Small Business Internet Commerce Systems – Learning from the Pre-Internet Era
Ron Craig
Simpson Poon
School of Information Technology, Murdoch University
ABSTRACT
End-user systems development has raised many issues, especially since microcomputer software became powerful and yet easy enough to be used by end-users to develop medium-sized systems. Until the era of the Internet, most of these applications were confined to internal systems built to support internal organisational functions. The Internet and the latest generation of electronic commerce software now allow small firms to develop complete trading systems easily. This means traditional concerns in end-user development now extend beyond the boundary of an organisation and possibly to the whole industry. Yet potential benefits arising from Internet Commerce Systems can be substantial, so few enterprises can ignore the possible implications. For small firms, the opportunities and risks are greater than ever.
INTRODUCTION
There has been substantial growth since the early 1980s in the number and proportion of applications developed by end users (Brown et al, 1997; Edberg & Bowman, 1996). Where once control over user developed applications (UDA) was a major concern of top management, this is no longer so. It is not that End User Computing (EUC) is no longer viewed as a problem area, but that other concerns are paramount in the minds of CEOs, such as Y2K problems (Most, 1998), and effective use of IT for efficiency and competitive advantage in a global environment (Bradley, Hausman and Nolan, 1993). EUC management has, for the most part, been delegated to the unit or department level.
Several factors are responsible for the continuing increase in EUC. The application request backlog continues to grow while the pressure to use IT efficiently and effectively has never been greater (Gallagher, 1998). Currently most IS departments are focussing most (or all) their resources on Y2K fixes (Gowan, Jesse and Mathieu, 1999). The shortage of IT professionals is severe in many areas, forcing end-users to either develop their own applications or delay implementation. Users are far more computer literate today, having worked with micros for a decade or more. Micro-based applications such as word processing, spreadsheets and database management are now familiar to many end users. The array of user-friendly software and the growing incorporation of wizards makes it easier to develop applications. As well, the internet and web have emerged as a communication platform, and
HTML as the programming standard.
Many concerns have been expressed about end-users developing applications for themselves and others (Brown et al, 1997). These centre around the lack of training with software and methodologies, and lack of discipline to comply with standards. Typical concerns raised include: lack of quality assurance (data validation, testing, documentation, system controls, backup, security), failure to specify correct requirements, poor design of applications,

mismatch of hardware/software, limited choices, redundant efforts, lack of organizational consideration (leading to independent islands of technology), and the fact that such applications may not support corporate plans and strategy (Mirani and King, 1994).
Small business is important to Australia
1
. There are currently more than a million small businesses (117,400 in agriculture, forestry and fishing, and 929,500 in non-agricultural) employing about half the national labour force (345,400 in the former area and 6,470,600 in the latter) (Department of Employment, Workplace Relations and Small Business, 1999).
They have been responsible for about 90% of job growth in Australia over the past decade and this trend continues. While most small firms always remain small, a few go on to become medium sized or large firms. A strong, vibrant small business sector is important to the
Australian economy.
Smaller firms have several advantages over larger ones. They can be more flexible, with quicker reaction times to market changes and opportunities. Niche markets, unattractive to larger firms because of limited size, are viable for them. The past geographic restrictiveness of small enterprises is, in many cases, being alleviated through use of the web. In the area of information technology, small firms have an easier time of changing their business processes to match those supported by software packages, whereas large firms are more likely to customise the software to match current business processes.
There are also many threats to small businesses. Foremost is the common lack of resources -
A resource poverty @ is a characteristic of most small firms. They usually have neither the expertise nor financial resources of a larger firm. A single strategic error, misreading of the competitive environment, or negative change in the business environment can result in a major setback or even bankruptcy. While the web can provide an opportunity for penetration into new market areas, it also opens up the door for competition from other small firms (both national and international). And as IT decreases transaction costs, larger firms are moving into markets once the sole domain of small firms. It can be difficult for a small player to capture the potential customer = s attention in such a fragmented and noisy environment.
