity, particularly in the currenteconomic circumstances, the Sectoral e-Business Watch 2009 shows that firms areexploiting the enabling potential of Information and Communication Technologies(ICT) to achieve their major business objectives. For strategic purposes, they have integrated ICTinto their production processes, quality management, marketing, logistics and customer services.Companies that exploit the innovative potential of ICT even in times of economic difficulty canemerge stronger and more competitive.While the outlook for ICT investment has become less favourable since mid-2008, the Sectorale-Business Watch shows that the evolutionary development of e-business has certainly notcome to an end. It is widely recognised that “e” elements have become an essential componentof modern business. The competitive pressure that companies are increasingly subject to remains a strong driver for ICTadoption to reduce costs and improve customer service.Recently, the use of ICT to save energy and reduce greenhouse gas emissions gained new prominence, with potentiallywide impacts for the economy and society as a whole. The e-Business Watch in 2009 has responded to the importance ofclimate change issues with specific studies: one on the energy supply industry, another on the glass, ceramics and cementindustries – which are energy-intensive – and a third on ICT impact on greenhouse gas emissions.The results show that ICT is increasingly used for efficient and environmentally-friendly use of resources and that thereremains much scope for further improvement. Survey findings also confirm the key enabling role of ICT for innovation: In theenergy supply industry, almost all companies that introduced new products, services or processes in the past year reportedthat ICT was a component of their innovation.A further study dealing with ICT-related industrial policy acknowledges that the economic crisis may call for new ways ofsupporting ICT innovation and adoption. Finally, e-skills continue to deserve particular attention for successful ICT ande-business implementation. The e-Business Watch found that a shortage in the supply of ICT practitioners is a main concern,particularly for ICT service providers.The European Commission has always considered that ICT uptake is instrumental in improving the competitiveness of theEuropean economy as a whole. The results of the Sectoral e-Business Watch for 2009 once again confirmed the validity ofthis approach.Costas AndropoulosHead of Unit, Unit D4 “ICT for Competitiveness and Innovation”European Commission, DG Enterprise and IndustryPage 3

K E Y F I N D I N G SSnapshots – key findings of the Sectorale-Business Watch in 2009The five studies of the Sectoral e-Business Watch (SeBW) in 2009 focus on ICT issues related to climate change andinnovation. Overall, the studies confirm the key enabling role of ICT for innovation in general as well as for enhancedenergy efficiency and reduced greenhouse gas emissions in particular.Enabling role of ICT for innovationsubstantiated for entire stream of R&D andcommercialisationICT can greatly support energy supply –but lack of interoperability hampers smartmeteringThe SeBW surveys found that ICT is crucial for innovation of new productsand services and, even more so, of new processes – it has an “enablingrole” in this respect. SeBW enterprise surveys confirmed this for the entirestream of research, development and market introduction. In the energysupply industry, 89% of respondents said that new products or serviceshave ICT components and as many as 97% stated that their new processesare supported by ICT – the highest values for ICT-enabled innovation thatthe e-Business Watch has ever encountered in an industry.Smart metering, smart grids, demand management and intelligentpower plants are some of most prominent issues in the energy supplyindustry. Supply of energy requires complex interactions of generation,transmission and distribution facilities which can be greatly facilitatedthrough ICT. Most important for successful ICT implementation isintegration of the core supporting technologies. However, the e-BusinessWatch survey found that a lack of interoperability is one of the mostrelevant issues preventing the adoption of smart metering.ICT is important for process innovation andgrowth in the glass, ceramics and cementindustriesThe ability to innovate is a critical success factor for European glass,ceramics and cement industries to keep their position in high valueaddedmarket segments. ICT has an important role to play as an enablerof process innovation. Case studies show that successful use of ICT doesnot necessarily require major investments in hardware or software.Furthermore, growth accounting shows that ICT capital (the stock ofhardware, software and telecommunications equipment) contributedpositively to value added growth in the sector from 1995-2005.ICT tends to increase energy efficiency andlower emissions in energy-intensive industriesClimate change is one of the main challenges of our time. Energy useproduces, on average, 80% of greenhouse gas emissions, and consequentlyenergy-intensive industries are the subject of much attention. ICT canhelp reduce the emissions intensity, but the potential differs betweenindustries. An e-Business Watch study finds that in three of the five mostenergy-intensive sectors in the EU, greater ICT capital intensity has beenassociated with increased efficiency and lower emissions intensity.This trend bodes well for a future reduction in emissions intensity dueto ICT.A suggested need for ICT-related industrialpolicy to foster ICT innovation and adoptione-Skills shortage concerns ICT serviceproviders – demands on user skills increasedFindings from an SeBW expert survey indicate a need for industrial policyto support ICT research, development, innovation (RDI) and adoption.The experts confirmed that the European Commission is focusing onthe right issues in its ICT- and e-business related industrial policies buttheir assessment can encourage the EC to extend the scope of thesepolicies. The results also suggest that the importance of the Europeansingle market for the ICT companies’ ability to sell their products is lesswell understood than the importance of ICT RDI.A shortage in the supply of ICT practitioners appears to be a concernmainly for ICT service providers. Interviewees from the ICT using sectorshad not experienced major recent difficulties in hiring ICT practitioners.Most of the managers interviewed stressed the importance of properlytraining for ICT practitioners so that they understand business processes.While demands on employees regarding their e-skills have noticeablyincreased in recent years, it appears that the vast majority of employeescan cope well with the requirements.Page 4

B U S I N E S S M O D E L Se-Business and companystrategy: how ICT cantransform business modelsCompanies use ICT in many different ways, and at different levels of sophistication. At a verybasic level, applications such as e-mail and using the web do not have major implications for theexisting business. They support processes as they are. To effectively use more advanced formsof e-business, such as the exchange of standardised data with business partners, companiesoften have to implement significant organisational changes in parallel. In some sectors, the riseof e-business has not only had an impact on internal processes, but is transforming the entirebusiness model of companies or the sector as a whole.Level 1: Basic ICT use – littleorganisational impactICT use has become a commonplace in modernbusiness. Nearly all companies use e-mail. Manyhave a website, and many of them offer basice-commerce services on their website. Thesebasic ICT applications do not have a significantimpact on how the company operates, i.e. onits processes or business model. Many of theSMEs in manufacturing sectors, notably in themore traditional industries, use ICT on this level.The gains in process efficiency and cost savingsare limited; on the other hand, investments inthe technology are low as well. For many ofthe smaller companies this may be the optimaluse of ICT, provided that they are not forcedby large buyers to upgrade their e-businesscapabilities.Table 1: The impact of ICT and e-business in different sectorsLevel 1: Basic ICT use– with little impact onbusiness processesMost SMEs in process manufacturingsectors (e.g. paper,chemical, basic metals, glass,ceramics, cement)SMEs in manufacturing sectorssuch as food, furnitureConstruction SMEsLevel 2: Advancede-business activity –sector-wide exchangeof standardised dataAutomotive industryElectronics industryPharmaceutical industryLarge companies in othermanufacturing sectors (e.g.chemicals, paper)Large retail chainsLevel 3: Sectorsundergoing a majortransformation dueto e-businessICT servicesTourismFinancial servicesKnowledge-intensive businessservicesPublishingLogisticsLevel 2: Advanced e-businessactivity – significant impact onbusiness processes“Advanced” e-business means that companiescan exchange data electronically with suppliersor customers based on e-business standards.This is the precondition that ICT systems canthen automatically process the data (withouthaving to manually key them into the system).Taking the step from basic to advancede-business must, however, be well planned andis not without challenges. For most companies,this innovation has organisational and financialimplications. They may need new technologysuch as e-business software (e.g. an ERP / CRMsystem); they have to decide which standardsto use and organise their business data (e.g.product catalogues) accordingly; and they haveto make sure that the new systems are alignedwith their actual business processes.Level 3: e-Businesstransformation – new businessmodels and value chainsThe sectors which have been most affectedby ICT include the ICT services industry itself,tourism, financial services, publishing and thelogistics industry. In these industries, the role ofICT and e-business goes far beyond improvingprocess efficiency. ICT, and in particular theinternet, have had a profound impact on valuechains, including the emergence of new players.Many companies have to adapt their businessmodel in order to stay in business.In tourism, for example, the internet permitsservice providers to interact directly with tourismcustomers, which puts enormous pressureon traditional market intermediaries (travelagencies and tour operators). At the same time,new entrants in the market operate exclusivelyonline and successfully provide intermediaryservices. In publishing, the advertising andsales revenues of newspaper publishers aredecreasing as many young people of the“internet-generation” do not subscribe to aprinted newspaper. Convergence of services,multi-channel publishing and the offer ofmobile services are some of the catchwordsthat attempt to give a concrete quality to futuredevelopments in this sector.Page 5

