1. 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

2. 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

3. E-Business Adoption in Canada 2000  E-Business adoption is concentrated heavily in urban Canada, larger provinces and larger companies  Slow pace of e-commerce development, particularly the uneven pattern of growth regionally and within Canadian industry threatens to lead to digital divide  Canadian SMEs continue to fall behind their U.S. counterparts when it comes to embracing sophisticated e-business applications  Canadian organizations will be under increasing pressure to convert at significant cost "SMEs are connected, but not yet leveraging Internet technology fully for real productivity improvement...” ( "SMEs are connected, but not yet leveraging Internet technology fully for real productivity improvement...” (Canadian E-Business Opportunities Roundtable) Source: Survey on Electronic Commerce and Technology, Statistics Canada 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

4. 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

5. 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;  Canada’s private sector is using e- business 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  Almost half of Canadian public organizations are purchasing online (49.1%) E-Procurement Adoption By Canadian Sectors 2000 Source: Survey on Electronic Commerce and Technology, Statistics Canada 18% Online purchasing remains low in Canada 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

6. Fact #2 - Small firms are slow to adopt e-procurement technologies Source: Survey on Electronic Commerce and Technology, Statistics Canada 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 :  Accommodation and Food Services (95%)  Information and Cultural Industries (81%)  Transport and Warehousing (81%)  Among the smaller firms, the percentage of firms purchasing online varies significantly between sectors. Leading sectors in 1-19 FTE category  Information and Cultural Industries (55%)  Educational Services (45%)  Professional, Scientific and Technical Services (36%) Most private sector Internet B2B transactions and online purchasing are conducted by large enterprises 18% 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

7. Fact #3 - E-procurement is on the radar screen but fails to be implemented 84% of surveyed organizations have an e- business strategy 90% of them have an e- procurement strategy 38% of them procure online Canadian Leader Survey on E-Procurement  Top Leading Canadian CEOs  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  47% said that e-procurement was not a strategic issue for their organizations There is a significant discrepancy between firms that have an e- procurement strategy and firms that are actually implementing it Source: Industry Canada based on Canadian Leader Surveys 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

8. 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 What have we learned from the surveys and EBIP case studies? 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 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

9. Fact #2 - Most private sector Internet B2B transactions and online purchasing are conducted by large enterprises Policy considerations  Awareness  Drivers of e-procurement  Choice of technology  Costs  Financial cost/investment  Time  Market structure  Vertical integration What have we learned from the surveys and EBIP case studies? Learning from EBIP Case Studies Awareness e.g. ICT Market structure e.g Retail Travel Service, General Merchandising and Pharmaceutical Retailing, Intelligent Manufacturing Technology 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

10. 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 #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  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 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 Standards e.g. ICT Costs e.g. General Merchandising and Pharmaceutical Retailing, Consulting engineering, Retail Travel Services, ICT, Intelligent Manufacturing Technology, Plastic Industry Canada Industrie Canada

11. Statistical issues related to B2B activities in Canada Statistical Gap  Drivers of e-business adoption 1. ROI 2. Government role as a model user  Canadian SMEs 1. micro enterprises I.e. 1-9 employees  Regional distribution of e-business adoption 1. Local environment  Sectoral intelligence 1. Detailed sectoral intelligence  Linking of databases 1. Establishments vs enterprises 2. Research Survey on Electronic Commerce and Technology 2001 New Questionnaire New category of size of firms New question of perceived benefits of e-business New questions on application of ICT 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

12. S-Curve Level of Electronic Commerce Activity Time Readiness Intensity Impact Source: Industry Canada related to B2B activities in Canada Emerging issues related to B2B activities in Canada Research Gap  E-business in value chains  E-business and inter-industrial trade  E-marketplace  E-business and innovation  E-business and growth 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

13. 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... 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

14. www.ecom.ic.gc.ca charles.sandra@ic.gc.ca lepage.raymond@ic.gc.ca 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 E-Business Technology Adoption Assessing B2B and e-Procurement in Canada