1. National Computerization Agency
Korea’s Experience in promoting e-business adoption among micro and small business
Yoon, Jeongwon
Director
National Computerization Agency

2. Table of Contents Introduction E-business in Korea
ASP based e-business project for small business
30,000 SMB Informatization Project
Conclusion

3. Part I
Introduction

4. Background Why e-business ?
Cyber Korea 21
e-Korea Vision 2006
Renewed focus on Internet growth and Internet Business :
“Use ICT as a strategic means to overcome economic crisis”
New national IT master plan for five years(2002 ~ 2006) :
“Emphasize on advancing B2B e-commerce and providing a safe and reliable online business environment”
Why e-business ?
Remove the barriers of time and distance with the Internet
Tool to boost the nation’s competitiveness as witnessed in the Korean success case.

5. Background Continual growth in size of e-commerce market in Korea
47.9 billion dollars in > billion dollars in 2003
Total Commercial Transaction vs. e-Commerce(B2B, B2C)
16.5 %
Unit : billion USD
12.8 %
e-commerce transaction
9.1 %
1,400
4.5 %
196
148
1,200 99 48
1,000
800
1,155
1,188
600
1,058
1,090
Total e-commerce transaction
400
200
2000
2001
2002
2003
Source: National Statistical Office of Korea

6. Background Relation btw GDP Growth and IT Industry Growth in Korea40 35 30 25
IT Industry Growth Rate 20 15 10 5
GDP Growth Rate
1996
1997
1998
1999
2000
2001
2002 -5
-10
Unit : %, contrast to previous year
Source: Bank of Korea

7. Objectives
Closing the gap in IT use between small businesses and medium & large enterprises
Utilizing its highly advanced information infrastructure
Right business environment for small businesses
Promoting new business model
Highly Advanced Information Infrastructure

8. Part 2
E-Business in Korea

9. B2B in Korea
More than 88% of the total e-commerce market(198.3 billion USD as of 2003)
CALS
B2B Network Project
1998
1999
2001
2002
2003
Electronics
Automobiles
Construction
Defense
Start with 9 fields;
steel, shipbuilding, machinery,etc.
11 fields added; watches, agricultural products, livestock, and machinery, etc.
10 fields added; Semiconductor animation, etc.(Total 30 fields)
9 fields added, ; stationary, jewelry, fruit, and flowery. (Total 1,017 companies)

10. “Optimizing Value Chain”
B2B in Korea
Large Enterprise
Large Enterprise
SME
Large Enterprise
SME
Large Enterprise
Large Enterprise
Large Enterprise
“Optimizing Value Chain”
CALS Project
B2B Network Project
B2B Network Project
Government investment : 70% of the total costs (Total $51mil)
ISP, Standardization, raising awareness on e-business, pilot implementation

11. B2C in Korea
B2C market : 5.8% billion USD as of 2003, taking up 4.7% of the total retail market(105.8 billion USD)
Growth of B2C Market in Korea
(in Billion USD)
<Source: National Statistical Office>

12. Realizing fair and transparent procurement
G2B in Korea
Establishment of a single window government procurement system for entire process via the Internet
• Standardized e-Catalog system for procurement supplies
• Public announcement of all government-wide projects for bidding
Realizing fair and transparent procurement
process and services
• Enabling online process for registering as a contractor, bidding on
public project, signing contract agreement, and receive payment
for services

13. G2B in Korea Other G2B Tool ‘Special Act on Taxes’ enacted in 2001
Tax Reduction
‘Special Act on Taxes’ enacted in 2001
Online single window for public services
Trade permit, logistics, customs declaration
Credit inquiry, business matchmaking
Online Business
Registration & permit
Online Export & Import
Processing
Promotional sites for
international trade
information

14. Government Initiatives
E-leadership
Establishment of ‘Informatization Strategy Meeting’ under the presidency
e-Korea Vision 2006, e-business Facilitation Measure
Informatization Promotion Committee and several sub-committees
Collaboration for detailed implementation strategy=
Political Commitment from
the Top
Visions & strategies for
Informatization
Implementation Framework
Cooperative Partnership
btw Public & Private Sectors

15. Government Initiatives
Government’s role
Building trust for user and consumer
High-speed broadband network, R&D, HRD
Procurement of government and public corporate
Create favorable market environment
e-commerce law and regulations
Enhance e-trust for
E-business market
Establish infrastructure
Facilitate G2B
Promote e-commerce
in the private sector
Lay a groundwork for
cyber trade standardization