Insights into therole of ICT for inICT is crucial for innovation of new products and services and, even moreso, of new processes – it has an “enabling role” in this respect. SeBW surveysamong enterprises in energy supply as well as in the glass, ceramics and cementindustries confirmed this for the entire research, development and innovationstream. Furthermore, “open innovation”, i.e. involving external experts andbusiness partners in the innovation process, is very common. The surveys alsoshowed differences between industries.Data sources and methodologyThis analysis is based on micro data from representativeIT decision-maker surveys (telephone interviews)among 676 glass, ceramics and cement companiesand 359 energy supply companies from the six largestEU countries (Germany, France, Italy, United Kingdom,Spain, Poland).More informationFurther information about the enabling role of ICT forinnovation will be included in the study reports about ICTand e-business impact in the energy supply industry andin the glass, ceramics and cement industry. Both reportswill be available on the website at www.ebusinesswatch.org.For more information, please contact DrStefan Lilischkis (stefan.lilischkis@empirica.com).ICT is a general purposetechnologyICT has far-reaching properties. It is a so-calledgeneral-purpose technology with three basiccharacteristics: it is pervasive as it spreads toall sectors; it improves over time and hencekeeps lowering the costs for users; and itspawns innovation, i.e. it facilitates research,development and market introduction ofnew products, services or processes. This lastproperty can be termed the “enabling role ofICT for innovation”. For example, in the energysupply industry, “smart metering” and “smartgrids”, two technologies with high potentialto transform European energy provision, areICT-enabled.ICT is crucial for product,service and process innovationAccording to the SeBW enterprise surveys2009, companies representing 53% of theenergy supply industry’s employment saidthey introduced new products or services inthe past twelve months, and 76% introducednew processes. In glass, ceramics and cement,companies representing 45% of employmentintroduced new products or services and 54%new processes.The vast majority of innovators in bothindustries stated that ICT played a crucial rolefor innovating. In energy supply, 89% saidthat the new products or services have ICTcomponents (48% “applies fully”, 41% “appliespartly”), and 97% said that their new processesare supported by ICT (54% fully, 43% partly).These are the highest values for ICT-enabledinnovation that the e-Business Watch has everfound in an industry. In glass, ceramics andcement, 42% said that the new products orservices have ICT components (13% fully, 29%partly) and 75% stated that the new processesare supported by ICT (33% fully, 42% partly).(See Chart 1 for the role of ICT in the energysupply industry and Chart 2 for the glass,ceramics and cement industry.)ICT is also important for R&Dand market launchIn both industries, ICT also played an importantrole in R&D processes leading to innovation, aswell as in market launch or implementation.In energy supply, 71% of the companies(employment-weighted) stated that ICT wasimportant for R&D leading to the product andservice innovation, and also for market launch.For process innovation, the related valueswere greater than 90%. In the glass, ceramicsand cement industry, the role of ICT is smaller:56% of the companies reported that ICT wasimportant for R&D and 54% said that ICT wasimportant for market launch. For processinnovation the related values were around70%. This more detailed view shows that ICThas multi-faceted functions in the innovationstream, which also supports the notion of the“enabling role” of ICT.Joint innovationis prevalentThe surveys also showed that a large proportionof companies collaborated with businesspartners or external experts in developing thenew product, service or process. This type of“joint innovation” may be beneficial for thecompanies in that it expands the scope of newknowledge involved, reduces costs and alsoreduces risks – particularly in pre-competitiveR&D. External links may for example be withPage 6

E N A B L I N G R O L E O F I C Tenabling47%53%25%22%novationno new products or services in past 12 monthsnew products or services with ICT components ("applies fully")new products or services with ICT components ("applies partly")new products or services but without ICT components6%no new products or services in past 12 monthsnew products or services with ICT components 25%("applies fully")new47%53%products or services with ICT components("applies partly")22%new products or services but without ICTcomponents6%no new products or services in past 12 monthsno new products or services in past 12 months 25%new products or services with ICT components37%new products or services with ICT components ("applies fully")("applies fully")new products or services 47% with ICT components 53% ("applies partly")new 31% products or services 69% with ICT componentsuniversities. More than 80% of the innovative new products Chart or services 1: Role but of without ICT in ICT innovation components 22% in the energy supply industry ("applies partly") 2009companies in the energy supply industry andnew products or services but without 30% ICTmore than 50% in the glass, ceramics and Product or service innovation: Companies6%with… Process components innovation: Companies with…cement industry said that they involved external2%experts or business partners in product, serviceno new products or services in past 12 monthsew products or servicesor processin pastinnovation.12 monthsno new processes in past 12 monthsThis finding underlinesnew products or services with ICT componentsproducts or services with ICT components ("applies fully")25%37%how much innovation in both industries ("applies fully")new processes ICT-enabled ("applies fully")products or services with ICT components ("applies partly")relies strongly on expertise from outside the new 47% products or services 53% with ICT componentsnew 31% processes ICT-enabled 69% ("applies partly")products or services but without ICT components("applies partly")company.22%new processes but not ICT-enablednew products or services but without ICT30%components6%Overall differences betweenindustriesew products or services in past 12 monthsproducts or services with ICT components ("applies fully")All in all, the results confirm the crucialproducts or services with ICT components ("applies partly")products or services importance but without of ICT for components innovation. Policy makersmay thus be well advised to recognise thatthere should be a link between ICT policies andinnovation policies.no new products or services in past 12 months37%new products or services with ICT components("applies fully")31%69%new products or services with ICT components("applies partly")30%new products or services but without ICTcomponents2%6%no new processes in past 12 months14%new processes ICT-enabled ("applies fully")new 52% processes ICT-enabled49%("applies partly")new processes but not ICT-enabled28%Weighted by employment (i.e. firms representing x% of sector employment). N = 3516%no new processes in past 12 monthsno new products or services in past 12 monthsHowever, the surveys also indicate industryno new products or services in past new 12 months processes ICT-enabled ("applies 37% fully")new products or services with ICT components14%differences in the level of importance of ICT. Innew products or services with ICT componentsnew processes("appliesICT-enabledfully")("applies fully")("applies partly")52%49%energy supply, ICT appears to be indispensable Chart 31% 2: Role of ICT for 69% innovation in the glass, ceramics and cement industry 2009new products or services with ICT components ("applies partly")new products or services with ICT componentsfor innovation, while in the glass, ceramics andnew processes but not ICT-enabled("applies partly")new products or services but without ICT components28%30%cement industry ICT is important but there are Product or service innovation: Companies with… Processnew productsinnovation:or servicesCompaniesbut withoutwith…ICTcomponentsapparently other important technologies used2%for innovation as well.6%no new products or services in pastno new processes in past 12 months18% 12 monthsno new products or services in past 12 months14%new products or services with ICT componentsnew processes ICT-enabled ("applies fully")new products or services with ICT components 52% ("applies fully") 49%("applies fully")new processes ICT-enabled ("applies partly")47% 54%22%new products or services with ICT components ("applies partly")new products or services with ICT componentsnew processes but not ICT-enabled28%("applies partly")new products or services but without ICT componentsnew products or services but without ICT13%components2%ices in past 12 monthss with ICT components ("applies fully")s with ICT components ("applies partly")s but without ICT componentsno new products or services in past 12 6% monthsnew products or services with ICT components14%("applies fully")new 52% products or services49%with ICT components("applies partly")28%new products or services but without ICTcomponents18%no new processes in past 12 monthsnew processes ICT-enabled ("applies fully")47% 54%22%new processes ICT-enabled ("applies partly")new processes but not ICT-enabled13%ices in past 12 monthss with ICT components ("applies fully")s with ICT components ("applies partly")s but without ICT componentsWeighted by employment (i.e. firms representing x% of sector employment). N = 676no new products or services in past 18% 12 monthsnew products or services with ICT components("applies fully")47% 54%22%new products or services with ICT components("applies partly")new products or services but without 13% ICTcomponentsno new processes in past 12 monthsnew processes ICT-enabled ("applies fully")Page 7new processes ICT-enabled ("applies partly")new processes but not ICT-enabled

