Sectoral e-Business Watch: e-Newsletter No. 2/2008, November 2008

Sectoral e-Business Watch e-Newsletter No. 2/2008, November 2008

Dear Readers, The Sectoral e-Business Watch (SeBW) has released a series of eleven study reports about ICT and e-business use and impact. Six studies focus on specific sectors: chemicals, steel, furniture, retail, transport & logistics services and banking. The other studies analyse specific ICT topics: RFID adoption, intellectual property protection in ICT firms, ICT and energy use, ICT impact and e-health standards. The studies are based on surveys with more than 5,300 interviews, econometric analyses, case studies and expert interviews. All study results are summarised in the European e-Business Report 2008, which has also been released. The report presents a range of evidence about ICT impacts. While micro-data evidence clearly underlines the strategic importance of e-business for individual companies, macro-economic analyses at industry level find only moderate direct effects of ICT capital on productivity and industry growth. The report concludes that more refined political responses may be needed with regard to supporting digital value systems development, e-standards adoption and e-skills development. We invite you to consult the studies and send us your valued feed-back or questions. Best regards, The e-Business Watch Study Team More about the SeBW » European e-Business Report 2008: on a fast track towards e-Business 3.0 The quality of companies' ICT use has significantly improved in the past 3-4 years, in particular among SMEs. Basic ICT infrastructure, such as simple computer networks and access to the internet, has become a precondition for business in any industry and in companies of any size. e-Business increasingly goes beyond transactions, towards service provision. There is now a trend towards digitally integrated value systems connected through ICT that can be seen as a new life-cycle: “e-Business 3.0”. It follows the internet boom in 1995-2000 (“e-Business 1.0”) and a conservative attitude towards e-business in 2001-2005 (“e-Business 2.0”). This new phase may lead to an upsurge of outsourcing and e-business innovation as well as the emergence of new business models. Moreover there is a trend towards using ICT for sustainable industrial development. Download study report » Sector study: e-Business in the chemical, rubber and plastics industry In the chemical, rubber and plastics (CRP) industry, the ICT infrastructure of companies has improved since the previous e-Business Watch survey in 2003. For instance, the average share of orders which a company receives online has significantly increased: from 5-8% in 2003 to 25-30% in 2007, among companies accepting online orders, i.e. about a third of all firms active in the sector. The main impact of ICT on the CRP industry is as an enabler of process innovation in production, supply chain management and B2B trading processes. Furthermore companies discover new opportunities of e-business as a facilitator also for customer service. As international competition increases, notably from Asian competitors, the right e-business strategy will be important to establish a global market presence. Download study report » Sector study: e-Business in the steel industry ICT is important for the steel industry. It can increase productivity, reduce costs and improve customer relationships. The study also found that the steel industry does not lag behind other manufacturing industries. ICT and e-business adoption in steel firms is similar to the furniture and chemicals industries, which contradicts the industry’s old-fashioned image. As regards impacts of ICT, almost two thirds of the large steel companies reported that ICT use has increased competition in the sector. More than 40% of the medium-sized and large steel firms confirmed considerable ICT impact on skills requirements. ICT may have high future impacts, too. Steel firms representing 80% of the industry’s employment foresee ICT impacts on logistics, 75% on management and controlling. However, current policy activities lack ICT focus. They may not adequately reflect the importance of ICT for the steel industry. Download study report » Sector study: e-Business in the furniture industry In the furniture industry there is a fairly good basic ICT infrastructure in terms of the quality of the companies’ internet access or the use of internal networks. However, integration of e-business systems is still limited – mainly because of the prevalence of small traditional companies. ICT impacts considerably on innovation in design, production, supply chains and B2B trade. Product design plays an increasing role, hence CAD and 3D tools are becoming more important. A rapidly changing environment is increasing pressure on EU furniture manufacturers. Product innovation and reduced lead times are the key success factors to remain competitive. Therefore policy should focus on interoperability and standardisation, the creation of a favourable environment for innovation and the improvement of e-skills. Download study report » Sector study: e-Business in the retail industry Overall there has been an increase of e-business use in the retail industry from 2003 to 2007. Approximately one quarter of retail firms now offer customers the possibility to shop online. However, more than half of those firms report that the share of orders received online is smaller than 5% of total orders. By contrast, only 4% have specialised in online retailing and sell more than 50% of their goods online. Furthermore the e-commerce environment in the EU is less vibrant than in the US as EU retailers tend to use less e-business processes than US retailers. Retail SMEs lag behind large retailers in ICT uptake – overall, e-business activities often tend to increase with firm size. The three retail industry sub-sectors – non-food, food and other retail – show no significant differences in ICT and e-business use. Download study report » Sector study: e-Business in the transport and logistics services sector The availability of high quality transport and logistics (T&L) services is of paramount importance for growth and competitiveness of the European economy. The sector is characterised by a pronounced digital divide between small and large companies. ICT systems of large companies are normally more powerful and sophisticated than those of small firms. Furthermore, EU T&L firms operate on the same ICT adoption level as US firms. The logistics sub-sector is more advanced in ICT uptake than the passenger and freight transport services sub-sector. A regression analysis found strong links between ICT usage, innovation activity and firm performance. In addition, ICT and skills were found to act as complementary factors for productivity growth. Download study report » Sector study: e-Business in the banking sector ICT plays an important role in the banking industry. Process efficiency is gaining ground as ICT capital investments are largely taking the place of labour, particularly in retail banking, by standardising ordinary financial services and having customers perform basic financial services online. This causes