Several industry sectors were identified by a local authority as having the potential to spearhead the continued development of the region. There was however, some concern that many smaller or more isolated organisations within these industries were not taking advantage of the opportunities that developments in Information and Communication Technology (ICT) were making available. The focus of this research was to gather information on the current usage and understanding of e-business by Small and Medium sized Enterprises (SMEs), as well as an examination of their level of planning and intended use of e-business in the short to medium term. Results indicate that whilst the uptake of some aspects of ICT e.g. establishing a Web based presence may be high, the underlying knowledge of how to use them effectively is lacking. The paper concludes with some reasons for both the current level of understanding and involvement with ICT.
There is often considerable confusion as to what exactly the terms "E-Commerce" and "E-Business" mean and consequently they are often used interchangeably. For the purposes of this paper the following definitions apply:
E-Commerce: "the commercial activity of buying and selling of products and/or services via the media commonly called the Internet. This is the public face of Internet technology and relates to Business to Consumer and Consumer to Business transactions only".
E-Business: "encompasses E-Commerce but in addition also includes the further dimension of Business to Business information transfers. This includes information transfers within an organisation as well as external transfers".
It has been suggested that for many SMEs, their prosperity and in some cases their very survival depends on them embracing the opportunities that e-business has to offer. There has been little New Zealand based research on the attitudes of SMEs toward the impact such technological advancements on business practice and success.
New Zealand's economy is more reliant on SMEs than most other countries [ HREF 1 ], as shown in Figure 1:
Figure 1 Size Distribution of Manufacturing Industry
The January 2000 NZ Ministry of Commerce (MOC) Update Report [ HREF 2 ] identified SMEs as generally sharing key characteristics, such as:
These characteristics mean that managers in these firms are often required to be multi-skilled and frequently must, single handedly, manage a range of disciplines as diverse as marketing, accounting and manufacturing. They are often also severely constrained by a lack of time to devote to some functional areas and finance to invest in their organisation. The MOC report suggests that the above characteristics are more typically exhibited by businesses with fewer than 20 employees. They have defined a Small Enterprise as one having 5 or fewer full-time equivalent employees (FTEs) and a Medium Enterprise as having 6 to19 FTEs.
The following summary points are taken from the January 2000 Update Report.
The report goes on to say that, "the significance of the SME sector in New Zealand is increasing as large firms downsize to compete in the international market, workers face less job security, and more people turn their hand to small business at retirement or as a lifestyle choice. With further opportunities presented by globalisation and technological development, the role of SMEs seems more likely to continue to increase than to diminish in the coming years." Such commentary highlights the importance of SMEs to the economic well being of the Otago region.
It is widely believed by analysts that adopting an e-business approach is of fundamental strategic importance to the future economic development and social well being of New Zealand. Further, there is a significant opportunity for those operating in less recognised business districts, to make target and potential markets aware of where they are and what they are capable of.
Figure 2 below indicates the percentage of respondents that currently use the various technologies as well as those who intend to implement them within the next 12 months. The blue bar represents current use and the maroon bar represents intended implementation.
Figure 2 Current & intended technology implementation
As can be seen, the biggest change over the next 12 months is Web-site development, currently at 48.3% of those with Internet access but set to rise to 90%.
In subsequent in-depth interviews (Figure 3), 77% of respondents felt it was necessary for them to develop a Web-site because of competitors had already established a presence.
Interestingly, only 23% of those contacted who already had an established Web-site or were intending to establish a Web-site saw such development as an opportunity to progress their business, and felt they were under no competitive pressure to do so.
Figure 3 Web-site Incentive
There was almost universal agreement that the primary use of the Web-site was to communicate information to and from suppliers, and existing and potential customers (98%), with 91% believing it would also raise their profile. This is higher than findings found by Adam & Deans [ HREF 3 ] in their 1999 WebQual work.
It was apparent from the interviews that many expected an elevated profile as a result of their Web-site. However, they expected such results from simply registering their site with one or more search engines rather than integrating it in their marketing communication strategies.
When asked to indicate how important they believed e-business to be to the future of their organisation almost 80% said it was of moderate to major importance (Figure 4).
Figure 4 Importance of e-business to your future
Respondents were also asked if they had formally evaluated their products / services as well as their organisation's future direction, to assess if there were further advantages in expanding their use of any aspects of e-business. Only 36.7% of all respondents said that they had, with a further 41.7% saying it had been discussed casually.
Cross-tabulating this result with the results from the previous question showed that of those who believed e-business was of moderate or major importance to their future, only 40% of them had seriously looked at its implications. This result further supports the belief that many managers and owners of SMEs are under considerable pressure and must give priority to issues immediately impacting on the day to day operation of their businesses and are not taking a more long-term strategic perspective.
Only 20% of respondents said that they had a formal written strategic plan that identified their intentions with regard to development of e-business capabilities over the next 12 months.
Cross- tabulating whether respondents do or do not have a strategic plan with the earlier responses to the question about how important they felt e-business was to their future produced some interesting results.
Deloitte Touche Tohmatsu, (2000). Deloitte e-Business Survey. Insights and Issues facing New Zealand Business.
McGoven, G. (1999), The Caring Economy. Blackhall Publishing, Dublin.
New Zealand Ministry of Economic Development, (2000). Electronic Commerce: Strategic Importance, Key Issues and a way Forward. Wellington.
OECD. Small Business, Job Creation & Growth: Facts, obstacles and Best Practice. 1997
HREF 1
http://www.med.govt.nz/irdev/ind_dev/smes2/smes2-14.html#P592_27461
HREF 2
http://www.med.govt.nz/irdev/ind_dev/smes2/smes2.html
HREF 3
http://ausweb.scu.edu.au/aw2k/papers/adam/index.html
HREF 4
http://www.forrester.com/
Murray Wilson and Kenneth R Deans, © 2000. The authors assign to Southern Cross University and other educational and non-profit institutions a non-exclusive licence to use this document for personal use and in courses of instruction provided that the article is used in full and this copyright statement is reproduced. The authors also grant a non-exclusive licence to Southern Cross University to publish this document in full on the World Wide Web and on CD-ROM and in printed form with the conference papers and for the document to be published on mirrors on the World Wide Web.
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