ICT and e-businessthe energy supplyThere is a flurry of activity related to the use of ICT in the energy supplyindustry. Smart metering, intelligent or smart grids, demand management,intelligent power plants are some of most prominent issues. The central issueis how ICT can better support the evolution of the utilities industry and makeit possible to achieve the EU objectives of security of supply, environmentalsustainability, and the creation of an efficient, reliable and competitiveEuropean energy market.Data sources and methodologyThe study is based on a selected set of data sources andmethodologies, including primary data collection, deskresearch and case studies. More specifically, informationwas collected from a survey of 351 energy supplycompanies in the six largest EU countries in March2009 and interviews with industry experts. Econometricmethods leveraging the EU KLEMS database were usedto gain evidence on links between ICT adoption andgreenhouse gas emissions.More informationThis Sectoral e-Business Watch study is conducted byIDC Energy Insights (http://www.energy-insights.com/EI/index.jsp), with inputs from case study correspondentsand DIW econ (www.diw-econ.de). It is managed byempirica GmbH (www.empirica.com). The study reportwill be available on the website at www.ebusinesswatch.org.For more information about this study, pleasecontact Mr Stefan Lilischkis (stefan.lilischkis@empirica.com) or Roberta Bigliani (rbigliani@idc.com).Page 8Characteristics of the energysupply industryThe energy supply industry, as defined byNACE Rev. 2 Group 35, includes “electricity, gas,steam and air conditioning supply”. The valuechain encompasses production, transmission,distribution and trading of energy as well as itssupply to final consumers. In the EU-27, the sectorincludes 31,000 firms, employs nearly 1.6 millionpeople and generates a turnover of 932 billioneuro. Moreover, the energy industry is pivotal toany other industrial and private activity.The EU energy supply industry faces manychallenges. Above all, the EU is highly dependenton imported primary energy sources and issubject to the inherent volatility of prices.The national markets lack integration into aEuropean market, as indicated by the absenceof pan-European price convergence and the lowlevel of cross-border trading. There are still widedifferences in market structure, competitiveness,public service and customer protection betweenEuropean countries. The EU is also active in thefight against climate change, and the Europeanenergy supply industry is aiming to shift towardsdecarbonised power or new technologies tocapture and store CO2.The deployment of smart grids, including thepilot and roll-out of smart metering, is a strategicelement in order to meet these challenges. Tostay competitive, energy supply companiesneed to increase process efficiency along theentire value chain. It is increasingly necessaryto integrate ICT applications and to migratesystems to more cost-effective IT architectures,both for electricity and gas.e-Business activity in the sectorICT and e-business can contribute to improvedefficiency along the entire value chain, includingfinal usage. They can make possible changes inbusiness models, production and distributionpractices and they can influence customers’behaviour to become more energy efficient.Utilities increasingly use ICT to improve networkreliability, reduce losses and efficiently managedemand. The e-Business Watch survey foundthat firms representing 71% of the industry’semployment are adopting systems for energynetwork automation and control.The successful implementation of ICT ande-business applications in energy supplydepends on several factors. The most importantis system integration of the core supportingtechnologies. This implies development andimprovement of standards at various levels,including data formats, database management,interfaces between users and machines, andinteroperability among devices from differentvendors. The lack of interoperability is one ofthe most significant factors that the e-BusinessWatch survey found to be impeding theadoption of smart metering (Chart 1). Thesurvey also showed that the level of adoptionof smart metering is low but increasing: 20%of energy supply companies (employmentweighted)said they have it, 18% said they arepiloting it, and 16% said they were planningto instal or test smart meters in the next twoyears.ICT improves businessprocessesICT plays a fundamental role in improvingbusiness processes in the European energysupply industry. Currently, the most widespreadbusiness application deployed is enterpriseresource planning (ERP), used by firmsrepresenting two thirds (67%) of the industry’semployment, followed by computer-aideddesign systems (CAD, 63%) and documentmanagement (DMS 61%) – see Chart 2. Otherwidely deployed sector-specific ICT solutionsinclude: customer relationship management