a significant branch renewal and change in market structure with mergers and acquisitions, for instance when large banks acquire innovative internet-only banks. The banking industry has so far taken limited measures to comply with the Single Euro Payments Area (SEPA). In order to do so it is expected that the industry will have to make significant ICT investments, however banks have troubles in seeing how that can benefit them. Customer and bank readiness for the use and provision of e-banking is still not widespread among customers. Moreover, not all banks are ready for e-banking. Download study report » Market study: RFID adoption and implications RFID (Radio Frequency Identification) is a real-time data acquisition platform for enterprises and healthcare providers. If used well, it can significantly improve the performance of asset-, technology-, engineering- and brand-oriented value chains. RFID is expected to become mainstream over the next 5-10 years. Simultaneously investments will increase. This projected growth in RFID adoption will be driven by key business motivations including the opportunity to achieve cost reductions and to increase efficiency. Empirical evidence indicates that the average payback time for RFID investments is about 2-3 years. Introduction of RFID technology has an evident impact on workforce composition. About 30% of the companies already using RFID have experienced workforce reduction. However, often relocation to other departments takes place or new technical jobs are created. Download study report » Market study: Intellectual property protection in ICT-producing SMEs The protection of intellectual property rights (IPR) through means such as copyrights, patents and trademarks is critical to the success of many ICT-producing SMEs. In comparison to larger firms, SMEs face higher barriers to IPR protection since they lack resources and appropriate skills. Overall IPR adoption is increasing, but advanced users remain a minority. Only 23% can be described as advanced IPR users, i.e. having a portfolio of 4-7 different IPR. ICT-producing SMEs use IPR to protect their research investments and defend their competitiveness in global supply chains. Usually the use of IPR is correlated with better business performance. As regards the competition between SMEs and large companies, the EC should consider the concerns of smaller enterprises which fear being sidelined from the innovation process because of aggressive IPR strategies by larger competitors. Download study report » ICT impact study: ICT and energy use The role of ICT in shaping energy needs and behaviour has increased sharply. ICT can help to reduce energy consumption and thus costs by reorganising production processes, but it can also lead to additional demand for energy for the provision of new products and services. For the industrial sectors investigated in this study, electricity intensity is found to be reduced by communications devices but increased by computers and software. There is mixed and largely insufficient evidence in the literature backing the net benefit of ICT on energy consumption. Many research gaps prevail, especially with regard to theory-guided empirical (quantitative) studies. Concerning energy consumption, the three case studies conducted show that energy management and monitoring systems can help to reduce energy consumption significantly in companies from various industries. Download study report » ICT impact study: economic assessment of ICT adoption and its impact The study provides modest evidence that increasing competition induces ICT use by companies. In particular, companies in the transport and logistics sector as well as in retailing were found to use ICT to cut costs and to seek more innovative ways of conducting business. As regards ICT-enabled innovation, once a company has started to use ICT, the intensive use of electronic information exchange systems such as SCM as well as employee skills increase the likelihood that a company innovates. Intensive ICT users are also more likely to change their organisational structure and to outsource non-core activities. The results clearly demonstrate that ICT use increases the turnover of companies in all sectors. There is also some evidence for a positive impact of ICT use on market shares. Download study report » ICT study: ICT standards in the health sector Interoperability of ICT systems is a serious problem in the health sector. This implies a compromised quality of healthcare and unnecessarily high costs in the health system. Activities to harmonise standards have been rare so far, but recently there has been a major advance from ISO, CEN and Health Level 7 to tackle this problem. Barriers to e-health standards adoption are many and can be broken down by stakeholders and their rationales: governments, standards development organisations, industry, and ICT users. Achieving interoperability of health systems on a national and international level is a major challenge. Considering recent e-health standardisation activities by the US government, the EC and the Member States may be well advised to develop a common strategy and roadmap for e-health standards to prevent developments unfavourable for the EU. Download study report » This is a FREE e-Newsletter published by the Sectoral e-Business Watch (SeBW), which is an initiative launched by the European Commission, DG Enterprise and Industry. It is implemented on the basis of a service contract with empirica GmbH and involving the following main service providers: Altran Group, Databank, DIW Berlin, GOPA-Cartermill, IDC, Ipsos GmbH and Ramboll Management. If you wish to subscribe, click here. Legal notice: The contents of this e-Newsletter are prepared by the SeBW consortium and represent their personal views on the subject matters. These views have not been adopted or in any way approved by the European Commission and should not be relied upon as a statement of the European Commission nor DG Enterprise and Industry. Reproduction is authorised provided the source is acknowledged.	Downloading and ordering study reports Download All study reports and the European e-Business Report 2008 can be downloaded from the Sectoral e-Business Watch website: www.ebusiness-watch.org » Order print copies Printed copies of the European e-Business Report 2008 can be ordered from: European Commission Enterprise and Industry Directorate-General Unit D4 «ICT for Competitiveness and Innovation» 1040 Brussels, Belgium e-Mail: entr-innov-ict-ebiz[at]ec[dot]europa[dot]eu Conference Proceedings "Understanding the e-Economy": Proceedings of the e-Business Watch Conference 2008 19/20 May 2008, Brussels The 5th e-Business Watch conference titled "Understanding the e-Economy" took place on 19/20 May 2008 in Brussels. It attracted more than 100 speakers and delegates from business, government, public sector initiatives, universities, ICT service providers and consultants. The conference was a major venue for discussing the latest trends in ICT usage by companies as well as implications for competition and policy. All presentations can be downloaded from the Sectoral e-Business Watch website: Download presentations »

