E-Business Technology Adoption
Assessing B2B and e-Procurement in Canada
Sandra Charles
Raymond Lepage
Presentation for the OECD Electronic Commerce
Business Impacts Project (EBIP) Workshop
October 29-30, 2001
Rome, Italy
Industry Canada Industrie Canada
E-Business Technology Adoption
Assessing B2B and e-Procurement in Canada
Outline
1.
Introduction
2.
Findings related to B2B and e-procurement
3.
Policy considerations
4.
Issues to be addressed in future research
Industry Canada Industrie Canada
"SMEs are connected, but not yet leveraging Internet technology fully for
real productivity improvement...” (Canadian E-Business Opportunities Roundtable)
E-Business Adoption in Canada
2000
 E-Business adoption is concentrated heavily
in urban Canada, larger provinces and larger
companies
 Canadian SMEs continue to fall behind their
U.S. counterparts when it comes to embracing
sophisticated e-business applications
60
Percentage of firms (%)
 Slow pace of e-commerce development,
particularly the uneven pattern of growth
regionally and within Canadian industry
threatens to lead to digital divide
70
Internet Use
Website Use
E-procurement
EDI
Internet Sales
50
40
30
20
sad
 Canadian organizations will be under
increasing pressure to convert at significant
cost
10
0
Source: Survey on Electronic Commerce and Technology,
Statistics Canada
1. Introduction
2. Findings related to B2B and e-procurement
3. Policy considerations
4. Issues to be addressed in future research
Industry Canada Industrie Canada
Anecdotal and statistical evidence in e-business transformation are
crucial to the development of appropriate policies
Anecdotal evidence
 Case studies
• OECD Case Studies (6 sectors)
• Other Sectoral Case Studies (Academics)
Statistical evidence
 Survey on Electronic Commerce and Technology 2000 (SECT)
• Data on business transformation/Supply chain transformation
– Business-to-Business sales
– Purchasing online
– Purpose for using the Internet
 Canadian Leaders Surveys
• Data on e-procurement/Attitudes toward e-procurement
– Drivers and barriers
– Proportion of total purchasing
 Private sector’s surveys and reports
Industry Canada Industrie Canada
1. Introduction
2. Findings related to B2B and e-procurement
3. Policy considerations
4. Issues to be addressed in future research
Fact #1 - Only 18% of Canadian firms are purchasing online
 Business-to-business transactions were
the fastest growing segment of e-commerce
in 2000. They accounted for 80% of total
Internet sales or $5.8 billion;
E-Procurement Adoption
By Canadian Sectors
2000
18%
Information & Cultural Industries
52.69
Educational Services
41.04
Professional Services
 Canada’s private sector is using ebusiness technology:
42% to access database of suppliers
32% to share or perform
collaborative research
23% for training and education
purposes
15% to access customer databases
35.8
Utilities
25.51
Wholesale
22.93
Manufacturing
21.3
Mining
20.41
Finance & Assurance
20.21
Entertainment
15.87
Transportation & Wharehousing
15.01
Health Care
 Almost half of Canadian public
organizations are purchasing online (49.1%)
14.39
Retail
13.46
Accommodation & Foods Services
10.13
0
10
20
30
40
50
Percentage of firms (%)
Online purchasing
remains low in Canada
Source: Survey on Electronic Commerce and Technology,
Statistics Canada
1. Introduction
2. Findings related to B2B and e-procurement
3. Policy considerations
4. Issues to be addressed in future research
Industry Canada Industrie Canada
60
Fact #2 - Small firms are slow to adopt e-procurement technologies
E-Procurement Adoption
By Size of Firms
2000
 More than half of Canada’s largest firms have
implemented some e-procurement processes in
their commercial activities. Leading sectors include
:
18%
 Accommodation and Food Services (95%)
 Information and Cultural Industries (81%)
500 + FTE
 Transport and Warehousing (81%)
300-499 FTE
 Among the smaller firms, the percentage of
firms purchasing online varies significantly
between sectors. Leading sectors in 1-19 FTE
category
100-299 FTE
50-99 FTE
 Information and Cultural Industries (55%)
 Educational Services (45%)
 Professional, Scientific and Technical
Services (36%)
20-49 FTE
1-19 FTE
0
Most private sector Internet
B2B transactions and online
purchasing are conducted
by large enterprises
Industry Canada Industrie Canada
10
20
30
40
50
60
Percentage of firms (%)
Source: Survey on Electronic Commerce and Technology,
Statistics Canada
1. Introduction
2. Findings related to B2B and e-procurement
3. Policy considerations
4. Issues to be addressed in future research
Fact #3 - E-procurement is on the radar screen but fails to be implemented
 Top Leading Canadian CEOs
Canadian Leader Survey on E-Procurement
 53% will procure online in the next two
years while only 6 percent said that they
had no plans to procure online
 42% said that online procurement was
among top 7-10 strategic issues while 22%
said that online procurement was not a
strategic issue for their business
 Other Canadian CEOs
 58% have an e-business strategy
 67% of them have an e-procurement
strategy
 37% procure online, 34% will procure
online in the next two year while 18% have
no plans to procure online
84% of surveyed
organizations
have an ebusiness strategy
90% of them
have an eprocurement
strategy
38% of them
procure
online
 47% said that e-procurement was not a
strategic issue for their organizations
There is a significant discrepancy
between firms that have an eprocurement strategy and firms that
are actually implementing it
Industry Canada Industrie Canada
Source: Industry Canada based on Canadian Leader
Surveys
1. Introduction
2. Findings related to B2B and e-procurement
3. Policy considerations
4. Issues to be addressed in future research
What have we learned from the surveys and EBIP case studies?
Fact #1 - Online purchasing remains low in
Canada
Policy considerations
 Awareness