Lack of interoperabilitybetween devicesand systems involved60impact inindustrySmart meters wouldnot have enough52E Nreturn E Ron GinvestmentY S U P P L Y I N D U S T R YIntroduction and integrationof smart meters with existingICT would be too complexInsufficient regulationby public entities3650(CRM, 56%), health, safety and environmentsystems (HS&E, 50%), energy trading andrisk management (ETRM, 45%), and carbonmanagement systems (25%). The penetration ofthese solutions enhances value chain visibilityand ensures continuity of operations, whileat the same time responding to changingregulatory, safety, and security requirementsICT enables innovationICT is also driving profound innovation,bringing the industry closer to the vision of the“intelligent utility” to which users can activelyparticipate. Smart grids represent the newvision on how transmission and distributionnetworks and consumers are all connected andcan interact in real time, thus making it possibleto predict and adjust network changes. Thishowever requires enhancing or upgrading ofexisting infrastructure, implementing new ICTsystems and improving integration throughoutthe ICT operating environment. There is a majorrole for ICT in all the application areas: in gridmanagement and monitoring, in maintenanceoperations, in managing and controllingdistributed energy resources and in security.ICT enables energy efficiencyICT can facilitate the efficient use of energy byhelping energy suppliers to analyse consumptiondata and to stimulate consumers to respond toenergy prices at specific times. On the supplyside, companies installing, controlling, managingand monitoring energy distribution grids canuse ICT for purposes such as complex billing,remote meter reading and advanced meteringinfrastructure solutions. On the demand side, ICTmay have a potential to increase energy efficiencyamong businesses and private households, asshown in Charts 3 and 4. Companies engagingin distribution or retail sale of energy or heating/cooling supply were asked for an assessment ofthe potential of ICT to increase energy efficiencyamong customers. Overall, players in this sectorbelieve that the potential impact of ICT on energyefficiency of business customers is significant.About 41% see a high potential to increase theenergy efficiency of other companies and 31%think ICT have a medium potential. The scopefor improving energy efficiency among privatehouseholds, however, is perceived by nearlyhalf the interviewed companies as small. Thesefigures demonstrate what a distance still has tobe travelled to realise the potential benefits ofsmart systems.Chart 1: Barriers to smart meter adoptionChart 2: Use of ICT systems0 10 20 30 40 50 60 700 10 20 30 40 50 60 70Lack of interoperabilitybetween devicesand systems involvedSmart meters wouldnot have enoughreturn on investmentIntroduction and integrationof smart meters with existingICT would be too complexInsufficient regulationby public entities36525060Enterprise Resource PlanningComputer-Aided DesignDocument Management SystemCustomer RelationshipManagementHealth, Safety & Environment SystemEnergy Trading & RiskManagement SystemCarbon management system25676361565045* Weightings are based on % of employees. Base: energy supply companiesneither implementing nor testing nor planning to instal smart meters.Number of Respondents: 76.Chart 3: Assumed ICT potential to increaseenergy efficiency of companies* Weightings are based on % of employees. Base: all energy supply companies.Number of respondents: 351.Chart 4: ICT potential to increase energy efficiency among private households.28%interoperability between devicesems involved is important reasonot implementing smart meters28%0 10 20 41% 30 40 41% 50 60 7031%31%rt meters would not have enoughreturn on investmenthigh potential high potentialoduction and integration medium of smart potential medium potentialers with existing ICT would be toocomplexat best little potential at best little potential52506018%18%54%54%28%high potential high potentialmedium potential medium potentialat best little potential at best little potential28%*weighted byemployment (i.e. firmsrepresenting x% of sectoremployment).Base: Companiesengaging in distributionor retail sale of energyor heating/coolingsupply. Number ofrespondents: 249 (forother companies), 241(for private households).Page 9ent regulation by public entities isant reason for not implementingsmart meters36

ICT and e-Businessin the Glass, CeraCement IndustryThe ability to innovate is a critical success factor for companies in the Europeanglass, ceramics and cement industries to stay competitive and keep their positionin high value-added market segments. ICT has an important role to play here as anenabler of process innovation. This does not necessarily imply large investmentsin hardware and software – simple ICT solutions can often be sufficient.Data sources and methodologyThe study is based on micro and macro data, primaryand secondary sources. Micro-data about the e-businessactivity of firms were collected in two ways: (i) througha representative IT decision-maker survey (telephoneinterviews) among 676 GCC companies from six EUcountries, and (ii) through case studies. The macroeconomicanalysis is based on growth accounting andcorrelation analysis, using aggregate industry accountsfrom the EU KLEMS database (www.euklems.net).Thisdatabase was specifically established for the economicanalysis of productivity developments.More informationThis Sectoral e-Business Watch study is conductedby empirica GmbH (www.empirica.com) with inputsfrom DIW econ (www.diw-econ.de) and case studycorrespondents. The study report will be available onthe website at www.ebusiness-watch.org. For moreinformation about this study, please contact HannesSelhofer (hannes.selhofer@empirica.com).Characteristics of the glass,ceramics and cementindustriesThe glass, ceramics and cement (GCC) industriesare a long-established manufacturing sectorin the EU and an important supplier to otherindustries. The sector produces raw materials andcomponents for the building and constructionindustry, packaging solutions (container glass)for the consumer goods industry, and specificmaterials or components used –for example–in the aerospace, automobile, electronics andmedical industries. The sector also produceshousehold goods such as glass and ceramictableware and cookware.The EU still has a surplus in international trade inthis sector and the leading producer world-widein several segments. However, in some segmentssuch as flat and container glass, imports havesurged in the past five years. The GCC industriesare energy intensive. Energy costs, and copingwith environmental regulation, such as the EUEmissions Trading Scheme for greenhouse gasemissions, are key issues in this sector. Europeis confronted with the challenge of balancingits ambitious environmental objectives againstthe risk of relocation of production to regionswith lower environmental standards.e-Business activityin the sectorBy definition, e-business means “automatingbusiness processes”, that is replacing formerlypaper-based document exchanges and theirmanual processing by electronic exchanges. Inmost segments of the GCC industry, e-businessadoption in general is slightly less advancedthan in other process manufacturing sectors.Smaller companies in particular tend to havelittle incentive to use e-business. In a surveyof 676 companies from the sector, only 16% ofthe companies (by their share of employment)said that they conducted at least “a good deal”of their business processes electronically,compared to nearly 30% in the chemicalindustry (2007, see Chart 1).Looking at e-commerce, online sales channels(e.g. EDI, sales on the internet) tend to be lessrelevant than in other sectors. Only about 20%of the companies receive orders from customersonline, compared to more than 30% in othermanufacturing sectors (see Chart 2b). This ispartly related to supply chain characteristics, e.g.the fact that heavy products such as cement aremainly traded in regional markets, with stablecustomer-buyer relationships. e-Procurement isa common activity in medium-sized and largecompanies, but not widely used by small firms,compared to other sectors (see Chart 2a).ICT enables innovationNevertheless, ICT matters for this sector. TheEuropean GCC industry, in order to withstandglobal competition, needs to keep its strongposition in value-added market segmentswhich rely on product differentiation, qualityand service. This requires a continuous effortto innovate business processes. The majorityof process innovations in the industry (about75%), according to the innovating companiesinterviewed, are linked in one way or theother with ICT usage, in particular in largercompanies.Case studies show that successful use ofICT does not necessarily require majorinvestments in hardware or software. In onecase, a medium-sized ceramics manufactureruses a self-programmed production planningPage 10