16. Government Initiatives
Public Policy
e-Commerce and Informatization Budget Portion for Traditional Industries
(Unit : million USD)
1998
1999
2000
2001
2002
2003
e-commerce/informatization of traditional industries(①)
2.1
2.3
3.5
44.5
89.3
106.9
Informatization budget(②)
596
714
1,013
1,224
1,343
1,392
portion(①/②)
0.35%
0.33%
3.63%
6.65%
7.67%

17. Government Initiatives
Key-Policies for e-Business
Category
Project
Budget(’03)
Ministry
SMB Informatization
ASP based e-business project for small business
26.2
MIC
30,000 SMB informatiozation project
27.5
MCIE
Reform consortium for SMB
9.6
SMBA
HRD
Training HR in e-commerce
2.1
Technology Development
Next generation e-business technology development
4.6
E-commerce technology development
5.5
Standardization
E-business infrastructure technology
0.9

18. Government Initiatives
Skills
Technical problems in MSB
No IT expert, insufficient number of application software
lack in capacity to operate or maintain IT resources adopted.
low standardization level
Solutions;
Adoption of ASP in the form of consortium.
Provide free IT training courses
Development & introduction of Business models through consulting

19. The ASP Based e-Business Project
Part 3
The ASP Based e-Business Project
for Small Business

20. Implementation Framework
The implementation structure of ASP based e-business project for SMB
MIC
SMBA
Promotion Committee
NCA
Related Agencies Council
TFT
Advisory Committee
Service Business
KIMI
BM Business
CNK

21. Implementation Progress
Master Plan for the project & 1st year project began
Formulation of ASP consortia
ASP-based integrated IT pilot services
2001
2002
45 integrated ASP services
3 community-BMs focusing on unions or associations related to small businesses.
Designation of 5 ASP consortia with 175 companies
A hub-BM developing company was designated for provider-oriented e-business adoption
4 community-BM developing companies chosen.
2003
2004
The 4th year project on progress.

22. Implementation Strategy
ASP Diffusion
“Cost-effective”
Training for SME
“Promote informatization”
Synergy through Consortia
“Maximized synergy
through integration”
Win-Win Framework
“Link suppliers&demanders”

23. Implementation Status
The ASP based implementation framework for MSB informatization
“Acts independently, attracting MSBs wanting to benefit from ASP services”
NCA
Select & designate Consortia
Consortium
Public bidding
Broadband ISPs
Portal Service Providers
MSB
Consortia
Consortia
Contents Providers
Consortia
Solution Providers
Consortia
Etc…
MSB
MSB

24. Implementation Status
Development of Business Models:
Pilot projects involving industry unions, industry associations, and IT companies were launched to promote development of network-based business models.
Two types of e-business models :
Community-Model
“Demander oriented”
Industry Association or Union
7 models developed by 2003
HUB-Model
“Supplier oriented”
Individual service provider
32 models developed by 2003

25. Firm Level Support Educational Support & PR
Customized training services & promotional activities through Unions or associations - > 160,000 companies benefited as of Nov 2003
Creation of Demands on Initial IT services for MSB
Government led the creation of the market (80% of investment covered by matching-fund system)
A provider-oriented business model proposed
Cyber IT Support center
Provide online service and technical support for e-Business project

26. 30,000 SMB Informatization Project
Part 4
30,000 SMB Informatization Project

27. 30,000 SMB Informatization Project
5 Areas of Assistance
Pre-Consulting for Informatization
Basic Business Software
ERP
Manufacturing Process Informatization
Collaborative Informatization
Out of 37,392 companies applied 35,324 companies were selected for assistance

28. Raise awareness on Informatization
Present IT guidelines appropriate to their level
Business process software for SMBs in early stage of Informatization
For businesses looking to integrate their system
Informatizing work process in the factory
External expansion of Informatization
Pre-Consulting
for Informatization
Basic Business
Software
ERP
Manufacturing
Process
Informatization
Collaborative
Informatization

29. Part 5
Conclusion

30. Success Factors Technical Factors Organizational Factors Environmental
Government reduced
cost burden for
IT adoption
Information systems
& business models
Customized for
Industry types
Various
IT training
Systematic
IT manpower support
Advanced
Information
Infrastructure

31. Recommendation Establishment of Standards Ministerial cooperation
Long-term and effective support policies
Differentiated policies for small and medium businesses
Improving environments from the public sector
Meeting technological progress

32. Thank You!