Dear Readers,

The Sectoral e-Business Watch (SeBW) has released a series of eleven study reports about ICT and e-business use and impact. Six studies focus on specific sectors: chemicals, steel, furniture, retail, transport & logistics services and banking. The other studies analyse specific ICT topics: RFID adoption, intellectual property protection in ICT firms, ICT and energy use, ICT impact and e-health standards. The studies are based on surveys with more than 5,300 interviews, econometric analyses, case studies and expert interviews.

All study results are summarised in the European e-Business Report 2008, which has also been released. The report presents a range of evidence about ICT impacts. While micro-data evidence clearly underlines the strategic importance of e-business for individual companies, macro-economic analyses at industry level find only moderate direct effects of ICT capital on productivity and industry growth. The report concludes that more refined political responses may be needed with regard to supporting digital value systems development, e-standards adoption and e-skills development.

We invite you to consult the studies and send us your valued feed-back or questions.

Best regards,
The e-Business Watch Study Team

More about the SeBW »

European e-Business Report 2008: on a fast track towards e-Business 3.0

The quality of companies' ICT use has significantly improved in the past 3-4 years, in particular among SMEs. Basic ICT infrastructure, such as simple computer networks and access to the internet, has become a precondition for business in any industry and in companies of any size. e-Business increasingly goes beyond transactions, towards service provision. There is now a trend towards digitally integrated value systems connected through ICT that can be seen as a new life-cycle: “e-Business 3.0”. It follows the internet boom in 1995-2000 (“e-Business 1.0”) and a conservative attitude towards e-business in 2001-2005 (“e-Business 2.0”). This new phase may lead to an upsurge of outsourcing and e-business innovation as well as the emergence of new business models. Moreover there is a trend towards using ICT for sustainable industrial development.