Impactmics &G C C I N D U S T R Yand management system which is based ona standard office software application. Thiswas sufficient to enable the company to movefrom on-stock to order-based production, witha significant business impact.Chart 1: Share of business processes conducted electronically:% of companies* saying that most / a good deal / some / noneof their business processes are conducted as e-business(a) Glass, ceramics & cement (2009)(b) Chemical, rubber & plastics (2007)The economic impactof ICT – a macro-perspective31%31% 31%1%15%46%1%15%46%26%26%8%8%26%1% 15% 46%8%20%20%20%Growth accounting shows that ICT capital(the stock of hardware, software andtelecommunications equipment) contributedpositively to value added growth in the GCCsector as well as in the total manufacturingindustry from 1995-2005. However, but thecontribution of ICT capital was not substantial,typically accounting for less than 0.5 percentagepoints of annual growth. Total factor productivity(TFP), the residual that cannot be statisticallyexplained (or accounted for) by other inputfactors, accounts for a relatively high share ofgrowth in the GCC sector. This finding is quitespecific for capital intensive manufacturingindustries such as the GCC sector. It indicatesthe importance of non-tangible “assets” suchas organisational innovation. Changes inICT capital are strongly positively correlatedwith labour productivity growth in themanufacturing industry and even more so inthe GCC sector. In contrast to (accumulated) ICTcapital stock, however, annual ICT investmentsare not correlated with labour productivitygrowth and hours worked. This implies a timelag between the point of investment in ICTand the actual return on investment in termsof productivity growth.53%53%53%"most""a"most"good deal""some""a"most"good deal""none""some" "a good deal""none" "some""none""most""a"most"good deal""some""a good deal" "most""none""some" "a good deal""none" "some""none"* weighted by employment (i.e. firms representing x% of sector employment). N = 671 (GCC) / 895 (Chemical)Chart 2: % of companies* using e-Commerce(a) Companies placing orders for supplies online80608040605962 67 7070 71586468 7620405059 37 62 67 7070 71586468 7680205003760 0GCC ('09) Chemical ('07) Furniture ('07)40GCC ('09) Chemical ('07) Furniture ('07)Total sectorSmall (10-49) Medium (50-249) Large (250+)5962 67 7070 71586468 762050Total sector 37 Small (10-49) Medium (50-249) Large (250+)0(b) Companies receiving GCC ('09) orders from customers Chemical online ('07) Furniture ('07)40Total sectorSmall (10-49) Medium (50-249) Large (250+)304020305933 33 35 34 32 32331020 21 242759 18 1733 33 35 34 32 323310 21 2427018 1740 0GCC ('09) Chemical ('07) Furniture ('07)30GCC ('09)Total sector Small (10-49)Chemical ('07)Medium (50-249)Furniture ('07)Large (250+)20Total sector Small (10-49) Medium (50-249) Large (250+)5933 33 35 34 32 32331021 242718 17* Data for sector totals are weighted by employment (i.e. firms representing x% of sector employment), data0for size-bands in % of companies. N = 676 (GCC) / 911 (Chemical) / 761 (Furniture)GCC ('09) Chemical ('07) Furniture ('07)Total sectorSmall (10-49) Medium (50-249) Large (250+)Page 11

ICT impacts on gregas emissions inintensive industClimate change is one of the main challenges of our time. Energy use produces,on average, 80% of greenhouse gas emissions. Energy-intensive industriesare consequently the object of much attention. ICT can help reducing theemissions intensity, but the potential differs between industries. An e-BusinessWatch study finds that in three of the five most energy-intensive sectors in theEU, greater ICT capital intensity has been associated with increased efficiencyand lower emissions intensity. The trend bodes well for a future reduction inemissions intensity due to ICT.Data sourcesThe study is based on both micro and macro data.Macro data about production activity and greenhousegas emissions (for the years 1995-2005) were extractedfrom the EU KLEMS database (www.euklems.net) andEurostat (epp.eurostat.ec.europa.eu); supplementarydata sources used include the United NationsFramework on Climate Change database (www.unfccc.int) and the OECD (www.oecd.org). Micro-data aboutthe ICT use for controlling energy consumption andemissions were collected through case studies and arepresentative survey among 676 companies from theglass, ceramics and cement industry.More informationThis Sectoral e-Business Watch study is conductedby DIW econ (www.diw-econ.de) with inputs fromcase-study correspondents. The study report will beavailable on the website at www.ebusiness-watch.org.For more information, please contact Ferdinand Pavel(fpavel@diw-econ.de).Energy-intensive industriesin EuropeThe study focuses on five sectors which alluse a high level of energy in their productionprocesses:• Transport services (NACE Rev.1.1,Divisions 60 to 63);• Pulp, paper, printing and paper products(NACE Rev. 1.1, Divisions 21 and 22);• Chemicals, rubber, plastics and coke(NACE Rev. 1.1, Divisions 23 to 25);• Glass, cement and ceramic (NACERev. 1.1, Division 26);• Basic metals and fabricated metal(NACE Rev. 1.1, Divisions 27 and 28).These five sectors together comprise one third ofthe greenhouse gas (GHG) emissions emitted fromall EU countries. Absolute emissions from thesesectors increased by about 6% between 1995and 2005 (see Chart 1). However, the emissionsintensity (defined as the ratio of the quantity ofGHG emissions to euros of gross output) has beensteadily decreasing (see Chart 2).Policy plays an important role in settingincentives for companies to reduce their GHGemissions. The EU Emissions Trading System(EU-ETS) was implemented in the paper,metal, and glass-ceramic-cement sectors in2005 as an important step toward regulatingand reducing these industries’ high level ofemissions. However, individual firms’ decisionsregarding factors of production and productionefficiency standards can be just as important aspolicy in reducing emissions.Case-level evidence: strongemissions-reduction potentialof ICTCapital is an essential input into the productionprocess. ICT capital stock is growing as apercentage of total capital stock in all sectorsstudied (see Chart 3). The current and potentialuses of ICT suggest that it might also have beenan important factor in the observed decrease inemissions intensity in the past decade.A survey of environmental managersand representatives from each industrydemonstrates the importance of ICT. Theparticipating representatives noted a medium tomajor change in their sector’s business practicesdue to both environmental regulations relatedto carbon emissions and the EU-ETS (whenapplicable to the sector). Respondents reportedthat dedicated processes for systematicallymonitoring GHG emissions are widely used,and these processes are almost always ICTenabled.However, views on the potential ofICT systems for reducing GHG emissions weremixed. Respondents emphasised the indirectimportance of ICT in emissions monitoringsystems, noting that ICT systems are alsoinstalled simply to improve overall productionefficiency.Case studies were conducted with companiesthat use ICT systems to collect, transfer, andprocess information about their energyconsumption in order to optimise their energyuse and business processes. The cases show thatthis leads to a reduction in GHG emissions. In railproduction, for example, ICT is used to optimisefurnace temperature; in logistics, ICT helps tooptimise delivery routes and thus save energy.Page 12

