3 March 2003
Steve Butler examines e-business development in Canada and determines that businesses are not as proactive as they could be when it comes to encouraging their trading partners to adopt e-business solutions.
By Steve Butler
In the World Economic Forum’s recently published Global Information Technology Report 2002-2003, Canada ranked sixth overall according to the study�s Network Readiness Index.
Contributing to Canada’s strong score were high marks given to the Canadian government’s use of the Internet, as well as Canada’s favorable political and regulatory environment that supports e-business development. Indeed, the report singled out Canada as a case study on how business and government have successfully worked together to develop a regulatory system that supports e-business investment.
However, despite the Canadian government’s best efforts for e-business development, Canada received its lowest ranking in the study�s Business Usage Index, coming in 14th overall behind Norway and South Korea. In light of this relatively low score, it appears that the private sector in Canada remains rather cautious in its adoption of e-business technology.
The World Economic Forum study’s findings are supported by the Purchasing Management Association of Canada (PMAC), which found in a survey of 173 Canadian purchasing professionals that just 45% of respondents were using online RFQs/RFPs as of mid-2002, while only 8% were participating in online auctions.
This compares with 68.4% of companies in the US that used online RFQs/RFPs and 27.2% of US companies that used an online auction during the fourth quarter of 2002, according to a similar study conducted by Forrester Research and the Institute for Supply Management (ISM).
The most significant finding of the PMAC survey, however, reveals that a substantial 82% of Canadian organizations do not require prospective suppliers to offer their products or services online, while 79% said that they do not give their current suppliers any incentives or encouragement to sell online either.
By comparison, many large enterprises in the United States and Europe have been proactively encouraging their small and medium-size trading partners to interact with them via private extranets or Web-based EDI connections. Early results show that large and small trading partners alike are becoming more productive as a result.
As confirmed in a study conducted by the Center for Information Technology and Organizations (CRITO), one of the key drivers of e-business development is the leadership of large enterprises, which play a crucial role in encouraging the adoption of e-business technology within their own organizations, and throughout their supply chains as well.
Data from the PMAC survey indicates that businesses in Canada are not as proactive as they could be at encouraging e-business adoption among their domestic trading partners, which may in turn explain why Canadian companies trail their US counterparts in the use of various e-procurement tools.
In light of the role that the Canadian government has already played in encouraging e-business development, the above findings confirm that there are limits to what any government can do to support the adoption of new technology� at one point, the private sector needs to step up and show some leadership as well.
Steve Butler is a Senior Analyst with eMarketer and is currently working on the Online Trading & B2B Exchanges report. You can reach him at [email protected] with comments, questions or suggestions.
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