Download study report »

Sector study: e-Business in the chemical, rubber and plastics industry

In the chemical, rubber and plastics (CRP) industry, the ICT infrastructure of companies has improved since the previous e-Business Watch survey in 2003. For instance, the average share of orders which a company receives online has significantly increased: from 5-8% in 2003 to 25-30% in 2007, among companies accepting online orders, i.e. about a third of all firms active in the sector. The main impact of ICT on the CRP industry is as an enabler of process innovation in production, supply chain management and B2B trading processes. Furthermore companies discover new opportunities of e-business as a facilitator also for customer service. As international competition increases, notably from Asian competitors, the right e-business strategy will be important to establish a global market presence.

Download study report »

Sector study: e-Business in the steel industry

ICT is important for the steel industry. It can increase productivity, reduce costs and improve customer relationships. The study also found that the steel industry does not lag behind other manufacturing industries. ICT and e-business adoption in steel firms is similar to the furniture and chemicals industries, which contradicts the industry’s old-fashioned image. As regards impacts of ICT, almost two thirds of the large steel companies reported that ICT use has increased competition in the sector. More than 40% of the medium-sized and large steel firms confirmed considerable ICT impact on skills requirements. ICT may have high future impacts, too. Steel firms representing 80% of the industry’s employment foresee ICT impacts on logistics, 75% on management and controlling. However, current policy activities lack ICT focus. They may not adequately reflect the importance of ICT for the steel industry.

Download study report »

Sector study: e-Business in the furniture industry

In the furniture industry there is a fairly good basic ICT infrastructure in terms of the quality of the companies’ internet access or the use of internal networks. However, integration of e-business systems is still limited – mainly because of the prevalence of small traditional companies. ICT impacts considerably on innovation in design, production, supply chains and B2B trade. Product design plays an increasing role, hence CAD and 3D tools are becoming more important. A rapidly changing environment is increasing pressure on EU furniture manufacturers. Product innovation and reduced lead times are the key success factors to remain competitive. Therefore policy should focus on interoperability and standardisation, the creation of a favourable environment for innovation and the improvement of e-skills.

Download study report »

Sector study: e-Business in the retail industry

Overall there has been an increase of e-business use in the retail industry from 2003 to 2007. Approximately one quarter of retail firms now offer customers the possibility to shop online. However, more than half of those firms report that the share of orders received online is smaller than 5% of total orders. By contrast, only 4% have specialised in online retailing and sell more than 50% of their goods online. Furthermore the e-commerce environment in the EU is less vibrant than in the US as EU retailers tend to use less e-business processes than US retailers. Retail SMEs lag behind large retailers in ICT uptake – overall, e-business activities often tend to increase with firm size. The three retail industry sub-sectors – non-food, food and other retail – show no significant differences in ICT and e-business use.

Download study report »

Sector study: e-Business in the transport and logistics services sector

The availability of high quality transport and logistics (T&L) services is of paramount importance for growth and competitiveness of the European economy. The sector is characterised by a pronounced digital divide between small and large companies. ICT systems of large companies are normally more powerful and sophisticated than those of small firms. Furthermore, EU T&L firms operate on the same ICT adoption level as US firms. The logistics sub-sector is more advanced in ICT uptake than the passenger and freight transport services sub-sector. A regression analysis found strong links between ICT usage, innovation activity and firm performance. In addition, ICT and skills were found to act as complementary factors for productivity growth.

Download study report »

Sector study: e-Business in the banking sector

ICT plays an important role in the banking industry. Process efficiency is gaining ground as ICT capital investments are largely taking the place of labour, particularly in retail banking, by standardising ordinary financial services and having customers perform basic financial services online. This causes a significant branch renewal and change in market structure with mergers and acquisitions, for instance when large banks acquire innovative internet-only banks. The banking industry has so far taken limited measures to comply with the Single Euro Payments Area (SEPA). In order to do so it is expected that the industry will have to make significant ICT investments, however banks have troubles in seeing how that can benefit them. Customer and bank readiness for the use and provision of e-banking is still not widespread among customers. Moreover, not all banks are ready for e-banking.