enhouseenergyriesI C T a n d g r e e n h o u s e g a s e m i s s i o n sThe typical reduction of energy use found in thecase studies is considerable, ranging from 10-20%. ICT is also an integral element in carbonaccountingsystems, providing the feedbacknecessary to make sustainable managementdecisions.Macro-economic evidenceIt is a challenging task to assess the impactof ICT capital on emissions at the aggregatelevel. GHG missions can be thought of as aresult of the normal production process or as asubstance that is subject to a specific abatementprocess. Limited data is available, and there isa lack of research on this topic. Furthermore,the production processes and capital intensitylevels of firms differ considerably among the fivesectors studied. The study opted for a sectoralapproach, implementing both parametric(regressions) and non-parametric (two-stageData Envelopment Analysis) econometrictechniques simultaneously. Parametricregressions were used to model and quantify therelationship between ICT capital intensity andemissions intensity. Non-parametric methodswere applied to discover patterns in the datawhile making fewer assumptions.Over the past decade, the relationship betweenthe size of ICT capital stock and aggregatesectoral sustainable efficiency has been mixed.The chemical, glass-ceramic-cement, and metalsectors exhibit the expected association betweengreater ICT capital and greater efficiency. Incontrast, in the paper and transport sectors, moreICT capital was associated with less efficiency.The unexpected association in the paper andtransport sectors can be explained throughparametric regressions, which identify aquadratic relationship between ICT capitalstock and emissions intensity. Despite increasingemissions intensity at low levels of ICT capital,a critical point exists at which ICT capitalbegins to contribute to an overall reduction inemissions intensity. This relationship suggeststhat in the paper and transport sectors, more ICTinvestment can improve sectoral GHG intensity.Theoretically, this marginal ICT contributes moredirectly to emissions-abatement.The parametric regressions also support theinterpretation of the results in the other threesectors. They suggest a decreasing marginal6 000return to ICT investment in terms of emissionsICT share ICT of share total ICT capital of total share stock capital of total stock capital stock tons of CO2 tons eq. of CO2 per tons Mio eq. of EUR CO2 per Mio output eq. EUR per Mio output EUR outputMio tons Mio of CO2 tons equivalent Mio of CO2 tons equivalent of CO2 equivalent5 0006 0004 0005 0006 0003 0004 0005 0002 0003 0004 0001 0002 0003 00001 0002 00001 0000600600 500500 400 600400 300 500300 200 400200 100 300100 200 0100 00141214101214810126810468246024020intensity. ICT capital stock can certainly improvethe emissions intensity levels of Europeanenergy-intensive sectors, but the marginaldecision to invest in more ICT must be madetaking account of the investment cost relativeto the expected reduction.Chart 1: Greenhouse gas emissions in Europe (absolute values)90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05EU-2790 91 EU-15 92 93 94EU-1195 for selected 96 sectors 97 98 99 00 01 02 03 04 05EU-2790 EU-15 91 92 93 94EU-1195 for selected 96 sectors 97 98 99 00 01 02 03 04 05EU-27EU-15EU-11EU-11EU-11EU-11 for selected sectorsChart 2: Emissions intensity in the EU-15 and selected countriesEU-15 DE ITSEUK90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05Chart 3: Share of ICT capital in total capital stockEU-15 DE ITEU-11 for selected sectors and energy supplyEU-15 DE ITSEUK90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05DE IT SEUK90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05DE IT SEUK90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05SEEU-11 for selected sectors and energy supplyEU-11 for selected sectors and energy supply90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 0590 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05UKPage 13DE IT SEUK

An economic assof ICT-related indupolicyFindings from an SeBW expert survey indicate a clear need for public policy tosupport ICT research, development and innovation in ICT-producing companiesas well as to support e-business adoption in ICT-using manufacturing companies.The European Commission was assessed as focusing on the right issues butwas encouraged to extend the scope of its ICT and e-business related policies.The experts also see a need for closer co-operation between the EC and theMember States in related policies.Competitive pressure inICT-producing and ICT-usingindustriesA need to enhance ICT RDIand use ICT to improveindustrial competitivenessData sources and methodologyThe study is based on micro data, primary and secondarysources, and a theoretical analysis. Micro-data about ICTand e-business policies were mainly collected throughan online survey of ICT and e-business experts in allcountries of the European Union which took placein June 2009. The experts comprised the membersof the European e-Business Support Network (eBSN)and selected members of the “European Network forInformation Society Research“ (ENIR) co-ordinated byempirica. 48 answers were received. Further data werecollected through expert interviews and case studies.More informationThis Sectoral e-Business Watch study is conductedby empirica GmbH (www.empirica.com) with inputsfrom DIW Berlin (www.diw.de) and case studycorrespondents. The study report will be availableon the website at www.ebusiness-watch.org.For more information about this study, please contactStefan Lilischkis (stefan.lilischkis@empirica.com).The European Commission (EC) sees a criticalneed to increase spending on ICT research,development and innovation (RDI) to staycompetitive with the US and East Asia. The ECis also anxious about highly fragmented ICTRDI in Europe, calling for more co-operationbetween the EC and the Member States, aswell as for specialisation and concentrationof ICT RDI. The 50 respondents to an SeBWexpert survey in June and July 2009 sharethis anxiety, particularly with regard to theEuropean hardware industry: The majority ofrespondents who answered this question doubtthat European ICT RDI is sufficiently strong tomaintain hardware manufacturing.As regards e-business adoption in ICT-usingmanufacturing industries, there may be acritical need to improve electronic valuesystems, i.e. electronic data exchange betweencompanies. In particular, small and mediumsizedenterprises (SMEs) are at risk of droppingout of large enterprises’ supply chains if theydo not adopt e-business practices. 85% of theexperts confirmed this. They also agreed thata lack of widely used e-business standards isimpeding e-business communication.In both ICT-producing and ICT-using enterprises,the experts see a danger that investments in RDIand ICT adoption, respectively, are reduced dueto the economic crisis.There was almost unanimous agreement amongthe experts that ICT R&D and innovation inEurope needs to be improved. The agreementwas strongest for the statement that “ICT R&D incompanies needs to be improved”: 50% of therespondents agreed strongly and also 43% ratheragreed; no one disagreed. The lowest agreementwas for the statement that “legislation ensuringthat ICT companies can sell to customers EUwideneeds to be improved” (52% agreed; 26%disagreed). For this statement, the share ofrespondents providing no answer (22%) was oneof the highest in the whole survey. Possibly theimportance of the European single market forthe ICT companies’ ability to sell their products isless well understood than the importance of ICTresearch, development and innovation.There was very wide agreement with thestatements about improvement needsrelated to e-business adoption in ICT-usingmanufacturing companies in Europe. Accordingto the respondents, improving SMEs’ e-businessrelationships with large companies is the mostimportant issue, while e-business adoptionand e-business understanding in SMEs areimportant but less pressing. However, a focus onsustaining SMEs’ participation in large companies’value systems is challenged by theoreticalconsiderations. The observation that only anumber of firms invest in ICT and that marketsbecome more concentrated over time can simplyreflect the fact that the number of efficient firmsis decreasing. Thus, policy measures to supportSMEs may imply that an inefficiently high numberof SMEs remains active.Page 14

