Canada Closing e-Business Gap With U.S.

But still lagging, and U.S. Companies expect to reap the early adopter rewards,
says e-Business Acceleration Team

TORONTO, June 26 – Canada closed in on the United States in some areas of e-Business but
the gap remains substantial, and U.S. companies are much more optimistic than their
Canadian counterparts about the expected payoff from their e-Business investment.

These findings are part of ongoing research, released today by the Canadian e-Business
Opportunities Roundtable’s e-Business Acceleration team, led by John Wetmore, Vice
President,, IBM Americas. The research was conducted by IDC Canada and its
U.S.-based parent, International Data Corp. IDC projects a compound annual growth rate for
the Canadian e-Business sector of 63.1 per cent through 2005, compared to 62.3 per cent in the U.S.

“We’re pleased and encouraged to see that the e-Business gap continues to narrow, as
we also saw last fall, with Canadian businesses increasingly embracing the digital tools
that will keep them competitive,” said Mr. Wetmore, chairman of the e-Business
Acceleration Team. “But it’s not across the board. Small Canadian businesses continue
to fall well behind their U.S. counterparts, and Canadian businesses in general tend to be
more reluctant to embrace e-Business for sophisticated applications such as supply chain
management or order processing and fulfillment. The challenge is that, in the global
economy, having a Web site is not enough.”

IDC added some new questions to its survey that indicate that U.S. businesses expect to
see strong returns from their investments in e-Business, much more so than their Canadian
counterparts. U.S. small businesses said they expect 17 per cent of their 2001 revenues to
come via the Internet, compared to just over 3 per cent for Canadian small businesses;
U.S. medium businesses said 6.5 per cent compared to 3 per cent for Canadian medium
businesses; and U.S. large businesses said 5 per cent compared to just 1 per cent for
Canadian large businesses.

A closer look at the research reveals that it’s the business-to-consumer sector where
Canadian firms are gaining the most ground. IDC is now predicting compound annual growth
rate of 57 per cent in the Canadian B2C sector, compared to 42 per cent in the U.S. for the years 2000-2005.

In the business-to-business sector, Canada closed the growth gap a bit but still trails
the U.S. IDC projects Canadian B2B growth through 2005 at 64.3 per cent compared to 68 per
cent in the U.S. “The survey data indicates that Canada is making some headway
compared to the U.S. for B2C Web sites. But the data also says we have a long way to go
for the more sophisticated applications,” said Joe Greene, vice president, IDC
Canada. “There’s still lots of work to be done if Canada is going to compete
successfully with our giant neighbour.”

For example, the IDC research indicates that medium and large Canadian businesses are well
behind their U.S. counterparts in the adoption of sophisticated online tools such as
integrated supply chain management. The number of medium-sized (100-499 employees)
businesses with supply chain management fully integrated with their Web sites was
approximately 15 per cent in the U.S. compared to approximately 3 per cent in Canada.

“Web access and Web sites are now standard business tools, just as the telephone has
been for decades,” said Mr. Wetmore. “Canadian companies that want to compete in
a global marketplace have to take advantage of more sophisticated tools to reap the
rewards that running a more effective business offers.”

The Canadian E-Business Opportunities Roundtable is a private-sector led initiative formed
in 1999 to develop a strategy for accelerating Canada’s participation in the Internet
economy. The E-Business Acceleration team was announced in March, 2000 with a mandate to
create a sense of awareness and urgency for Canadian companies to adopt e-business to
compete more effectively in a networked world.