Developing or implementing IT applications can be difficult when there is no internal expertise, and outsourcing has its own risks. Using new programming tools and applications may initially appear deceptively easy, yet turn out to be a major problem. It takes significant time, knowledge and skill to develop architected systems that can provide guaranteed levels of service in one or more domains (especially compared to constructing a simple web site).
Therefore a challenge for many Australian small enterprises is how to deal with Electronic
Commerce Systems, especially those which are internet based. Determining what should be done, how to do this, and then carrying through with successful implementation can be a considerable task. This paper focuses primarily on the implications of in-house development of such systems by end-users (end user computing). As well, other aspects of Small Business
Internet Computing (SBIC) are considered.
LITERATURE REVIEW
1
In Australia, a small business is defined as a firm having up to 19 employees in the
non-manufacturing sectors and up to 99 in the manufacturing sector.

That system development and maintenance is error prone is well known. Considerable investigation of error rates, and sources of errors, has been completed, showing that error rates typically range from 0.5% to 5%, depending on complexity of the task and other factors
(Panko, 1998). Programming, logic and design error rates seen in the > 70s have been mirrored in spreadsheet error rates found in the > 80s and > 90s. There is no reason to expect that error rates will be less for Small Business applications, especially where untrained or minimally trained end users are involved.
Rockart & Flannery (1983) defined six types of end users: Nonprogramming, Command-
Level, Programmer, Functional Support Personnel, End User Computing Support Personnel, and Data Processing Programmers. The first three categories are still applicable to small firms today, with the remaining three possible for larger small firms (such as manufacturers) or technology-based firms. They made fourteen recommendations for managing EUC, encompassing the areas of strategy, support, and control. These key areas continue to be important today.
A significant amount of research and study has been directed to the management of EUC and
UDA (Aggarwal, 1996; Brancheau & Brown, 1993; Dodd, 1994; Henderson, 1986; Mirani &
King, 1994), to the extent one journal (Journal of End User Computing) focuses exclusively on this topic. The emphasis has been on larger organizations (Kittner & Van Slyke, 1997, is an exception) with a particular focus on the role of an Information Centre to partner with and support end users. Control of EUC is obtained through development of policies, hardware and software standards, and user support and training. Despite the documented problems with
EUC, few organizations have policies on end user development in general, and even fewer enforce these (Cale, 1994; Galletta & Hufnagel, 1992; Speier & Brown, 1996). The Gartner
Group has flagged EUC management, in the era of web-based systems, as a major concern for business (Brown et al, 1997).
Results from studying small business IT use started to appear in the 1980s. Before that little had been published, possibly due to the unaffordability of IT and the lack of need to use it in a small firm. User input in the development and use of IT has been identified as critical to IT success (DeLone, 1988; Montazemi, 1988). However, most of the studies focussed on internal applications such as office automation or accounting systems. Little was explored in the area of computerised inter-organisational communication, due to their lack availability.
As telecommunication technologies matured and become more affordable, interorganisational systems (mainly in the form of EDI) started to appear. Large firms were the early adopters of such systems but quickly small firms found they were > coerced = into using such technology (Iacovou, Benbasat and Dexter, 1995).
The emergence of Internet technologies has changed the traditional adoption pattern somewhat. Instead of large companies adopting a technology and forcing it onto their smaller suppliers and customers, small businesses became the early adopters (Poon, 1998). This is mainly because the Internet has been a relatively cheap technology to obtain and use. More importantly, it does not require the formation of a trading relationship before using it.
Consequently, a small business can experiment with the technology and be better prepared when engaging in a real trading relationship. Nevertheless, full exploitation of electronic commerce is a complex area (Kambil, 1997).

Recently, there has been increased interest in Small Business Internet Commerce (SBIC) from both academia and governments to learn more about how to enable small businesses to benefit from Internet Commerce (e.g., Barker, 1994; Adams, et al., 1997; Poon, 1998 and http://www.ispo.cec.be/ecommerce/g7init.html
). However, these studies have only addressed the basic issues of SBIC. Many additional issues are yet to be discovered and studied before we know how SBIC is really impacting on world economies.