Drivers of e-procurement
 Lack of skilled workers

Availability of skilled workers

Training opportunities
 Security and privacy considerations
 Others

Jurisdiction

Lack of Technology standards

Local and sectoral constraints
Industry Canada Industrie Canada
Learning from EBIP Case Studies
• Privacy issues
e.g. General Merchandising and
Pharmaceutical Retailing, Intelligent
Manufacturing Technology
• Skills
e.g Consulting Engineering, ICT, Intelligent
Manufacturing Technology, Plastic Industry
• Jurisdiction
e.g Consulting Engineering
• Awareness/Standards
e.g. ICT
1. Introduction
2. Findings related to B2B and e-procurement
3. Policy considerations
4. Issues to be addressed in future research
What have we learned from the surveys and EBIP case studies?
Fact #2 - Most private sector Internet B2B
transactions and online purchasing are
conducted by large enterprises
Policy considerations



Learning from EBIP Case Studies
• Awareness
e.g. ICT
Awareness

Drivers of e-procurement
• Market structure

Choice of technology
e.g Retail Travel Service, General
Merchandising and Pharmaceutical Retailing,
Intelligent Manufacturing Technology
Costs

Financial cost/investment

Time
Market structure

Vertical integration
1. Introduction
2. Findings related to B2B and e-procurement
3. Policy considerations
4. Issues to be addressed in future research
Industry Canada Industrie Canada
What have we learned from the surveys and EBIP case studies?
Fact #3 - There is a discrepancy between firms
that have an e-procurement strategy and firms
that actually purchase online
Policy considerations

Costs

Transition from proprietary EDI to
Internet-based EDI

Industrial structure
Learning from EBIP Case Studies
• Privacy issues
e.g. General Merchandising and
Pharmaceutical Retailing, Intelligent
Manufacturing Technology
• Skills
e.g Consulting Engineering, ICT, Intelligent
Manufacturing Technology, Plastic Industry


Lack of national and international
standards

Use of multiple technologies

Infrastructure

Intellectual properties
Internal culture is slow to adapt to
new technologies

Reluctance from management

Lack of skills
Industry Canada Industrie Canada
• Standards
e.g. ICT
Costs
e.g. General Merchandising and
Pharmaceutical Retailing, Consulting
engineering, Retail Travel Services, ICT,
Intelligent Manufacturing Technology, Plastic
1. Introduction
2. Findings related to B2B and e-procurement
3. Policy considerations
4. Issues to be addressed in future research
Statistical issues related to B2B activities in Canada
Statistical Gap


Drivers of e-business adoption
Survey on
1. ROI
Electronic Commerce
2. Government role as a model user
and Technology 2001
Canadian SMEs
New Questionnaire
1. micro enterprises I.e. 1-9 employees
 New category of size of firms

Regional distribution of e-business adoption
1. Local environment

Sectoral intelligence
1. Detailed sectoral intelligence

 New question of perceived
benefits of e-business
 New questions on application of
ICT
Linking of databases
1. Establishments vs enterprises
2. Research
Industry Canada Industrie Canada
1. Introduction
2. Findings related to B2B and e-procurement
3. Policy considerations
4. Issues to be addressed in future research
Emerging issues related to B2B activities in Canada
S-Curve
Research Gap
Level of
Electronic
Commerce
Activity

E-business in value chains

E-business and inter-industrial trade
Impact
Intensity

E-marketplace
Readiness

E-business and innovation

E-business and growth
Source: Industry Canada
Time
1. Introduction
2. Findings related to B2B and e-procurement
3. Policy considerations
4. Issues to be addressed in future research
Industry Canada Industrie Canada
Food for thoughts - Potential policy research on e-business adoption
 Understanding the economic, social, cultural and technological
dimensions of e-business
E-business and economic growth; How does e-business influence the relative
contributions to economic growth?; e-business and productivity; e-business and
comparative advantage; e-business and innovation; impact of e-business on markets,
investment, industrial structure, organizations and labor markets; Cost of e-business in rural
and remote areas vs urban center; impact of e-business on SMEs and on SMEs on rural
areas;etc…
 Understanding the major factors which influence productivity, growth and
innovation in firms and organizations
What are the features of innovative and leading firms in e-business and how do they
develop?; Are these features consistent across all sectors and firms sizes?; e-business and
firm’s productivity and innovation; How does e-marketplace evolve?What can differentiate
the behavior of SMEs and large firms in terms of adopting e-business technologies; How
does e-business provide competitive edge to self-employed and SMEs; etc...
1. Introduction
2. Findings related to B2B and e-procurement
3. Policy considerations
4. Issues to be addressed in future research
Industry Canada Industrie Canada
E-Business Technology Adoption
Assessing B2B and e-Procurement in Canada
For more information, Visit our Web site
www.ecom.ic.gc.ca
or contact us
charles.sandra@ic.gc.ca
lepage.raymond@ic.gc.ca