Download study report »

Market study: RFID adoption and implications

RFID (Radio Frequency Identification) is a real-time data acquisition platform for enterprises and healthcare providers. If used well, it can significantly improve the performance of asset-, technology-, engineering- and brand-oriented value chains. RFID is expected to become mainstream over the next 5-10 years. Simultaneously investments will increase. This projected growth in RFID adoption will be driven by key business motivations including the opportunity to achieve cost reductions and to increase efficiency. Empirical evidence indicates that the average payback time for RFID investments is about 2-3 years. Introduction of RFID technology has an evident impact on workforce composition. About 30% of the companies already using RFID have experienced workforce reduction. However, often relocation to other departments takes place or new technical jobs are created.

Download study report »

Market study: Intellectual property protection in ICT-producing SMEs

The protection of intellectual property rights (IPR) through means such as copyrights, patents and trademarks is critical to the success of many ICT-producing SMEs. In comparison to larger firms, SMEs face higher barriers to IPR protection since they lack resources and appropriate skills. Overall IPR adoption is increasing, but advanced users remain a minority. Only 23% can be described as advanced IPR users, i.e. having a portfolio of 4-7 different IPR. ICT-producing SMEs use IPR to protect their research investments and defend their competitiveness in global supply chains. Usually the use of IPR is correlated with better business performance. As regards the competition between SMEs and large companies, the EC should consider the concerns of smaller enterprises which fear being sidelined from the innovation process because of aggressive IPR strategies by larger competitors.

Download study report »

ICT impact study: ICT and energy use

The role of ICT in shaping energy needs and behaviour has increased sharply. ICT can help to reduce energy consumption and thus costs by reorganising production processes, but it can also lead to additional demand for energy for the provision of new products and services. For the industrial sectors investigated in this study, electricity intensity is found to be reduced by communications devices but increased by computers and software. There is mixed and largely insufficient evidence in the literature backing the net benefit of ICT on energy consumption. Many research gaps prevail, especially with regard to theory-guided empirical (quantitative) studies. Concerning energy consumption, the three case studies conducted show that energy management and monitoring systems can help to reduce energy consumption significantly in companies from various industries.

Download study report »

ICT impact study: economic assessment of ICT adoption and its impact

The study provides modest evidence that increasing competition induces ICT use by companies. In particular, companies in the transport and logistics sector as well as in retailing were found to use ICT to cut costs and to seek more innovative ways of conducting business. As regards ICT-enabled innovation, once a company has started to use ICT, the intensive use of electronic information exchange systems such as SCM as well as employee skills increase the likelihood that a company innovates. Intensive ICT users are also more likely to change their organisational structure and to outsource non-core activities. The results clearly demonstrate that ICT use increases the turnover of companies in all sectors. There is also some evidence for a positive impact of ICT use on market shares.

Download study report »

ICT study: ICT standards in the health sector

Interoperability of ICT systems is a serious problem in the health sector. This implies a compromised quality of healthcare and unnecessarily high costs in the health system. Activities to harmonise standards have been rare so far, but recently there has been a major advance from ISO, CEN and Health Level 7 to tackle this problem. Barriers to e-health standards adoption are many and can be broken down by stakeholders and their rationales: governments, standards development organisations, industry, and ICT users. Achieving interoperability of health systems on a national and international level is a major challenge. Considering recent e-health standardisation activities by the US government, the EC and the Member States may be well advised to develop a common strategy and roadmap for e-health standards to prevent developments unfavourable for the EU.

Download study report »

This is a FREE e-Newsletter published by the Sectoral e-Business Watch (SeBW), which is an initiative launched by the European Commission, DG Enterprise and Industry. It is implemented on the basis of a service contract with empirica GmbH and involving the following main service providers: Altran Group, Databank, DIW Berlin, GOPA-Cartermill, IDC, Ipsos GmbH and Ramboll Management.

If you wish to subscribe, click here.

Legal notice: The contents of this e-Newsletter are prepared by the SeBW consortium and represent their personal views on the subject matters. These views have not been adopted or in any way approved by the European Commission and should not be relied upon as a statement of the European Commission nor DG Enterprise and Industry. Reproduction is authorised provided the source is acknowledged.