PRE-INTERNET ERA
Initial EUC applications involved the use of 4GLs and query tools in larger organizations, enabling end users to query databases and develop smaller applications. This provided an important contribution to the reduction of application backlogs, where small applications could take months to rise up the IS department project queue (Mirani and King, 1994). Few small firms benefited from these developments, simply because they did not use IT.
With the advent of microcomputers, personal computing grew rapidly in both small and larger firms. The classic EUC applications include word processing, spreadsheet development, database applications (record storage, update and retrieval), graphics
(spreadsheets, presentation software), and communications (e-mail).
Small businesses gradually adopted IT and integrated it into their business practices. Their choices were to make minimal (or no) use of IT, to purchase software packages, to outsource application development (and maintenance), or in-house development. Software packages proved very popular, as they were inexpensive and powerful (compared to labour intensive non-computerized approaches). Functional packages (such as accounting and payroll) and then integrated packages became available. However electronic communication was still the domain of large firms, who made use of EDI and proprietary networks.
To the extent that small firms developed their own in-house applications, they were vulnerable to embedded errors. However their computer systems were isolated from those of other firms, and from customers. When problems arose, they could revert temporarily to manual systems.
POST-INTERNET ERA
As EUC moves into the era of Internet Commerce, our understanding of EUC based on PC- based systems with Office Automation type tools needs to be expanded. The Internet provides an opportunity for small businesses to tap into a rich and extensive information infrastructure which was once only affordable by the largest of the large corporations. For a small firm, the only commonly available telecommunication support before the Internet was the telephone network, with some proprietary networking systems (e.g., EDI systems). Data communications were expensive due to high charges and there was little a small firm could do to customise PC-based communication software.
This has all changed since the Internet era. Small businesses can now access the Internet and use low-cost software packages to develop small but sophisticated groupware environments, transaction systems and other inter-organisational IS.

With this, there also comes an unprecedented opportunity for small firms to reach out to suppliers and customers they may not even know exist. Poon (1998) has provided examples where small businesses from different industries benefited from the use of the Internet. For example, a small law firm managed to get advice and support from an overseas legal expert; and a small manufacturer started exchanging design documents with its overseas customers via e-mail. In addition to using it as a sales medium, many more small businesses are using email and the Web to interact and exchange information with different groups. The end result is that small firm operators are now becoming more knowledgeable about the Internet and some have acknowledged that this has helped them save time for more important matters.
Even though Internet connections among small businesses have grown, many small businesses are still wondering why Internet Commerce has anything to do with them.
Recently, a number of initiatives have started to help small businesses overcome this hurdle
(e.g., Australian Electronic Business Network, The Department of Workplace Relations and
Small Businesses). The objective is to help small businesses understand what Internet
Commerce is and learn how to use this technology to benefit their operations.
Indeed, one of our research directions is to develop a stage model to describe such diffusion processes and provide late adopters with lessons from the experience of early adopters. Most important, small businesses need to understand the boundaries and limitations of Internet
Commerce and be sensible with respect to expectations.
End-user development in the Internet era has also become a more complex issue. This is partly due to the system = s ability to directly interact with systems of another organisation, and also because end-users are now using a very powerful system building tool (integrated electronic commerce systems can be installed as easily as office software). More important, these systems have the ability to integrate with existing tools (e.g., spreadsheets and database management systems) which support the firm = s management information system.
Consequently, end-users can not only create web pages, but can also set up a whole Extranet system that encapsulates many trading functions. Until now such systems could only be built by a team of analysts and programmers with significant investment. This situation should prompt management to review strategies of EUC control, in addition to considering the risks/rewards of allowing external users access to the firm = s operational systems.
Systems integrity and security are only two of many issues which require total rethinking.
Given that many small businesses will go ahead and construct interorganisational Internet
Commerce systems, such issues are more critical as the consequences will affect not just one firm.