essmentstrialE - P O L I C YPolicy assessment:encouraging to do moreof the right thingsThere was also wide agreement among theexperts that ICT RDI as well as ICT adoption bycompanies should not be left to the market:there is a need for policy initiatives. The majorityof respondents also agreed with the statementthat the EC’s policies to enhance ICT RDI ande-business adoption in companies are focusedon the right issues. As for e-business policies,this can be taken as a confirmation of the focuson electronic value system enhancement,e-business standards adoption and e-skillsdevelopment. The majority of respondentsdid not agree with the suggested statementsthat “the European Commission’s policies toenhance ICT RDI and e-business adoption aresufficient in scope”, and that “the EC’s policiesto enhance ICT RDI and e-business adoptioncontribute to industrial competitiveness”. Thisshould not, however, be interpreted as a critiqueof the EC’s policies as such. Taken together, theanswers confirm the focus of EC’s policies butencourage the EC to take a more strategic andcoordinated approach to effectively capitaliseon R&D results. In this context, this Sectorale-Business Watch study uses game theory toassess the strategies of companies, MemberStates and the European Commission wheninteracting about ICT RDI to improve the basisfor designing related industrial policies.The respondents would also appreciate moreco-operation between the EC and the MemberStates. They agreed that there is a lack of cooperationbetween EC and EU Member Statesin enhancing ICT RDI and e-business adoptionin companies. An even higher share ofrespondents agreed that EC and Member Statesshould foster regional clusters of ICT-producingcompanies and regional or sectoral electronicnetworks of ICT-using companies. (See Chart 1for policies to support ICT RDI and Chart 2 forpolicies to support e-business adoption in ICTusingmanufacturing industries.)Chart 1: Expert assessment of policies for ICT-producing companies in Europe-100 -80 -60 -40 -20 0 20 40 60 80 100-100EC's policies to enhance-80 -60 -40 -20 0 20 40 60 80 100ICT R&D and innovation-4 -41 4 35EC'sarepoliciessufficientto enhancein scopeICT R&D and innovation-4 -41 4 35are sufficient in scopeEC's policies to enhanceICT R&D and innovation are-2 -17 4 59focusedEC's policieson the rightto enhanceissuesICT R&D and innovation are-2 -17 4 59focused on the right issuesEC's policies to enhance ICT R&D andinnovation contribute to competitiveness-2 -37 7 43EC's policiesoftoICT-producingenhance ICT R&Dindustriesandinnovation contribute to competitiveness-2 -37 7 43of ICT-producing industriesLack of co-operation between ECand EU Member States in ICT R&D-2 -22 22 33Lack of co-operationand innovationbetweenpolicyECand EU Member States in ICT R&D-2 -22 22 33and innovation policyEC and Member States shouldfoster regional clusters-7 37 48-22ECofandICT-producingMember Statescompaniesshouldfoster regional clustersof ICT-producing companiesICT R&D and innovation in companies-7 37 48-22should be left to the market.-39 -37 13ICT R&D andNo needinnovationfor policyin companiesinitiativesshould be left to the market.No need for policy initiatives-39 -37 13I strongly disagree I rather disagree I rather agree I strongly agreeI strongly disagree I rather disagree I rather agree I strongly agreeChart 2: Expert assessment of policies for ICT-using manufacturingcompanies in Europe-100 -80 -60 -40 -20 0 20 40 60 80 100-100EC's policies to enhance ICT-80 -60 -40 -20 0 20 40 60 80 100and e-business adoption-9 -52 26in companiesEC's policiesare sufficientto enhancein scopeICTand e-business adoption-9 -52 26in companies are sufficient in scopeEC's policies to enhance ICTand e-business adoption in companies-7 -22 54areEC'sfocusedpoliciesontotheenhanceright issuesICTand e-business adoption in companies-7 -22 54are focused on the right issuesEC's policies to enhance ICT and e-businessadoption contribute to competitiveness-4 -52 2 30EC's policiesof ICT-usingto enhancemanufacturingICT and e-businessindustriesadoption contribute to competitiveness-4 -52 2 30of ICT-using manufacturing industriesLack of co-operation between ECand EU Member States for enhancing-13 35 39ICT and e-businessLack of co-operationadoption inbetweencompaniesECand EU Member States for enhancing-13 35 39ICT and e-business adoption in companiesEC and Member States shouldfoster regional or sectoral electronic-7 39 41-22networksEC andofMemberICT-usingStatescompaniesshouldfoster regional or sectoral electronicnetworks of ICT-using companiesICT adoption by companies-7 39 41-22can be left to market.-41 -39 2 9NoICTneedadoptionfor policyby companiesinitiativescan be left to market.No need for policy initiatives-41 -39 2 9I strongly disagree I rather disagree I rather agree I strongly agreeI strongly disagree I rather disagree I rather agree I strongly agreePage 15

Which “e-skills” doneed? Trends in dand challenges exHaving the right ICT-related skills (“e-skills”) is important to create and sustaincompetitive advantage – for individual companies and for the economy as awhole. A shortage of e-skills in the market is an obstacle to productivity growthand can therefore have a negative impact on competitiveness and employment.A study by the Sectoral e-Business Watch explored the actual e-skills demandof enterprises.The e-skills policy frameworkof DG Enterprise & IndustryThe European Commission adopted on 7 September2007 a Communication on “e-Skills for the 21st Century:Fostering Competitiveness, Growth and Jobs”. It presentsa long term e-skills agenda, based on five major actionlines at EU level for the period 2008-2010. These includelong-term cooperation between public authorities andthe private sector, ensuring sufficient investment inhuman resources development, and promoting theattractiveness of ICT-related career perspectives. See:http://ec.europa.eu/enterprise/ict/policy/ict-skills/ictskills_en.htmMore informationThis Sectoral e-Business Watch study is conductedby empirica GmbH (www.empirica.com). Thestudy report will be available on the website atwww.ebusiness-watch.org. For more informationabout this study, please contact Hannes Selhofer(hannes.selhofer@empirica.com).Three levels of e-skillsThe term “e-skills”, when used in a businesscontext, covers three levels of ICT-relatedcompetencies:1. specialists that plan, implement,run and maintain ICT systems in companies(“ICT practitioners”);2. ICT skills of the workforce that use computersand software applications in their daily routines(“ICT user skills”);3. the management’s strategic approach toe-business, that is how the company uses ICTto support its strategy (“e-business skills”).The Sectoral e-Business Watch interviewed ITand human resources managers of several largecompanies about the requirements of theircompanies in this area. The study aimed to exploretrends in demand and to derive recommendationsfor education and training in ICT subjects.ICT practitioners:understanding businessprocesses & open sourceA quantitative shortage in the supply of ICTpractitioners is mainly a concern for ICT serviceproviders. An interviewee from a large companyin the ICT industry said that they typically couldnot fill about one in four positions they offer.Interviewees from the ICT using sectors, onthe other hand, had not experienced majordifficulties recently in finding and hiring ICTpractitioners with the required qualifications.Most of the IT and e-business managersinterviewed stressed the importance thatICT practitioners are properly trained inunderstanding business processes. “They need tohave the ‘big picture’ and understand the entireprocess from start to finish in order to select ordevelop the right solutions for each step in theprocess,” said one of the interviewees.Another IT manager of an international companysaid that the importance of “soft skills” was oftenunderestimated. He suggested that developingcommunication and presentation skills shouldbe a vital element in ICT training curricula.He believed that complaints about the “techspeak”of some IT people result from a lack ofsuch skills.“Open source, open source, open source” saidone IT manager of another large companywhen asked about the main trends for futurerequirements. He recommended that ICTprogrammes at universities and colleges shouldpay more attention to offering certified trainingsin how to work with open source software.ICT user skills: no majordifficulties encounteredWhile the number of ICT specialists is limitedin most companies, many more jobs requirecomputer and software user skills. In most cases,this means operating basic office applicationssuch as text editing and spreadsheet calculation,communication tools (e-mail) and the web.Depending on the department they workin, employees may also be users of specificapplications such as the ERP or CRM system or aprocurement system, or design tools (CAD/CAM).A manager from a large manufacturing companywith about 8,000 employees interviewed for thisstudy said that about 2,500 of them were mainlyPC workers.Page 16