For firms who outsource such projects to trained IS professionals, the issue of cost is of concern. Although a pilot Internet Commerce system is cheap enough to build, small firms often find that to extend it to something significant can be more expensive than first estimated. For example, building a web page with an e-mail address to accept orders is relatively simple, but to set up a fully functional internet transaction server can be complex and requires advanced programming skills.
All these issues relate back to the need for proper planning, analysis and design, which had been part of the criticism of EUC over the last decade or so. Unfortunately, system

development methodologies for Internet Commerce systems are not as mature as those for traditional internal systems. The result is Internet Commerce systems built by end-users can contain unknown problems (data integrity, security, susceptibility to computer viruses, lack of documentation leading to unmaintainability, etc.) which may affect not only the owner = s company, but also those who trade with them.
RESEARCH DIRECTIONS
(1) Management of UDAs in Small Business
With the increasing complexity and importance of applications, the need for risk assessment and management has never been greater for small businesses. Rockart and Flannery = s recommendation for an EUC strategy, as well as end user support and control, is as applicable today as it was fifteen years ago. To what extent are owner/managers aware of the risk? What policies/procedures/standards have they established? If established, are these enforced? Both descriptive and normative studies would provide examples, lessons and recommendations that could assist small firms in making better use of the web and increasing their competitive position.
(2) Towards a Stage Model
There is now a fairly rich body of research on SBIC. Among these, many studies have given a longitudinal view of how small businesses adopted Internet Commerce and evolved with it. It would be useful to have a stage model describing the generic evolution pattern of SBIC. Such a model should look at the evolution process from a multidimensional perspective including technology, processes, organisational culture and industry structure. Using such a model, one could identify the similarities and differences between SBIC and earlier generations of IT models in EUC. In parallel, other aspects of SBIC development could be studied, such as the impact of business network dynamics and cultural factors on diffusion of Internet Commerce.
(3) Identification of Major Challenges
This research stream is an area of considerable activity already. What are the major new challenges facing small businesses with respect to electronic commerce and internet commerce systems, what are the potential impacts of these challenges, and what strategies can owner/managers follow for managing these? What can be learned from the successes and failures of early pioneers? Some of these challenges are listed above, and others will emerge as internet commerce continues to grow.
(4) Small business virtual alliances and cooperative support
The concept of virtual business alliances is an attractive idea and is to be realised through the global Internet. Recently a few research studies have investigated how the Internet can be used to support such alliances (e.g., Sherer, 1997; Akizawa and Kijima, 1997). Small business alliances over the Internet have some key advantages which will help small firms to be more competitive in the era of global markets.

Firstly, small firms can form alliances with those who are in specific industries and countries which are strategically important to their future (e.g., export markets, new products development, etc.). The Internet can provide support for the virtual value-chain between a small firm and its business partners.
Secondly, small firms can exchange information with businesses in the same or related industry to keep themselves updated with latest development. In the past this could only be done through going to specific meetings and reading articles published by bodies such as the
Chamber of Commerce or industry groups.
Thirdly, for small firms who are, or plan to be, involved in joint production or development, the Internet is the ideal platform to build their collaborative technology. It is a relatively inexpensive and yet highly effective means to carry out processes such as concurrent engineering.
One research focus in this area is to investigate the economic benefits of using the Internet to form virtual alliances and identify activities best supported in such context.
CONCLUSIONS
Web-based applications, and their application to Internet Commerce Systems, are a potential gold mine and/or mine field for small businesses. The declining cost of information technology, and the availability of powerful tools and applications, provide unparalleled opportunities. From the overall business perspective, new competitors and forms of competition are appearing. Small enterprises can be proactive or reactive in considering the possibilities and implications, but they cannot afford to ignore what is happening.
The opportunities and risks demand that every firm continue to review both their corporate strategy and their application development strategy. User development of applications, along with support and control initiatives, is taking on increased importance for small firms.
From an academic perspective, the area of small business internet commerce provides several areas for study, as identified in the previous section.
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