enterprisesemandperiencedE - S K I L L SIn a survey among companies from the glass,ceramics and cement industry, more than 50%of the respondents felt that the demands onemployees regarding their computer andsoftware skills “have noticeably increased” inthe past few years (see Chart 1). However, itappears that the vast majority of employeescan cope well with the requirements. Only fewrespondents said that many employees in theircompany experienced difficulties in this respect(see Chart 2). This was broadly confirmed in thedetailed case studies conducted for this study,where ICT user skills were not found to be aproblem.e-Business skills: translatingbusiness requirements intoe-solutionsMany large companies have a dedicatede-business manager, often heading a unitwithin the ICT services department. His or herjob is to explore opportunities for using ICTto support the marketing and sales activitiesof a company. Often they are responsible fordeveloping the functionalities of the company’sERP system and extranet, as these are centralplatforms for data exchanges with customersand for service provision.e-Business managers need not necessarilycome from a technical background. Many havemoved into this function from a position inmarketing and sales. Requirements are excellentmanagement skills, a thorough understandingof the company’s strategy and its operations,and practical experience with e-businesssoftware such as ERP systems. Typically, thereare only few positions in a company with thisprofile, even in large companies.e-Business activity is closely linked with financialand accounting issues. One e-business managersaid that he would ideally need “a financialaccountant with good ICT and e-business skills”for his unit, but that it was impossible to find thiscombination in the market. Another managersaid that his unit was searching for graduateswith business and ICT skills, in particular withknow-how in business process design.Chart 1: % of companies saying that that the demandson employees regarding their computer and softwareskills have noticeably increased over the past fewyears (glass, ceramics and cement industry, 2009)100100 8060 8040 6020 40200045594559Small(10-49)Small(10-49)Medium(50-249)Medium(50-249)Large(250+)Large(250+)Chart 2: % of companies observing that many /some / a few employees have problems becauseof insufficient computer skills (glass, ceramics andcement industry, 2009)100100 8060 8040 6020 4020006868797962029 96659729202028316597Small 20 Medium 2831Large(10-49)Small(50-249)Medium(250+)Large(10-49)"many"(50-249)"some"(250+)"a few""many" "some" "a few"9Page 17

M E T H O D O L O G YMethods applied in 2009The SeBW approach is descriptive, exploratory and explanatory, applying a broad methodological basis: Quantitativesurveys are combined with qualitative case studies and expert interviews as well as with economic analysis. Thisthreefold approach is designed to produce an in-depth understanding of current ICT and e-business use and impactin industries.Quantitative methods: enterprise surveys 2009Since 2002, the Sectoral e-Business Watch has been collecting data on the use of ICT and e-business in European enterprises by means of representativesurveys. In 2009, two surveys were conducted, with a total coverage of more than 1,000 interviews with decision-makers in enterprises from thesix largest European countries (see table). The survey field work was coordinated by Ipsos GmbH (German branch office) and conducted locally byits partner institutes.Coverage of the two e-Business Surveys 2009SurveySectors coveredCountries coveredNumber of interviewsICT and e-business in energysupplyICT and e-business in glass,ceramics and cementElectricity, gas, steam and airconditioning supplyManufacture of glass,ceramics and cementFrance, Germany, Italy,Poland, Spain,United Kingdom351676Interviews were carried out in March 2009, using computer-aided telephone interview (CATI) technology. The decision-maker in the enterprisetargeted by the survey was normally the person responsible for ICT within the company, typically the IT manager. Alternatively, particularly in smallenterprises without a separate IT unit, the managing director or owner was interviewed. The survey included only companies that used computers.The average interview length was 15-20 minutes.For data presentation, two weighting schemes have been applied: weighting by employment and weighting by the number of enterprises.Employment-weighted data should be read as “enterprises comprising x% of employees” in a sector or country.Qualitative methods: case studies and expert interviewsThe use of case studies as real-life examples of e-business activity in enterprises has become a very important part of the work of the e-BusinessWatch. The case studies are typically based on interviews with company representatives and complementary resources such as company annualreports, brochures and websites. In 2009, a total number of 25-30 case studies have been conducted for all studies. In addition, personal in-depthinterviews with experts in the field of ICT and e-business from industry, research and policy have been conducted.Analytical methods: econometric and theoretical analysesThe SeBW applies analytical methods to examine the impact of ICT investment in industries, using extended macro-economic databases such asEU KLEMS and Eurostat databases. In 2009, a focus of macro-economic data analysis is the relationship between ICT capital and greenhouse gasemissions in energy-intensive industries and in the energy supply industry. Furthermore, for the study “an economic assessment of ICT-relatedindustrial policy”, an analysis based on selected economic theories has been conducted.More informationMore detailed information about the methods appliedin 2009 is available at the Sectoral e-Business Watchwebsite (www.ebusiness-watch.org) in the “About”section (see: “methodology”).Page 18

A D V I S O R Y B O A R DThe Advisory Boards of 2009 – networkingand debate of resultsTo validate study results, the Sectoral e-Business Watch seeks regular exchange and debate with international expertson ICT and e-business and from the sectors covered. For the studies in 2009 an advisory board was established thatcomprised 18 representatives from industry, research, consulting and public authorities. They provide comments oninterim and final reports and specific inputs to the research work. Their services are gratefully recognised.Advisory Board memberCompany / organisation and positionCountry *Study on ICT and e-business impact in the energy supply industryBernard AebischerMaher ChebboIiro Rinta-JouppiMiguel A. Sánchez FornieThomas TheisenETH Zurich, CEPE Centre for Energy Policy and EconomicsSAP AG, Vice President of Utilities Industry for Europe, Chairman of the EUSmartGrids Demand and MeteringVattenfall, Head of Business Development - Distribution operation Nordic areaEuropean Utilities Telecom Council (EUTC), Chairman of the European UtilitiesTelecom Council Board of DirectorsRWE Energy, Head R&DSwitzerlandFrance / EUSwedenSpain / EUGermanyStudy on ICT and e-business impact in the glass, ceramics and cement industryRenaud BatierJean Francois MottintBrigitte PreisslFrédéric Van HouteManaging Director, Ceramie-Unie - The European Ceramics IndustriesHead of Intelligence Unit, CembureauEditor-in-chief, IntereconomicsSecretary General, CPIV, Standing Committee of the European Glass IndustriesEUEUGermanyEUStudy on ICT impact on greenhouse gas emissions in energy-intensive industriesPietro EvangelistaEnrico GibellieriGraham VickeryMartin WörterNational Research Council (CNR), National Institute for Transportand Logistics (NITL)European Steel Technology Platform, Deputy Vice PresidentOECD, Directorate for Science, Technology and Industry; Information,Computer and Communications Policy Division; Information EconomyETH Zurich, KOF Swiss Economic InstituteItalyItaly / EUUK / internationalSwitzerlandStudy on an economic assessment of ICT-related industrial policyAntti EskolaPaul HeidhuesPhilipp KoellingerPaula SwatmanMinistry of Employment and the Economy, Innovation DepartmentProfessor for Economic Theory, University of Bonn,Assistant Professor in Economics, Erasmus University RotterdamProfessor for Information Systems, University of South AustraliaFinlandGermanyNetherlandsAustralia* EU = representative of a European industry federation / organisation(sorted alphabetically within each advisory board)Page 19

Contact informationFor further information and to request copies of this brochure, please contact:European CommissionEnterprise and Industry Directorate-GeneralData sources and methodologyThis analysis is based on overall insights from previousstudies in the framework of the Sectoral e-BusinessWatch, drawing from numerous enterprise surveys, casestudies and expert interviews.Unit D4 “ICT for Competitiveness and Innovation”1040 Brussels, Belgiume-Mail: entr-innov-ict-ebiz@ec.europa.euMore informationFurther information about e-business models will bemanly be included in the study report about ICT ande-business impact in the glass, ceramics and cementindustry. The report will be available on the websiteat www.ebusiness-watch.org. For more information,please contact Mr Hannes Selhofer (hannes.selhofer@empirica.com).The Sectoral e-Business Watchc/o empirica GmbHOxfordstr. 2, 53111 Bonn, GermanyWeb: www.ebusiness-watch.orge-Mail: info@ebusiness-watch.orgPage 20